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The importance of fundraising strategy

Note: This article originally appeared in the Spring 2021 issue of Independent School magazine, the magazine of the National Association of Independent Schools (NAIS).

When we consider how independent school fundraising emerged decades ago—the roots of school annual funds grew from the “gap” between tuition revenue and operating costs—it’s little wonder that schools have a difficult time thinking about fundraising as more than a stop-gap measure to balancing the budget. But fundraising should be so much more—and it can be. According to Giving USA 2020: The Annual Report on Philanthropy for the Year 2019, Americans gave nearly $450 billion in charitable contributions in 2019, a figure that has increased steadily over the past 40 years in both current and inflation-adjusted dollars. Living individuals gave 69% of all philanthropy in 2019, and bequests from individuals accounted for an additional 10%. Education, which comprised 14% of all giving, ranked second only to religion in the causes our society supports with charitable contributions.

Notwithstanding the $64 billion given to education in 2019, many schools struggle to position philanthropy as a reliable and significant source of revenue. Indeed, in the 2020–2021 NAIS Trendbook, President Donna Orem reported that in 20182019, 5.5% of day and 11% of boarding school revenue at NAIS schools came from charitable donations. What portion of your school’s revenue is supplied by philanthropy each year? Considering most endowments were built primarily from philanthropy, let’s also include the annual draw your school enjoys from this important source. Could your school use more? Could your constituents give more?

The short answer to both questions is, probably, yes. But paucity of fundraising strategy hampers even some of the best school fundraising programs. What keeps schools from developing the strategies that are so vital to fundraising success? One simple and common obstacle is ambiguity about who should be setting fundraising strategy. Is it the board? The head? The advancement director? It should be a combined responsibility between governing and operational leaders, who typically share the desire to work smarter, not harder, in the school’s fundraising efforts.

Another challenge is the dearth of school leaders who are sufficiently expert in fundraising to suggest that additional or alternate strategy is needed—let alone to devise it. Unless they have served as an advancement professional in a high-caliber fundraising program, few trustees or heads understand what it takes to move fundraising needles. There are also many school advancement leaders who lack strong professional training or experience. For fundraising to be successful, board chairs, development committee chairs, heads of school, and advancement leaders must become fluent enough in fundraising best practices to set strategic direction.

A final stumbling block lies in the constant tension between performing urgent versus important fundraising planning. Many schools live on a hamster wheel of special events, giving days, and spray-and-pray solicitations, feeling unable and unwilling to step off long enough to think critically about strategy. Rather, they go from goals to tactics with nary a discussion about the road map that must guide their actions in order to achieve their philanthropic aspirations. When schools and school leaders put time and effort into developing clear and consistent fundraising strategy, the results are invariably better.

What will it take for fundraising to become part of the fabric of schools’ success? Like most positive and sustainable outcomes in schools, strong fundraising requires thoughtfulness, labor, and discipline. Successful fundraising demands strategy at its core, which helps lay a philanthropic foundation unique to your school, its culture, and your donors and prospective donors. Understanding some key principles can help ensure more strategic fundraising.

Philanthropy Fuels Dreams, Not Needs

The first step in changing the fundraising dynamic at your school is to reorient your own and others’ thinking about the purpose of fundraising. Make peace with the fact that your school could, most likely, survive on tuition revenue alone. It would not be the school you want it to be nor very appealing to the best and brightest students, but it would survive. Then take off your “I have a budget to fill and think I can find a donor for it” hat, and look up at the sky. What is your bold vision for the school, students, and faculty? Successful fundraising begins with audacious ambition.

Plan your fundraising strategy around the notion that your purpose is to ensure a better school 10, 20, and 30 years from now: The schools with the strongest and most enduring philanthropic cultures invite their constituents not to fix problems but to fund dreams. Start by ensuring that the school’s aspirations are compelling to prospective donors. Then position philanthropic support as an essential factor in achieving those aspirations. Finally, give yourself and the advancement staff the permission to step back and consider the overarching challenges that prevent you from being more successful at fundraising. For example, many schools I’ve worked with say they’re unable to raise more in contributions because “We don’t have a culture of philanthropy” or “Parents and alumni don’t understand where their gift goes.” If you want change, you will have to stop sending the same annual giving appeals while expecting a different result and pause long enough to remove the underlying obstacles to fundraising success.

The largest philanthropic gifts are typically made to schools that articulate a courageous plan for improving programs and the experiences of people. Philanthropy is part intellectual but primarily emotional. Prospective donors need to understand how their gift will be used, yes, but they want to be inspired to make it. If you invite your donors to share your dreams, it’s more likely they will invest in them.

Analysis Should Inform Fundraising

Starting my advancement career as an annual giving director sparked my interest in analyzing data. Every year on July 1, I woke up thinking, “OK, now I have to do that all over again—but raise more in the coming year! Where will it come from?” But it wasn’t only on this first day of a new fiscal year that I asked myself this question. Throughout the year, I was tracking and analyzing our results to discern trends and guide tactics, which sometimes needed to be amended midstream. But in my consulting work I see few school advancement programs with a data-driven ethos. If you don’t know how you’re doing—and why—how can you possibly perform better?

To make significant and lasting gains, a fundraising program must have a disciplined, analytical approach to measuring outcomes and using data to inform strategy. A key element of a data-driven culture is understanding that there is a science to fundraising. Informed by the most successful programs in all sectors—higher education, schools, arts and culture, social services, and others—as well as decades of research, fundraising best practices have emerged. If the board, head of school, or even advancement staff members are not knowledgeable about the strategies and tactics that support strong fundraising, it’s critical to invest effort and financial resources in this area—attending trainings and conferences, seeking out mentors in the field, and hiring fundraising counsel. Sheer force of will and relentless diligence, while admirable, are not enough to yield stronger results. Demonstrating your strategy through better fundraising will also boost confidence among your school’s donors and prospective donors, who likely support other institutions and organizations that deploy best practices and stay current with philanthropic trends.

To create a data-driven culture for your fundraising program, start first with analyzing your own school’s results. I often meet trustees, heads, and even advancement professionals who have become mired in, if not obsessed with, benchmarking against “peer schools.” I advise against using benchmarking as the sole framework for data analysis, as it is rarely helpful in improving your school’s fundraising efforts. Whether the school across town has higher or lower alumni participation is largely meaningless to improving the number of alumni donors your school acquires, retains, and upgrades on an annual basis. And just because a school of your type, size, and constituency in another city has a successful house tour fundraising event doesn’t make it right for you. Comparing your school’s results to those achieved by a different program, in a different school, with a different prospect pool, and with a different philanthropic culture isn’t just unfair; it’s irrelevant. Focus on analyzing fundraising trends at your own school, which the advancement office should be able to produce. If not, that points to a need for more training.

Boards are the Bellwethers

According to DASL, in the past 10 years, the median capital gift from NAIS school trustees has increased 64% (from $17,810 in 2009–2010 to $29,225 in 2019–2020), and the median trustee annual fund contribution has grown by 34% (from $4,035 to $5,424). Despite this growth, many boards lack understanding about the role they must play—in both giving and volunteering—to ensure fundraising success. One of the recurring lessons I find myself teaching trustees is that their fundraising aspirations for the school must align with their collective and individual commitment to philanthropy. If the board approves, say, a $50 million campaign goal, it should be ready to ensure the success of the campaign. Most boards agree in concept, but many don’t make clear what ensuring success actually looks like. Too frequently I encounter boards that set fundraising goals without having a frank conversation among the trustees about the philanthropic leadership and volunteerism required to achieve the goal.

Strengthening the board’s philanthropic support and hands-on involvement in cultivating and soliciting the school’s best prospects requires transparency and candor with current and—most important—prospective trustees. As a group and as individuals, trustees set both the example and the pace for the rest of the school community by demonstrating their financial commitment to ensuring the school’s success and their alacrity for asking peers to join them in contributing. In high-achieving fundraising programs, the board typically contributes 20% to 30% of the annual fund and 30% to 40% of a campaign goal. And increasingly, principal and leadership donors are asking, in advance of making their own commitments, how much the board has contributed. Understanding and effectively deploying the powerful influence of the board’s philanthropic example-setting is a critical part of good fundraising strategy.

Don’t assume that a board with a strong culture of giving and fundraising has to sacrifice other goals for its composition. As schools increasingly reflect our broader society, many boards are committed—now more than ever—to constituting themselves in alignment with the diverse and inclusive community they are or aspire to be. This goal, combined with the age-old need for particular skills—financial or legal expertise, for example—is not mutually exclusive with ambitious fundraising. To imply that it is reinforces stereotypes we must cast aside. When assembling a board of trustees, fundraising strategy must be a consideration.

Donors Desire Partnership

Gone are the days when schools could rely solely on constituents’ sense of noblesse oblige, the questionable “appeal” of supporting the unrestricted operating budget or tuition gap, and requests to help the school meet its fundraising goals and deadlines. As revealed in NAIS’s Jobs-to-Be-Done (JTBD) research about why donors give to independent schools, today’s donors demand that schools offer opportunities to make a meaningful impact, create new programs, and continue or improve the student educational experience. (For an in-depth look at the JTBD research, the three Jobs, and practical applications, see “Match Point” on page 60.) In other words, donors want to drive their own philanthropic experience. Schools need to hand them the keys.

To make fundraising as important to your donors as it is to the school, donors should play the starring—or at least an equal—role in the philanthropic process. Taking a donor-centered approach, however, requires abandoning the traditional, transactional fundraising style that enables many schools to get by. It might be challenging to adopt an alternative mindset, because doing so often requires more planning from advancement staff, more time from school leaders, and more financial resources. But investing in these areas helps schools forge meaningful partnerships with large donors. National trends show increasing dollars from a decreasing number of donors, which points to the importance of major gifts work in our schools. Schools that set fundraising strategy around a robust major and planned gifts program—that continues even between campaigns—maximize their fundraising potential.

When donors feel like partners, when they feel supported in matching their philanthropic passions with the fundraising priorities of the school, the relationship is fulfilling for both donor and school. Presenting prospective donors with opportunities to make a difference through their philanthropic decision-making leads to better outcomes than incessantly and indiscriminately petitioning them for money, which only reinforces a transactional relationship that can lead to increased or inappropriate donor demands. Schools that ensure that their fundraising strategy, particularly in major gifts work, employs a donor-centered approach typically yield stronger results and strengthen, rather than erode, their culture of philanthropy.

As school leaders strive to increase affordability, augment programs, and compensate faculty more fairly, it’s understandable that the challenges of the here-and-now often take precedence over long-term planning. But today and in the future, schools that create and employ a fundraising strategy built on bold vision, data analysis, board leadership, and a donor-centered culture will accelerate philanthropic support and sustain it with permanence.

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About the author

Elizabeth Kolb Farr

Senior Vice President

Elizabeth Kolb Farr, Senior Vice President, joined the firm in 2017 and in 2021 was named Practice Area Leader for GG+A’s Independent Schools Practice Area. Liz serves the firm’s independent school and higher education clients, supporting them in identifying and seizing opportunities for fundraising growth. She holds particular expertise in…