Essentials of a Well-Planned Annual Fund: Hope Is Not a Strategy

Essentials of a Well-Planned Annual Fund: Hope Is Not a Strategy

In my decade of leading annual funds, July 1 was always the day I felt the most overwhelmed and the most optimistic. Having just completed one annual giving campaign, I had one night’s sleep before I had to turn my attention to outdoing myself in the next one. It was both daunting and exciting.

Realizing that the same methods employed in the past year would need to be bolstered, improved, expanded, or even reinvented gave me the opportunity to take a great annual giving program and make it even better. Over the years, I learned there are some crucial ingredients to the annual giving “secret sauce” that help any program maintain and increase its annual giving revenue. I’ve outlined how I encourage my clients to approach those ingredients below.

Clarify the case for support

A case for support? For the annual fund? Isn’t that as simple as explaining the gap between tuition revenue and operating expenses? Please, no. Expressing a clear, compelling annual fund case for support is important to sustaining and growing this vital source of philanthropic revenue for your school. Despite its importance, the annual giving case is an area where I see many schools fall short.

The annual fund is an essential operating budget revenue stream, but that shouldn’t be the focus of your case. Instead, the case should highlight how annual giving donors help the school attract and retain top-notch faculty; devise and implement cutting-edge programs; defray tuition expenses for children who could not otherwise attend; and more. As a favorite head of school of mine says, “The annual fund allows us to make choices rather than compromises,” which is a succinct way of explaining that annual giving is essential to being the school we want to be.

If your annual fund case hasn’t been clear or compelling, spend time improving it. Your donors want and need to understand why your school is worthy of their support—especially when myriad other nonprofits are vying for their attention and contributions. Illustrate the ways in which annual giving support makes a tangible impact on the school by affecting people and programs positively. It can be tempting to tout the ways that the annual fund has helped the school make pandemic-related accommodations, but I urge you to avoid tying gifts to those outcomes. Why? Because a key marker of an annual fund gift is that it is repeatable. Your annual fund was important before the COVID-19 pandemic, and it will continue to be important well into the future.

Refine or create your annual fund gift table

When we plan a capital campaign, we chart a path for goal attainment by devising a gift table of prospects at various bands, anticipating that we will need to ask three or four times as many prospects for a gift at a particular level in order to secure such a gift.

Unfortunately, I encounter many schools that, despite using this methodology during campaigns, do not apply this practice to the annual fund. Rather, they adopt a spray-and-pray approach predicated on the flawed belief that “If we just keep asking, people will give.” If you’ve used this approach to meet your annual fund goals in the past, your annual fund is probably underperforming. If you want it to perform better, you need to focus more intentionally on top prospects.

Develop a gift table for your annual fund. Devise a plan that will ensure you meet the goal by focusing on the top 10 percent to 20 percent of your prospects and seeking as many increased gifts as possible. When targeting top prospects—with a specific ask amount, please—consider the reason the donor should make a gift, especially an increased gift, at that level. Has the donor just joined the Board? Is it a reunion year? His or her child’s final year in the school? Weigh these factors when targeting anyone in your top 10 percent to 20 percent of prospective donors, and more if you can manage it. Once your targeting is complete, use it to make projections. Are you likely to reach the annual giving goal? If not, the time to share that news with the Head and Chief Financial Officer is now, not later.

Segment like the fund depends on it

If you don’t want your donors thinking of the annual fund as a “black hole,” don’t treat it like one.

A singular, bland message communicated indiscriminately to everyone is unlikely to appeal—figuratively and literally—to the donor’s desire to make an impact on your school. Segmenting your annual giving appeals by ask amount, constituency, class year (alumna/us or parent), and past giving (or lack thereof) is essential for a donor-centric solicitation experience.

Timing is vital as well. Many schools kick off the annual fund year by soliciting constituents in more or less the same order: faculty, trustees, parents, alumni, grandparents, and so on. Who says that appeals must go out in this order? Not I! Think carefully about when to solicit particular constituencies. I preferred soliciting leadership prospects right after the fall stewardship event, parents immediately following the affirming experience of back-to-school-nights, alumni just after they were engaged by the fall’s first e-newsletter. The key is soliciting when the moment is right for donors.

Lean on your board

When they join the Board, trustees accept both a governing and fiduciary role at your school. Reviewing the financials regularly, many trustees ask, “Can we do better in annual giving?” Typically the answer is “Yes,” and it should start with them.

As fundraisers, we should always ask our Board to step up, show its collective and individual leadership, and demonstrate publicly its belief in your school. This means talking about the case for support with their peers and advocating for the important role that philanthropy plays in ensuring the school is great, instead of merely good. And while achieving 100 percent participation in annual giving from trustees is nice, Board members should engage in sacrificial and pace-setting giving.

High-performing annual funds typically receive 20 percent to 25 percent of the overall total from trustees. If your Board is already meeting this benchmark, highlight it and perhaps ask them to do even more. If your Board isn’t meeting this benchmark, there is no time like the present to call upon them for increased support.

Hope is not a strategy

Finally, an annual fund operating plan is a key component of any well-run campaign. Planning deliberately, proactively, and thoughtfully is essential to ensuring that you take the important steps to achieving campaign goals.

Build your operating plan around educating donors about the annual fund case for support; achieving growth in leadership giving; retaining, upgrading, and acquiring donors; and stewarding the donors who make your annual fund successful. Do not get overly distracted by participation rates (they don’t pay bills), giving day gimmicks (if giving is just a game, you erode its importance), and perfecting passive solicitations like mass emails (people give to people).

Devise your plan based on the tactics that you know will help you achieve annual giving success and then, please, cleave to that plan as though, well, your annual fund depends on it. It’s likely it does.

If you need assistance developing your annual fund strategy, contact Liz Farr at efarr@grenzglier.com.

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About the author

Elizabeth Kolb Farr

Senior Vice President and Independent Schools Practice Leader

Elizabeth Kolb Farr, Senior Vice President, joined GG+A in 2017 and, in 2021, assumed leadership of the firm’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 instituting and orchestrating…