Title: A clusterwise linear regression model of alumni giving

Authors: Pablo L. Durango-Cohen; Elizabeth J. Durango-Cohen; Weizeng Zhang

Addresses: Department of Civil and Environmental Engineering, Northwestern University, 2145 Sheridan Road, A332, Evanston, IL 60208-3109, USA ' Stuart School of Business, Illinois Institute of Technology, 565 West Adams Street, Chicago, IL 60661, USA ' Department of Civil and Environmental Engineering, Northwestern University, 2145 Sheridan Road, A310, Evanston, IL 60208, USA

Abstract: We present a clusterwise regression model to analyse alumni contributions to a private, PhD-granting university in the Midwestern USA. The model provides a framework to simultaneously segment a population, and to explain the effect of various factors on the mean annual value of donations. We contribute a different approach to marketing studies in the university fundraising context, where segmentation is often based on intuitive, albeit possibly biased criteria. Instead, in clusterwise regression, individuals are assigned to segments with the objective of maximising the within-segment variation explained by a set of regression models. Our main finding is that individuals in different segments display systematic, but unobserved differences in their responses, i.e., the coefficients in the segment-level regression models exhibit differences in their magnitude, sign and level of significance. We discuss how characterising such differences can support tailored solicitation strategies.

Keywords: fundraising; not-for-profit organisations; higher education; education finance; educational economics; USA; United States; segmentation; latent class modelling; group effects; cross-sectional heterogeneity; clusterwise linear regression; exchange algorithms; alumni giving; private universities; mean annual values; donations; intuitive criteria; biased criteria; within-segment variations; regression models; coefficients; segment-level regression; tailored strategies; solicitation strategies; education economics; educational development.

DOI: 10.1504/IJEED.2012.052323

International Journal of Education Economics and Development, 2012 Vol.3 No.4, pp.330 - 347

Available online: 22 Feb 2013 *

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