New ways colleges target rich alumni

February 24, 2014: 7:01 AM ET
NEW YORK (CNNMoney)

Targeting alumni for donations is big business for colleges and universities -- and schools are getting more savvy with their tactics.

Called "prospect research," the practice of targeting wealthy alumni is not new. But the tools are getting better: complex data models using massive databases that store everything from wealth and income to class reunion attendance.

Schools can now predict how likely a student's parent or diehard university sports fan is to open their wallet. They can analyze whether a fraternity member tends to be more generous than those who ditched the Greek scene.

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For many alumni, much of their personal financial information, such as stock holdings or credit card limits, is off limits, so they use estimates instead. But the wealthier you are, the more information there is to be found.

Maryland-based data firm WealthEngine, for example, sells wealth and demographic data that it attains from SEC filings, property records and dozens of other sources, including information from other data brokers. Some of what it knows: income and bonuses, stock purchases, even whether someone owns a yacht or jet.

Schools then use all of this information to rank your "giving capacity." Rank high and you can expect more phone calls, mailings and invitations to special events.

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Pam Dixon, executive director of nonprofit World Privacy Forum, said many wealthy alumni would be surprised by the vast amount of personal information that has been gathered on them.

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"My question is, 'At what point do we cross the line to something that is really uncomfortable for a donor?'" she said.

WealthEngine said its data is culled legally and that it understands its "rich profile" might be an issue for some. But "as a donor and somebody who supports nonprofit organizations, the advantages so much outweigh whatever risks someone might perceive," said Sally Boucher, WealthEngine's director of research.

Members of the higher education community say they hold themselves to a high standard and "don't collect information that is not relevant to moving our relationship forward," said Karen Isble, board president of the Association of Professional Researchers for Advancement, a trade association that dictates ethical guidelines for prospect researchers.

Schools say the data helps them raise funds more efficiently to better support scholarships, faculty and new facilities.

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As part of a seven-year long fundraising campaign at Brown University that raised $1.6 billion, researchers analyzed hundreds of variables, including age, income, college majors, home values, and class reunion attendance, according to a 2011 webinar hosted by Target Analytics, a firm that helps colleges and universities analyze such data.

Brown found more than 11,000 "new prospects" through its data mining efforts, which eventually resulted in $339 million in gifts and pledges, according to the webinar.

Brown did not respond to a request for comment, while Target Analytics declined to comment beyond the webinar information.

After struggling to find major donors within its database of alumni and other potential donors, Colorado State University purchased their wealth and demographic information from WealthEngine in 2006, according to a company case study.

The school now uses the database to estimate prospective donors' net worth and "cash on hand," the case study stated. The school declined to comment. But on its web site, it says it raised a record $112.5 million in donations last year.

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