Lost Generation: How Can Fundraisers Effectively Engage Debt-Ridden Millennial Alumni?

a parade at a princeton reunion. EQRoy/shutterstock

A recent survey from Ruffalo Noel Levitz painted a dire picture for university fundraisers regarding millennial alumni giving. Less than a quarter of college fundraisers reported an increase in giving from this coveted demographic. About half of respondents said that young alumni giving is flat. And 21 percent reported a decrease in millennial alumni giving.

While many millennial grads obviously don’t have the income to donate, the survey’s authors also noted that fundraisers have done a poor job of targeting young alumni that may be amenable to giving. The lack of campaigns targeting these prospects is “a significant barrier to success in seeking donations and engaging donors,” said Brian Gawor, Ruffalo Noel Levitz’s vice president for research.

Gawor’s recommendation is a risky one, considering the elephant in the room: the student debt crisis and its long-term financial and conceptual reverberations. The average graduate now owes $37,000. Many alumni believe they have already provided—and will continue to provide, through decades of student loan payments—more than enough support to their alma mater. Debt breeds frustration and anxiety, not gratitude, especially when the alumna doesn’t believe she received an equitable return on her investment. Fundraisers should fundamentally change this perception, and there is no easy way to do it.

What’s more, when millennial alumni eventually have money to donate, research suggests many will bypass their alma maters entirely. Millennials are inherently suspicious of institutions. They’re focused on individual causes and movements that drive meaningful social impact. “Life-and-death” issues often command their attention, and until fundraisers can alter this reality, I can’t blame them for keeping their wealthy “top of the pyramid” boomer donors on speed dial.

The good news is that when the stars align, millennials have shown an inclination to support their alma maters—sometimes in a big way. But the unprecedented scope of the student debt crisis and millennials’ distinct ideas about giving have upended conventional wisdom about how university fundraisers should make the pitch.

The Millennial Giving Pyramid

Last year, Marts and Lundy published a report examining the proliferation of “mega-gifts” in 2017. It found that the total value of gifts exceeding $10 million to universities was up 25 percent over the previous year. The increase, the report stated, “is due entirely to more gifts at the $50 million to $99 million and $100 million+ levels, which increased in number by 70 percent and in total value by 47 percent from 2016.” During the same period, “gifts in the $10 million to $24 million range declined both in number and total value.”

While the Marts and Lundy study doesn’t provide donors’ demographic information, anecdotal evidence suggests a majority of these super-mega gifts are primarily coming from boomer donors. Again, this can partially explain why so few fundraisers have doubled down on targeting millennial alumni. They’re following the money. According to Blackbaud, millennials born between 1981 and 1995 give, on average, $481 annually, less than the $732 given by Generation X and the $1,212 given by baby boomers.

There are a few exceptions, of course. One is Kevin Chou and his wife, Dr. Connie Chen, who gave $25 million to the University of California, Berkeley’s Haas School of Business. Chou co-founded San Francisco-based mobile game company Kabam. In late 2016, he sold the majority of Kabam's assets to a South Korean firm in an $800 million deal. At the time, his commitment represented the largest personal gift to UC Berkeley by an alumnus under the age of 40.

Chou’s gift suggests that higher ed fundraisers can draw from a separate millennial giving pyramid, targeting affluent alumni at the top while devoting relatively fewer resources to the debtors in the middle and at the bottom.

Millennial Giving Preferences

Investment News projects that $30 trillion in assets will move from baby boomers to millennials and Gen Xers in the coming decades, the largest intergenerational transfer of wealth in history. Many young alumni now plagued by student debt may eventually find themselves in the black.

That’s encouraging news for university fundraisers. The catch? Research suggests that universities may not be a natural fit for millennials looking to give back. Unlike their baby boomer predecessors, millennials tend to champion causes and movements, rather than single institutions, and take a broad view of how to move the needle in the causes they care about. They grew up in an interconnected world, and are likely to believe all sectors have a role to play in problem-solving.

Millennials, forged in the crucible of the Great Recession, also have a very different view of market-based capitalism than their parents. Others, having attended liberal private schools and elite colleges, are more attuned to issues like rising inequality than their predecessors. And millennials are more likely to hold progressive views on race and sexuality. As a result, millennials give with an eye toward impact and values, focusing on nonprofits tackling health, economic and environmental challenges.

Like it or not, effective altruism exerts a powerful pull on younger Americans. Why would a socially conscious millennial donor give millions to her wealthy alma mater when those dollars can address life-and-death issues? Millennial women, a demographic poised to command significant wealth in the coming years, are particularly inclined to prioritize disease treatment and prevention, hunger, access to healthy food, healthcare, and basic health services.

Given this data, it should come as no surprise that, according to Achieve’s 2014 report on millennial alumni giving, 75 percent of responding young alumni said they would give to another nonprofit before they’d give to their alma maters. More than half had not made a financial contribution to their alma mater at all. Then again, this survey was an intellectual exercise, more or less: Nearly two-thirds of respondents cited a lack of money to donate in the first place.

Getting Creative

Fundraisers understand how millennials differ from their Gen X and baby boomer predecessors. “One challenge with millennials is, I think, they really give to causes they love, but not to institutions,” said Lisa Capone, executive director of development at the University of Louisiana at Lafayette. “We have to identify the causes and the initiatives they love and talk about that specifically.”

Cognizant of the fact that millennials lack the cash flow to make substantial gifts, fundraisers are also exploring new, easier ways to inspire alumni to give back, including crowdfunding and micro-donating. Nor do fundraisers require a tangible check from engaged young alumni. Back in April, Steven Cruz, a 28-year-old graduate of Florida International University, pledged his life insurance policy to the school in the form of a planned $1.2 million gift to establish the Steven Cruz Institute for Media, Science and Technology.

These examples primarily focus on execution and strategy, echoing the takeaways from the Ruffalo Noel Levitz study. Universities’ millennial outreach efforts have thus far been scattershot, and in some cases, nonexistent. Moving forward, fundraisers can successfully engage younger alumni with more precise, targeted and user-friendly campaigns.

But some fundraisers may still want to think twice before following the study’s advice. One tone-deaf fundraising letter could alienate a debt-ridden alumnus for life. Writing for Market Watch, Jill Berman quoted a millennial named Kathleen Garvin. After graduating from Temple University, she landed a retail job and began chipping away at $50,000 in debt. Then she got a phone call from her alma mater asking for a donation.

“It just almost felt like a slap in the face,” Garvin, now 28, said of the call. “To graduate, be in all this debt, and then get called to donate money when the school has already taken so much from me, it was just kind of violating and frustrating.”

Some universities, fully aware of the risks involving with hitting up indebted alumni for cash, have stopped asking for money altogether. Susquehanna University ceased soliciting donations and instead encourages alumni to become more involved through volunteering and alumni networking opportunities. The idea here is that while millennials may not have money now, they will someday, and when they do, fundraisers can draw from these relationships and shake the tree.

“If we get them saying yes, it becomes harder for them to say no—and that’s what we want the case to be over the next 50 to 60 years,” said Ron Cohen, who oversees advancement at Susquehanna.

A Question of Messaging

Again, the bigger question here is messaging. As tuition continues to skyrocket and the student loan crisis now threatens to drag down consumer spending and the housing market, fundraisers need to convince young alumni that a check to their alma mater is, at the bare minimum, equally impactful as one to a public health or anti-hunger nonprofit.

Ironically enough, this challenge will become even more difficult in coming years when millennials finally have cash on hand. Fundraisers could historically find comfort in the idea that as graduates age, start families, and earn money, they eventually develop an affinity for the institutions that made their success possible. But as we’ve seen, millennials aren’t Gen X donors, much less baby boomers. Millennials may develop an emotional bond with their alma mater, but not necessarily a philanthropic one.

Nor can fundraisers find that much solace if millennials decide to give back in non-financial ways across the next decade. Mentoring, volunteering and networking activities, while certainly preferable to no alumni engagement whatsoever, won’t pay the bills.

A Mixed Outlook

Administrators, politicians, predatory loan providers, and (alas) unwitting campus donors are all complicit in propagating the student debt crisis. But one way universities can engage equity-focused millennials while seeking atonement for burdening the very same graduates with debt is to make a good-faith effort to cut tuition for current and future students.

The message here can be powerful. “You may be saddled with debt,” a university can say, “But here’s what we’re doing to ensure that the next generation of graduates isn’t.”

It’s not impossible. St. John’s College, which has campuses in Santa Fe and Annapolis, launched a capital campaign with the goal of reducing annual tuition by as much as 50 percent. Donors responded enthusiastically. Meanwhile, Purdue University has successfully held tuition at 2012 levels for eight straight years. Giving to Purdue was a record $451.5 million in fiscal 2018.

Neither college provided a demographic breakdown of its donors, but the trends are nonetheless encouraging. For example, 46 percent of donors to Purdue’s “Ever True” campaign had never given to the university before. Purdue, as it turns out, also provides young alumni with a broad range of non-financial ways in which to give back.

Colleges can also follow Michael Bloomberg’s lead and dial back tuition-busting capital expenses and invest in financial aid and scholarships. Writing in the Washington Post, Stephen Lurie endorsed this approach, while arguing, rightly, that more money for financial aid won’t address the root causes of runaway tuition or the attendant debt crisis:

Paying off debt isn’t the same as cutting off the source. In fact, debt abolitionists would argue that it would simply perpetuate the cozy syndicate of universities, government and private loan makers. But granting temporary relief to a peer is not counter to the cause of reforming American university funding, spending and pricing. It can strengthen it. Fewer donations would certainly get administrators’ attention, and, if not, calls from alums now personally invested in debt relief efforts could help stop the problem at the source.

Research suggests that some millennial alumni are amenable to reducing the debt burden for future generations. Achieve’s 2014 Millennial Alumni Study found that when it comes to giving to their alma maters, 51 percent preferred giving current students financial aid or scholarships.

Speaking of Achieve, last year, the research group published its Millennial Impact Report Year in Review. It provides some illuminating (and alarming) thematic takeaways for university fundraisers. The report found that millennials are increasingly finding their voice in the public arena and philanthropy, focusing on changing an unequal status quo. They’re “more involved in causes than ever,” and “don’t care much how we label or categorize them.” Lastly, “while millennials share news about causes/social issues they care about, they view current online discourse as uncivil, and so do not engage in it.”

Intuition tells us that these behavioral characteristics don’t naturally align with giving to a wealthy university—and Achieve’s findings confirm this hunch. Twenty-nine percent of survey participants cited “Civil Rights/Racial Discrimination” as the cause or social issue of greatest interest. Employment (Job Creation) and Health Care Reform were tied at second with 26 percent, while Climate Change was fourth at 21 percent. “College/Post-Secondary Education” was ninth at 13 percent.

Or to put it more starkly, 87 percent of millennial respondents cited a cause that wasn’t “College/Post-Secondary Education.”

Peter Lipsett heads DonorTrust’s Novus Society, an organization that works to cultivate young philanthropists. He argues that millennials get a bad rap. They may not give extensively, but when they do, they’re incredibly generous. Looking ahead, he’s optimistic that millennials will eventually embrace philanthropy at a level that exceeds their Gen X and boomer predecessors. But just not yet.

“More than with past generations,” he said, “they’re dealing with student loans. I think that’s really weighing on folks’ minds in terms of where their cash flow is going to go. I think those student loans and those types of things are really sucking up (a) their dollars and (b) their mental bandwidth.”