Current Trends in Fund-Raising

By Jerry F. Smith, CFRE

The following is a list of what we at the J.F. Smith Group believe is “IN” and what we believe is “OUT” as it relates to raising money in today’s competitive environment.

What’s In	What’s Out
Leadership Phase Opportunity Facilitator Staff Driven Major Gifts Outright Gift Online Giving Prospect Screening Working Goal	Quiet Phase Need Fund-Raiser Volunteer Driven Events Endowment Direct Mail Prospect Rating Tentative Goal

Leadership Phase vs. Quiet Phase - There is no such thing as a quiet phase anymore.  When you begin a feasibility study and capital campaign, nearly everyone at your school or organization has heard about your plans.  Quiet phase used to refer to “let’s see if the campaign is going to be successful, before we announce,” this term does not describe what happens during this stage of the campaign.  However, this phase of the campaign is best described as the LEADERSHIP PHASE, because that is exactly who you are soliciting at this stage.  Remember, you conduct campaigns Top to Bottom.

Opportunity vs. Need - Individuals, companies, and foundations give to OPPORTUNITIES, not needs.  Regardless of your perceived “needs” do not use that word.  Talk to your prospective donors about investing in the future of your school or organization.  Opportunities signify that you, as a prospective donor, can make great things happen with your gift.

Staff Driven vs. Volunteer Driven - I do not like volunteers because most volunteers would rather do anything than ask for money.  Therefore, if you are to be successful with your campaign effort, you need to be STAFF  DRIVEN.   If you recruit 10 volunteers and two actually do what they say they will do, consider that a success.  Volunteers can work the lower level prospects.  Volunteer solicited gifts are “icing on the cake;” they do not necessarily help the campaign reach its goal.

Major Gifts vs. Events - If you want to raise private support, you have to focus on MAJOR GIFTS.  Events are a great way to involve volunteers and identify prospects, but events will not raise the amount of money that will make a significant difference at your school or organization.  Normally the cost of events is 50 cents for every dollar raised.  The cost of major gift fund-raising is about 10 cents for every dollar raised. There is private support out there for major gift giving. Consider the following statistics.  In 1954 giving was approximately $5.4 billion to support 500,000 organizations and institutions.  Fifty years later $248 billion is being given to 1.4 million charitable organizations.

Outright vs. Endowment - Over the last several years, it has become evident that charitable organizations need “spendable” or outright gifts to fund their programs, rather than trying to survive on endowment income.  I am not saying endowments are not good for the long term future of the organization.  But if a donor gives your organization $1 million dollars to spend where you and your board think it is most needed, I’m sure most boards would not put this in their endowment account, which would only generate about $50,000 per year, based on a 5 percent return.  Donors today also want to see immediate results from their gifts, not delayed gratification you get when you make an endowment gift.

Facilitator vs. Fundraiser - I believe today’s fund-raiser is best described as a FACILITATOR, someone who is making contact with a pre-qualified prospect and cultivating that prospect to a point where the President or Headmaster goes with the development officer to help close.  It’s important that prospects with leadership-gift  potential hear from the decision maker at your school or organization. Therefore, it is the role of the development team to facilitate this meeting so the prospect is looking the “person in charge” in the eye.  Fund-raisers need to keep their “egos” in the closet.  Trust me; you will raise more money using this approach!

Online Giving vs. Direct Mail - According to Giving USA 2005 as much as two percent of giving by individuals is done online; the average gift online was $116.  online giving will only continue to grow, and your school or organization needs to be ready to meet this growth.   Also, according to Giving USA 2005 direct mail campaigns saw declining response rates and higher average gift amounts per response. Direct mail is expensive and a response rate of 2% is considered to be exceptional.

Prospect Screening vs. Prospect Rating - Prospect Rating or Peer Review is a method we have used for years to determine the giving capability of a prospective donor.  However, the emerging electronic Prospect Screening services are providing much more reliable financial information on a person’s capability to make a leadership gift.  Wealth Engine is the company we are currently working with and they are providing our clients with information obtained from 19 different public sources.  After receiving prospect screening information, verification with knowledgeable individuals is necessary before making an “ask”.

Working Goal vs. Tentative Goal - The dictionary defines the word “tentative” as uncertain or revealing a lack of confidence.  We do not need to indicate in any way to our prospective donors that we lack confidence or are uncertain about what we are doing.  A better term to describe a goal that remains in a range during the leadership phase is a WORKING GOAL.  This term indicates we are building or moving forward to reach our ultimate or public goal.