Fundraising and Philanthropy

1. Fundraising and Philanthropy

2. Why Does it Matter? Non-profit organizations raise money because income generated from normal operations is insufficient to support the organization’s mission. A wide array of organizations raise funds: • Churches (35% of all giving) • Schools (14%) • Social service and relief organizations (9%) • Hospitals (8%) • Arts & Cultural organizations (5%) Fundamentally, the process of fundraising is the same across all types of organizations, however specific challenges will vary widely depending on the type of organization and its mission.

3. Why Does it Matter: More than $ • $211,770,000,000 was given away by individual donors in 2010. • Beyond the impact of the dollars, private philanthropy also strengthens non-profits by moving them toward greater • transparency, • accountability and • discipline • because institutions must articulate and defend their vision, priorities, and strategy for achieving them when asking donors for support. • In offering to fund our objectives, donors challenge us to test our assumptions, resist complacency and demonstrate that we are being true to our ambitions.

4. Why Does it Matter: Margin of Excellence Private philanthropic support has provided that margin of excellence that has separated American educational and cultural institutions from peers around the globe World’s top universities as ranked by Shanghai Jiaotong University, 2011 • Harvard • Stanford • MIT • UC Berkeley • Cambridge • Caltech • Princeton • Columbia • Chicago • Oxford

5. Why Does it Matter: Patchwork Quilt • Philanthropy is embedded in our national strategy for supporting education • “Students, individual alumni, philanthropic foundations, private businesses and industry and State and Federal Governments all share the responsibility of supporting our colleges and universities, and this is as it should be.” - US Dept. of Education

6. Defining the Case Fundraising goals flow from the institution’s academic or strategic plan – the plan determines your case for support • Fundraising is a means to achieving strategic academic goals, not a goal in itself The academic plan should provide fundraising staff with the ability to answer the following key questions: • What is the leadership’s vision for the future? • What do you need money for? • Why are those things important? • How will new funds change/improve the institution and make it better able to fulfill its mission?

7. Types of Fundraising Generally, there are two types of fundraising constituencies: • Individuals • Corporations & Foundations Corporations & Foundations Individuals • Formal proposal and application processes • Focus on alignment of your mission with mission of the donor organization • Proposal writing is a specific skill • A personal appeal • Focused on unique interests and motivations of an individual • Appeal to emotions, to intellect or to both

8. Individual Giving: Annual Giving vs. Major Gifts Individual giving is generally divided into three approaches ANNUAL GIVING MAJOR GIFTS PRINCIPAL GIFTS • Donors asked to give every year • Generally smaller gifts • Participation, as much as size of gift, is important • Mail, telemarketing, some personal solicitations • Usually “special” gift in honor of reunion or campaign, to name a permanent fund, building or room • Large gift, perhaps to be paid off over time • Size of gift is critical • Personal solicitation is key • “Once in a life-time” gift • Transformational for the institution • Very top of the giving pyramid • Typically the result of a lifetime relationship with institution and the institution’s leaders

9. Individual Giving: A Simple Process Model • The process of raising large gifts from individuals has three basic elements: • Identify individuals who have the potential to be significant donors • Create a process to bring them closer to your organziation, so they understand the mission and have confidence in the leadership • Ask them to demonstrate their commitment with a significant gift to support the organization Identification Investment Involvement • Suspects • Prospects • Communication • Cultivation • Commitment • Contributions

10. Identification: Constituencies • Most organizations have “natural” constituencies in which to search for donors • The natural constituency may or may not be sufficient to sustain the organization’s growth needs, so new constituencies must be considered

11. Identification: Research • Pareto Principle or the 80:20 Rule (“The Law of the Vital Few”) • Top 10 gifts = 25% of total dollars raised • Top 100 gifts = 50% of the total dollars raised • Top 500 gifts = 70% of the total dollars raised • Research • Efficient and effective prospect research is crucial to identifying top prospective donors • Referrals from board members and donors • News reports, Bloomberg, Dow Jones, etc. • Donors to similar organizations • Public information (home valuations, stock ownership, board memberships) • The purpose of research is to focus your efforts on the best “suspects” and qualify them as “prospects” • Determine how large a gift they can give

12. Involvement: Motivations • There are many reasons why people become involved in an organization, but some are more common than others • Pride of association • Demonstration of leadership • Particular emotional link to a cause • Making a difference • Like attention • People generally prefer to “join a winning team” than “bail a leaking boat” • One goal of your research is to identify the motivations of your prospects

13. Involvement: Techniques Prospect Visits • Build personal relationships with leadership of organization • Nothing is better than face-to-face attention Committees • Boards of Directors / Trustees • Issue-specific committees / task forces Events • Social events for prospects & donors to meet one another • Events that connect prospects with beneficiaries of gifts Communication • On-going education and information about the case • Newsletters, brochures, website, personal letters, phone calls

14. Investment: Motivations “People give to people, not to institutions” • This is true both in a figurative and literal sense • The largest donors give to support the efforts of the organizational leaders directly, because they believe in them as individuals and as agents of change, not merely an abstract belief in the mission of the organization • The leadership of the organization is often best evaluated by the quality of the academic or strategic plan • Major gifts are raised, not given – they generally must be solicited by another donor or a leader of the organization

15. Investment: Soliciting gifts • The best solicitors are those who have leverage over the prospective donor • Ideally, the solicitor should be a donor who has made a gift in the same range as that being solicited, or has made an equivalent “stretch gift” relative to his or her own resources • Alternatively, the solicitor should be the organization’s chairman, CEO or another senior administrator • Even better, both a donor/volunteer and senior staff person could be present • Solicitations should always specify a dollar amount, never “whatever you can do” • Frame the solicitation not as a discussion of money, but rather a discussion of the change/improvements/human impact that money will enable

16. Investment: Stewardship (Involvement after giving) “Your best prospects are your past donors” • No one is more likely to give in the future than someone who has given in the past • A gift is not the end of a process, but an inflection point in the relationship • Effective stewardship is crucial to sustain the level of personal commitment and investment that yielded the first gift • Stewardship can be viewed merely as an involvement strategy tailored to the needs of current donors • A lapsed donor is a major loss of time, effort and resources – it is much cheaper to keep a current donor than to find a new one

17. Detailed Flow Chart of the Major Gift Fundraising Process Appendix 1:

18. The Fundraising Process for Large Gifts 1. Identification 2. Qualification 3. Cultivation 4. Solicitation 5. Stewardship

19. 1 2 3 4 5 Identification & Qualification Negative outcome End of process Referrals List of potential prospects Visit Prospects Basic Research Positive outcome Assign major gift officer Research and qualify prospect further Proceed to cultivation process

20. 1 2 3 4 5 Cultivation • Visits • Staff • Faculty • Administrators • Volunteers • Events • Advisory Board Meetings • Small Dinners • Receptions • Campus Visits Define/Refine Cultivation Strategy Review Prospect Potential Proceed to Solicitation Process • Volunteer Opportunities • Committee Membership • Fundraising Committees • Alumni Affairs • Visiting Committees • Overseers/Governing Boards • Communications • Publications • Letters/notes/cards • Phone • Visits SIMULTANEOUS & CONTINUOUS

21. 1 2 3 4 5 Solicitation Back to define/refine cultivation strategy Result: no or maybe • Gain input from: • Development colleagues • Alumni and volunteers • Faculty and administrators • Determine solicitation strategy, including: • Solicitor/closer • Proposal • Amount • Timing • Sequence Schedule appointment with prospect Brief solicitor Solicitation meeting occurs Result: Yes; gift will be made Draft and confirm terms with donor Define payment schedule Book gift Proceed to stewardship process

22. 1 2 3 4 5 Stewardship Large gift Choose stewardship materials or methods Assign staff responsible Determine timing Draft and send thank-you letters Define further stewardship needs Update/revise cultivation strategy Small gift No further stewardship needed Return to cultivation process