Picture it. You’re standing alone before the Board of Trustees, ready to present the annual giving team’s strategy to increase your institution’s alumni participation rate. You’ve got a deck full of slides filled with goals, schedules, examples, charts, and metrics. You launch into your presentation confidently (you’ve been practicing!) when suddenly one of the board members cuts you off and says, “All this talk of alumni participation. So what? Why does it even matter? After all, you can’t take participation rates to the bank!”

Most advancement professionals can explain why annual fund dollars are important. They provide an important source of flexible and spendable revenue that has an impact on today’s students, faculty, and programs. It is money to “live on” versus money to “grow on,” which typically comes in the form of capital support.

On the other hand, many struggle to articulate the importance of alumni participation. For most educational institutions, the majority of donors will be alumni—although there are other key donor groups such as parents, students, faculty, staff, and friends. Alumni donor count is used to calculate alumni participation by dividing it by the number of living alumni on record. For example, if your institution has 100,000 alumni of record (i.e., living with a good address) and 10,000 of them made a gift last year, your alumni participation rate is 10%.

The next time you’re put on the spot to explain why participation rates matter—by a volunteer, a colleague, or a boss—it will be helpful if you’re prepared with a good answer. Here are 5 reasons why alumni participation is important:

1. It adds up – Annual gifts (even at very modest levels) can have just as much impact as major gifts when they are pooled together. For example, a $500,000 annual fund can have the same financial effect as the payout from a $1 million endowment gift in a given year.
2. It provides feedback – Similar to the way businesses measure market share to tell them how potential customers feel about their products or services, alumni participation rates give educational institutions a metric to help indicate how students and alumni feel about their experience.
3. It hedges risk – Alumni giving creates a broad and diverse base of support which helps insure that institutions don’t have to rely on the same donors year after year.
4. It builds a pipeline – Consistent giving by alumni in the years immediately following their graduation increases the likelihood that they will become major donors later in life, make planned gifts, and/or include their alma mater in their estate plans.
5. It inspires others – People want to give to a winning cause. High levels of alumni participation can influence major donors, corporations, and foundations when they’re considering their own investments. They want to give to institutions that others are supporting too.

Understanding—and being able to explain—why alumni participation rates are significant isn’t just important so that you have a good answer when someone asks. It will also help you appreciate the core purpose of annual giving and the reason why it is so fundamental to the success of advancement programs overall. No doubt, strong alumni participation is the key to sustainable philanthropic support and the long-term success of any educational institution.

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This article has been adapted from the book Ideas for Annual Giving by Dan Allenby. Copyright (c) 2016 Council for Advancement and Support of Education. All rights reserved. Used by permission.