Cairney Conversations
Leadership Series
Inaugural Interview with Sir Eric Thomas with Karen Cairney CEO of Cairney & Company
How to navigate the rapids: What fundraising and advancement learned from the Thomas Report (2004) to COVID-19 and beyond.
The advancement profession within HE, especially fundraising and alumni relations, is constantly being asked to justify its existence and prove its RoI. Since the Thomas Report, 16 years ago, the smarter HE establishments have been taking investment in advancement and development seriously. But has the investment paid off?
A time of threat and opportunity
The CASE Ross Survey 2020 reported a 21% increase in 2019, in new funds to Higher Education institutions. 2% of cash gifts received were between £1m-£5m and 34% over £5m. Although 97% of all gifts were from individuals, 51% of cash gifts came from organisations, trusts and foundations. Although donor numbers grew slightly, there is a continued trend of fewer donors giving but giving more. Investment in development has grown by around 4%. Only 1.4% of total contactable alumni donated but this rose to 12% of contactable alumni giving to elite organisations with well-established alumni departments.
This is in stark contrast to the US, where 26% of alumni gave to their alma mater, totalling £12.15 billion. For the top ten colleges, this rose to an average of 40-60% (2019 CASE Alumni Giving Report).
That’s the good news. But we're a long way from sustained investment in advancement, especially around bringing alumni into fundraising. US colleges put the secret of their alumni fundraising success down to campus environment, student experience, friendships developed during studies and engagement with the College during their studies. In the UK, the majority of HE providers frontload time and money into attracting students and creating the best student experience. In too many cases, once students finish their studies, they're gone and forgotten. The spend and effort doesn’t send the right message to alumni. Now with COVID-19, and the proposed limiting of students on campus, the future of alumni engagement needs to be handled very carefully.
I talked with Sir Eric Thomas, Cairney Strategic Advisor, about his thoughts on the advancements profession’s journey from 2004 until today, and what he believes the future holds.
You are in touch with many Vice-Chancellors during these challenging times. What are some of the tough decisions that they are having to make now?
Many tell me they have never worked so hard in their lives. There is a multiplicity of things going on but three pressure points emerge time and again.
Students. How can you provide valuable and relevant online content alongside a positive experience for students who are not on campus? One Vice-Chancellor of a Russell Group institution said they have created an online education offering in three weeks that would normally have taken 10 years.
Staff. Leaders are really worried about the wellbeing and mental health of their teams. Many team members are furloughed and this is impacting business continuity and research. We are in an ever-changing landscape and VCs are trying to lead and manage the best they can.
Money. Some universities could be facing up to £150 million loss for this year if there is a huge drop in international students, five times their surplus. Furthermore, they can’t predict the impact on international student numbers. Everyone is still figuring out the cost of social distancing measures and if UK students will pay for an education online but without a university experience. The critical date to focus on is September 2021. Will international students show up? If not, how will the sector cope? The unknowns are numerous, and all are costly.
What are the challenges for senior teams in Universities and how agile and flexible do they need to be to address the current crisis?
If there was ever a time where agility and flexibility are key, it’s now. What’s happening now combines deep threat with profound unpredictability. Universities are like oil tankers; changing their direction takes a lot of planning, effort and time. They are having to rethink their purpose and priorities in this new world. One VC has said to their senior team, “I know we are a research-intensive university but it’s the students who really really matter now”. These are times when leadership will be truly tested. No question about that.
The Thomas Report (2004) set the stage for the development of fundraising across Higher Education. The recent CASE Ross survey reported a 21% increase in new funds to UK HE institutions in 2019, while the Times Rich List 2020 reported a loss of £54bn in wealth across the UK. What are your thoughts as to why we have seen this increase in giving to universities and what do they now need to do to prepare for the future, given the current climate and the loss of wealth?
The increase is a result of a lot of hard work and investment in professional development functions over a long time. Simple as that. Fundraising is a professional job that if you invest in it, and do it properly, you will see returns.
The loss of [short term] wealth is having an impact on investment portfolios. But if we focus on engaging the likes of Bill Gates or other multi-million and billionaires, how much does it matter to the long view? We will have to wait and see whether people become more altruistic as a result of the current environment. Donors may well have less to give and so become more focussed in their giving.
Making an ask for a big gift takes time, the journey to concluding a gift can sometimes take up to 5 years. During and post-COVID, it could be even longer. It’s vital however, that HE leaders keep conversations happening.
As you have watched things change and evolve since 2004, what is working well in development and where do you still feel things need to change and where have you been disappointed?
2004 was wonderful because everybody took on board the recommendations of the Thomas Report. There was a real sense of “we had better start doing this”. Now we have about 30 to 35 universities who take development really seriously. I think back to 2004 when most Russell Group institutions would have had four people in the Development Office. Now it’s a minimum of 30 and upwards of 100 in some. But I do want to make it clear, this is far from being universal. We still have a long way to go if we want to see giving levels like the US.
Understandably, smaller and newer universities struggle to reach good RoI. They don’t have a bunch of wealthy alumni going back 70 years. And I always say to Vice-Chancellors, for fundraising to be taken seriously, they have to get their Governing body behind them. Otherwise it’s a non-starter.
And I don’t need to tell you fundraising is hard work. It takes time and it takes talent. It can all seem like glitz and glamour but after a three-hour dinner with seven high net worth individuals, who are thinking of giving to your university, I almost had to be resuscitated! Donors are very capable and successful people, and you need to know your strategy inside and out. They want to know why you are asking them for these particular things. You need to know higher education backwards nationally and internationally.
Do you see institutions investing more now in fundraising given the increase in giving? Where’s the challenge or opportunity in that?
You have to be a brave VC to increase investment in fundraising against this intensely pressurised backdrop. A huge factor is how dependent HE has become on international students, and as we discussed, there is a huge question mark here. So how can senior teams and governing bodies increase diversity in income streams? Philanthropy has a leading role to play, as well as leveraging relationships for other streams, such as commercial and research.
If I’m a Director of Development and you’re the Vice-Chancellor, who is receptive to development, how can I demonstrate the team’s value to the institution?
Make sure the Vice-Chancellor is talking with your governing body about advancement as much as they are about fundraising. Fundraising needs to be seen as core to the overall advancement of the institution. From building it into alumni networks to ensuring everyone gets why we need professionals whose job is to advance the institution.
If the market is going to be smaller, you need to get better at promoting your quality, showing your impact and clarifying your purpose. You need to show the Finance Director the difference you’ll make to the bottom line, and crucially, how you’ll do it.
What are your top predictions for the coming year for the role that philanthropy could play in the HE sector?
Vice-Chancellors and leaders will have to sharpen their ask of donors. They need to articulate the future of their institution, the need for philanthropy and their donor’s impact with greater clarity and a stronger sense of purpose.
For enlightened VCs, I don’t think there will be less investment, I think there will be the same or even possibly a little more. And that will lead to an incredible demand for the best fundraisers. Good fundraisers are a breed apart and there aren’t very many of them.
What do you see the HE sector looking like in the next 3-5 years?
The pressure on the sector is only going to get greater and I have been surprised by the Government’s attitude towards helping universities. There’s a disconnect between the perception and reality of HE. The experts the public look to for guidance are products of universities. The people that are asked their opinions on the television called Professor, are from universities! The research into treatments and vaccines is going on in universities.
Universities are a fundamental part of re-building the economy as COVID-19 hopefully settles, so where’s the government help? If you allow universities to fail, you lose one of your economic cylinders for the recovery.
There are already less people deciding to go to university in October 2020. Back in 2008, following the financial crisis, I presented two slides to my governing body. First, a boat sailing along a lovely calm river. I said this is what it’s been like for the last nine years. The next slide was the beginning of a set of rapids. I said that’s where we’re heading and I can’t tell you how we’re going to get through them until we get there. All I can do, with your support, is make sure we’ve got the best ship and crew.
If you were asked to give advancement professionals a motivational tip for the next year, what would say?
This is a time of great threat for some, but also of huge potential and opportunity. We are all feeling a bit jumpy at the moment but advancement professionals will be needed more than ever. They are the ones getting their senior team through the rapids.
Luckily, advancement professionals are always a very positive bunch, and that will count for a lot. It's one of the joys of working in the sector – they are always optimistic!
Sir Eric Thomas is the former Vice-Chancellor of the University of Bristol and chaired the Government Taskforce into Increasing Voluntary Donations to Higher Education which reported in 2004, The Thomas Report.