We'll always be here for you

There is no shortage of entrepreneurs in southern California. But in a slumping economy, there is a lot of competition for the venture capital that fuels them.

So the Lloyd Greif Center for Entrepreneurial Studies at the University of Southern California in Los Angeles, usually deserted on a weekend, overflowed with a crowd of 350 on its annual networking Saturday, when entrepreneurs had valuable access to potential investors and prospective customers. Most of the people who attended the event had two important things in common, in addition to a desire to do business and make money.

First, most were graduates of USC's Marshall School of Business. And second, they were living examples of the new ways in which US universities are working to engage their alumni at a time when such support is crucial.

"There has been a huge shift towards providing career services and networking opportunities to alumni, not just opportunities to meet and talk socially," says Rae Goldsmith, vice-president for advancement resources at the Council for Advancement and Support of Education, an international professional organisation for people who work in educational alumni relations and fundraising.

It's not because universities are being altruistic by giving their former students career help. It's because "we know engagement leads to donations", Goldsmith says. "The more engaged an alumnus is over time, the more likely he or she is to donate. And once an alumnus donates, the more likely he or she is to donate again."

With this new recognition, and with donors' philanthropy stretched thin by economic realities just when institutions are hungrier than ever for their financial backing, US universities are finding lots of these new ways to engage alumni beyond conventional cocktail parties and reunions. They offer not only networking events but also alumni cruises and other kinds of travel to exotic destinations, low-price car insurance and credit cards - even retirement communities for alumni on their campuses.

"We talk about our alumni having a lifelong relationship with the university," says Matthew Borowick, associate vice-president for alumni relations at Seton Hall University, New Jersey, and president of the Association of Private College and University Alumni Directors. "It's about building meaningful relationships, both in terms of connecting our alumni with each other and then with the university."

US universities raised $28 billion (£17.8 billion) in 2010, much of it from alumni. But that was down almost 1 per cent from the year before, when adjusted for inflation, according to the Council for Aid to Education. The Chronicle of Philanthropy estimates that such donations fell another 1 per cent last year. Undergraduate institutions spend an average of $4.1 million a year each on alumni relations. And alumni-relations offices are being pressed to prove their value.

"I have heard the phrase 'return on investment' more in the past two years than I did in my first 10 years in higher education," Borowick says.

So while many alumni-relations offices have suffered staffing and budget cuts, they are also having to find new ways to connect with graduates. One way is to start earlier, and to begin to work with students before they even finish college. "We tell them, 'Your diploma is a membership card, not a receipt,'" says Matt Herek, associate director of young alumni engagement at Northwestern University in Illinois. "There's a real recognition that you can't wait until someone is in their mid-thirties to establish a relationship with them."

That universities now have different programmes for younger alumni (graduates who have not yet reached their 10th reunion) is another sign of the changes. Using increasingly sophisticated methods of data sorting, alumni of any age or academic speciality can be offered services specific to their interests. "Back in the 1950s and 1960s, you were looking at class reunions and regional clubs and chapters," says Jeffrey Schanz, assistant vice-president for alumni relations at Rensselaer Polytechnic Institute in New York. "That's really all you knew about these people. You knew where they lived, and you knew what year they graduated."

Now, Schanz says, "universities have so many more data points about alumni that they know what they're interested in. It could be athletics, it could be a student programme they were part of or it could be the college band. So rather than saying we're going to have an event in New York for all of our alumni, we'll have an event in New York for architects who went here during a certain time."

The bottom line, he says, is that "we want them to connect, but we also want them to connect back to the university".

The marketing company Converge Consulting - part of a growing industry of middlemen helping universities hone their messages - found that alumni were most motivated to support their alma maters when they were provided with not only social occasions but also professional opportunities, and were more likely to become involved if that involvement furthered their careers and helped them make new business contacts.

"They see it rightfully as an opportunity to build their networks," Borowick says. "It helps the university because the alumni feel that they have got added value by having that enhanced relationship with the university. So it's a two-way street."

Many alumni no longer support their universities just for the warm feelings they get writing a cheque, he says. "They want to know what's in it for them. The more universities can do to help alumni network in terms of careers and jobs, the more there is a major incentive for them to support us." Or, as Herek says, "We cannot just be party planners."

Twenty universities, including Columbia, Pennsylvania State and Yale, now provide their alumni with digital access to 1,000 scholarly journals in 50 disciplines from the Jstor database. By helping them stay in touch with developments in their professions while saving them the high cost of journal subscriptions or fees to download individual articles, the service cements a continuing intellectual connection with alumni. Jstor reports that alumni used this service as many as 128,000 times a year at one participating institution.

But the economic downturn has had another broader, and potentially more damaging, effect beyond making universities more dependent on donations and donors less able to give. Cutbacks in funding from other sources have helped to raise tuition prices so much that students are becoming cynical about the institutions - especially since some colleges now ask them for money before they have even graduated - and many of them are left in so much debt that they could not contribute even if they wanted to.

This makes creating the traditional loyalty of alumni towards their universities even tougher, Herek says. "There's a transactional paradigm out there for a lot of students who feel that now that they've paid for this degree, they're done," he says.

Schanz sees this, too, he says. "Some of these people consider it a transaction, as in, 'I graduated, I paid my tuition, see you later.'"

"It's expensive to go to any college now," says Herek. For alumni-relations offices, the resulting resistance among alumni to contribute even more "can be a bit of a frustrating barrier, but it's understandable. If it looks like all we're doing is coming cap in hand to ask you for cash, that's not the message we want to send. Sometimes that means we have to understand that everything is not about, 'Will you give us money?' It may be about, 'We're going on a skiing trip, why don't you come along?'"

Many universities have increased their use of alumni volunteers as student mentors, advisers and recruiters, and in other capacities.

"While things might be difficult in terms of [making] an outright cash gift, that's not to say that there aren't other ways to support your university," Schanz says.

Alumni may recruit in areas where university admissions officers cannot visit, or interview prospective students, or man booths at education fairs. That saves money and can also boost the number of applicants - a key consideration used in US university rankings, which measure the "yield" rate derived from dividing the number of students accepted by the number who apply. "It really helps to drive that yield up among prospective students if you can point to a few successful engineers, for instance, and show them to be still involved with the school," says Herek.

Increasing numbers of alumni also help students after they enrol by providing career advice or hiring them outright for internships or full-time jobs. "We like our alumni to be connected with our students, and that's a great way to have that happen," Herek says. "It makes them want to be more involved, and that's what we're trying to get people to do."

One problem is that it is tougher to quantify how many alumni volunteered, in what ways, and for how long than it is to count how much money they give. University administrators are now giving their alumni offices goals to meet for volunteerism and other things that have not been counted in the past. "It all goes back to return on investment and making the case, as best we can, that what we do is helping with engagement and philanthropy," says Schanz.

Even if alumni do not become personally involved, universities have become adept at using social media to keep them informed. Many now use Twitter to make announcements that were once the subject of mass mailings or press releases, sidestepping conventional media that might present the news less favourably. They use a new feature on the online networking site LinkedIn called Classmates, which lets alumni search for fellow graduates in certain industries or with common interests. They encourage their alumni to list - and "friend" and "like" - their alma maters on Facebook. And they use streaming video from events so that alumni who cannot attend can watch and hear their friends online.

"You're not going to see the class reunion or homecoming disappear tomorrow," says Schanz. But social media allow for even more connections. People who were in classes together at Rensselaer and now live in Europe, for example, meet on LinkedIn, he says.

Alumni-relations offices once feared social media, says Goldsmith, thinking that they would give graduates a way to connect that might supplant reunions and other such vital social gatherings. In fact, she says, universities now use social media to promote reunions. "It makes it easier because you are finding alumni who are becoming engaged with the institution who never would have done in the past."

New technology does complicate the work of alumni relations in the sense that different generations expect communication in different ways, officials say. "People who are in their fifties and sixties still want to get things by mail or by phone," says Herek. "Younger alumni depend on email and social media. The core of what they want is the same, but you have to frame the message differently."

Another way alumni offices engage former students is to offer low-cost car insurance, credit cards and other services, provided by companies that lust after large lists of well-educated, high-income prospective customers. It's a happy convergence of interests. Alumni like these deals, research shows, and those who take advantage later donate money at a higher rate than those who do not.

After all, the bottom line is, well, the bottom line. And the end result of all this relating and engaging is supposed to be financial contributions.

Literally the end result in some cases. One of the most successful trends in US alumni support is estate giving, in which graduates leave substantial sums to their universities in their wills. "There still is a lot of money out there," says Schanz. "Philanthropy is not going to die because of an economic downturn, because there are so many ways for alumni to give."

That is not the only way alumni can show their school spirit when they die. Forty-six US institutions, including the universities of Nebraska, Alabama, Kentucky, Oklahoma State and North Carolina, sell caskets with their logos embroidered in the lining. They collect royalties of up to 10 per cent per coffin.

"Higher education, certainly in the United States, is a visceral relationship," says Borowick. "It doesn't end up being just a transactional one. It's something that we in alumni relations believe can transcend the end of the educational transaction and go into that lifelong relationship." And beyond.

Lasting legacy: how UK can learn from US cousins

Why are alumni so important to fundraising? The most significant sums of money given to universities come from wealthy individuals and, almost invariably, these individuals are alumni.

Decisions about corporate giving - and other forms of corporate support to universities - can also be strongly influenced by alumni who hold key positions within companies, so maintaining good relations is a strategy that can pay off.

The mass of alumni do not fall into either category, but that does not mean they should be neglected: although they may be able to make only small contributions during their lifetime, if enough of them do so, very useful sums of money can be raised.

The American experience is that the best way to get bigger gifts is to persuade alumni to start giving when they are young and to encourage their giving to grow as they become more prosperous. Ivy League experience has shown that if an alumnus gives $1 million (£643,000), there has usually been a history of regular giving to that institution. British universities are starting to report similar experiences anecdotally. While only a handful of donors will reach those heights of giving, many could nonetheless afford substantial legacies - and with average legacies to charities in the UK approaching £20,000, this is an important area for growth.

One mistake often made in UK university development offices - when compared with the US and some universities in continental Europe - is to focus exclusively on individual giving. A typical US office will have some corporate fundraisers. Even without such staff, there are synergies that can be gained from close coordination between development offices focused on individuals and trusts, and corporate, commercial or grants offices, which focus mainly on contract income. Businesses that have close contractual relationships with universities are more likely to provide softer and more strategic support to universities, especially if they really value a university's strength in a particular field. This is often how professorial chairs come to be funded by companies. Alumni who are in positions of influence in such companies may be more inclined to direct funds and contracts to their own alma mater than to other universities. Sadly, the silo structures of most UK research-intensive universities do not encourage the kind of cooperation that is needed to benefit from these potential synergies.

Many would say that the best way to cultivate donors is to involve them in the university and to give them something to do other than just being a donor. There are numerous ways for alumni to provide volunteer help. These include opportunities for them to serve on advisory committees, to mentor and provide internships for students, to give visiting lectures, to encourage student applications, and to offer careers advice.

I recently attended a Council for Advancement and Support of Education meeting of senior marketing and development professionals in Birmingham. The most important message to take away from the event was the importance of alumni for a whole range of external services: development, alumni relations, contract research, overseas student recruitment, careers, public relations and lobbying.

John Kelly is a fundraising consultant and a former head of Regent's College, London.