BEYOND FUNDRAISING: A CULTURE OF PHILANTHROPHY Necva Ozgur, M.ED nozgur@meritcenter.org

OUTLINE FUNDRAISING FACTS AND FIGURES FUNDRAISING, DEVELOPMENT, AND PHILANTHROPY DEFINED CREATING A CULTURE OF PHILANTHROPY THE ROLE OF BOARDS IN MAINTAINING FINANCIAL STABILITY & DEVELOPMENT DONOR DEVELOPMENT PROCESS THINGS YOU NEED TO KNOW BEFORE YOU ASK FOR DONATIONS

PART I FUNDRAISING FACTS AND FIGURES

NONPROFIT FUNDRAISING FACTS How much charitable gifts were given in the United States in 2012? $316 Billion Sources 72% Individuals 15% Foundations 7% Bequests 6% Corporations According to 2012 Giving USA Foundation and compiled by The Center on Philanthropy at Indiana University.

WHERE CONTRIBUTIONS WENT: 32% Religious Institutions 13% Educational Institutions 13% Human Services 10% Foundations 9% Health 7% Public-Society Benefit 6% International Affairs 5% Arts, Culture, Humanities 3% Environment/Animals 2% Unallocated 1% Individuals

WHAT DID WE LEARN? There is plenty of money. We need to focus our time, energy and resources Learn from successful organizations Learn the latest strategies Two top categories are Religion and Education; Islamic Schools fit in both

INDIVIDUALS ARE THE TARGET 72% of contributions to charitable organizations each year comes from individuals rather than foundations or corporations. One-to-one asks are the most effective way of soliciting funds.

PART II FUNDRAISING, DEVELOPMENT, AND PHILANTHROPY DEFINED

“Fund-raising is going around with a begging bowl, asking for money because the need is so great. Development is creating a constituency, which supports the institution because it deserves it.” Peter Drucker

PHILANTHROPHY DEVELOPMENT FUNDRAISING

FUNDRAISING, DEVELOPMENT AND PHILANTHROPY These three elements are interdependent and somewhat circular. Successful fundraising is an outcome of philanthropy and development. Philanthropy and development, which require healthy nonprofit institutions in order to thrive, are dependent on the success of fundraising.

A PARADIGM SHIFT The three part model of the interrelationship of philanthropy, development and fundraising is powerful and it works. Successful implementation of the three-part model occurs when its elements are integrated into a unified and seamless program. Values-based relationship building in an organization is based on a belief that prospective funders move from a basic belief in philanthropy to engagement with organizations through development to a need to act on their shared values through fundraising.

BEYOND FUNDRAISING PHILANTHROPHY Philanthropic behavior is motivated by values. People do not engage in philanthropic activities on behalf of organizations whose values they do not share. The match between the values of our organizations and the values of our constituencies predicts the success of fundraising.

DEFINITION OF PHILANTHROPHY A love of humankind and a voluntary joining of resources and action for the public good. There are four core components of a culture of philanthropy: Shared responsibility for development Integration and alignment with mission A focus on fundraising as engagement Strong donor relationships

TWO KEY PREMISES IN BEYOND FUNDRAISING Nonprofit organizations exist to fulfill community need. People do not give time and money to organizations because organizations have needs, they give because organizations meet the needs of the community.

INSTITUTIONAL READINESS FOR DEVELOPMENT Clear Mission Recent Strategic Plan Board Commitment Board and Community Cultivation Effective Marketing Materials Development Plan, Goals and Timetable Adequate Staff and Volunteers

DEVELOPMENT Philanthropy is based on values, and development is the process of uncovering shared values. Development is a series of deliberate activities which involve and retain funders. To be successful at fundraising, it is important to spend a lot of time in the development process.

DEVELOPMENT Development consists of those often subtle, frequently intangible, and not immediately measurable acts that draw donors and volunteers closer to the organization. Identifying shared values Identifying donors Development practices and strategies Creating a plan Cultivating of prospects Solicitation of gifts Stewardship

THE ULTIMATE GOAL OF DEVELOPMENT IS FRIEND-RAISING The goal of development is to attract people and people will attract dollars. The main goal is to cultivate personal, fulfilling, and lasting relationships with people. Dollars are the result, not the goal of development.

PART III CREATING A CULTURE OF PHILANTHROPY

CULTURE OF PHILANTHROPHY A culture of philanthropy is one in which everyone—board, staff and executive director—has a part to play in raising resources for the organization. It’s about relationships, not just money. It’s as much about keeping donors as acquiring new ones and seeing them as having more than just money to bring to the table. It’s a culture in which fund development is a valued and mission-aligned component of everything the organization does.

That’s why it’s important to start embedding Building a culture of philanthropy is important even for organizations that may believe they are doing fine when it comes to fundraising. Most of the fundraising success stems from the current leader’s charisma. Unfortunately, leaders come and go. And donors lose interest. That’s why it’s important to start embedding a culture of philanthropy deeper into the organization. Peter Wilderotter-Development Director

QUIZ FUNDRAISING-WHOSE JOB IS IT? Development Committee Development Director Principal Board

FOUR COMPONENTS OF PHILANTHROPHY 1. Shared responsibility for development 2. Integration and alignment with mission 3. A focus on fundraising as engagement 4. Strong donor relationships

#1 SHARED RESPONSIBILITY FOR DEVELOPMENT In organizations with a culture of philanthropy, fundraising isn’t just one person’s job or the job of one department or board committee. Everyone—staff , executive director, constituents, board and volunteers—shares responsibility for fund development.

#2 INTEGRATION AND ALIGNMENT WITH MISSION In organizations with a culture of philanthropy, fund development is a value and mission-aligned component of the organization’s overall work, rather than a standalone function.

COMMITMENT TO THE MISSION Commitment to the mission is the core of good management and is the heart of effective development and fundraising. It must be continually validated and carefully protected. The leadership imperative for nonprofit leaders is to prevent mission drift.

#3 A FOCUS ON FUNDRAISING AS ENGAGEMENT In organizations with a culture of philanthropy, fund development is no longer separated from engagement. This reflects the fact that people today are connecting with nonprofits via multiple channels (e.g., social media, volunteering, blogs, meet ups, petitions).

#4 STRONG DONOR RELATIONSHIPS In organizations with a culture of philanthropy, donors are seen as partners in the work, not simply as targets or dollar signs. These organizations establish systems to build strong relationships and support donors’ connection to the work.

In a Fundraising Culture... In a Culture of Philanthropy... Development staff is responsible for revenue generation. Everyone in the organization shares some responsibility for revenue generation by building relationships with potential donors. It’s all about the money. It’s all about the relationships. Donors are contacted only when money is needed. Donors are contacted regularly with invitations to participate in activities, about how their contributions are helping. The board relegates fundraising to the development committee. The board development committee directs the participation of the entire board in fundraising. It’s about acquiring donors. It’s about keeping donors. Mission, program goals and operations are separate from revenue generation. Mission, program goals and operations are aligned with revenue generation. The organization’s leaders make decisions based on what’s available. The organization’s leaders make decisions based on what the community needs and a shared vision of how to meet that need. The community isn’t engaged. The community is intentionally engaged and participates as a partner with the organization. Development goals aren’t part of everyone’s job description. Development goals are part of everyone’s job description. The focus is on big gifts. All gifts are important.

BUILDING A CULTURE OF PHILANTHROPY Roles for Development Staff Integrate development into every staff and board meeting. Spend one-on-one time with board members, donors and others involved in the organization’s work. Get to know them individually. Find out their stories—why did they get involved? Invite donors into your organization, not just for the usual guided tours but also to attend board or staff meetings. Keep donors, staff, board, and other constituents updated on the organization’s work, progress, challenges and accomplishments, and its development efforts. Share stories of donors, the individuals whose lives have been changed by the donors’ gifts, and staff and volunteers who do the work. Use donor communications more effectively. When planning pitches and other communications, look beyond how much donors give and personalize contact with them as much as possible by considering each person’s giving history, aspirations and preferences. Celebrate success. When you reach 100% board participation or a board or staff member has brought in new donors, recognize and celebrate it.

PART IV THE ROLE OF BOARDS IN MAINTAINING FINANCIAL STABILITY & DEVELOPMENT

In a recent BoardSource study, CEOs were asked to grade their organizations’ board of directors in 10 different areas. Fundraising received the lowest score.

BOARD’S PRIMARY ROLE Set and uphold the Mission and Vision of the school Fiduciary – assuring the financial stability and sustainability of the school in the immediate and long-term Establish a strategic vision/plan for the school Hire, evaluate, & support the Head/Principal.

BOARD RESPONSIBILITIES STAFF RESPONSIBILITIES Approve annual operating budget and fundraising plan that support organization’s strategic plan Prepare fundraising plan with specific goals and objectives that link to the strategic plan and its fiscal imperatives Approve fundraising policies and procedures, in accordance with an articulated code of professional fundraising ethics Select and implement fundraising techniques aimed at building and sustaining donors and prospects. Support staff by identifying potential donors, participating in face-to-face meetings and special events, and fostering communication with donors Develop a donor cultivation and solicitation plan, including identification and qualification of prospects, recruitment and preparation of solicitation teams, and scheduling of face-to- face meetings Support organization’s fundraising efforts with a personal annual gift and/or a planned gift Handle all administrative tasks associated with fundraising, including data management, accounting, and donor recognition Monitor performance of fundraising results compared to approved goals and budget Prepare regular reports that evaluate fundraising efforts based on gifts received, costs incurred compared to costs budgeted, and other metrics meaningful to the organization Ensure funds raised are used in accordance with legal and accounting requirements and any donor restrictions Maintain stewardship of donors and their gifts by maintaining good relations and communications

ROLE OF BOARDS IN MAINTAINING FINANCIAL STABILITY One of the primary responsibilities of the board is to ensure that the organization has adequate financial resources to carry out its mission. The board approves the budget so it must be on top of how the money comes in. The board must agree on the programmatic goals, so it must also agree on how the work gets financed. If one of the ways for the organization to fulfill its obligations is to raise additional funds, then the board must commit to make this happen. Either the board raises the needed funds or it ensures that staff is equipped with the necessary skills and expertise to organize the fundraising effort. In many organizations the two go hand in hand.

FINANCIAL STABILITY - IMMEDIATE Non-profit schools rely on fundraising above and beyond tuition. On average, non-profit schools require 20% of their operating budget from sources outside of tuition and fees. The Board must actively participate in contributing towards this annual need (give and get others to give).

FINANCIAL SUSTAINABILITY – LONG TERM The Board must look ahead to the school’s long-term financial health. Strategically plan for an endowment fund that can subsidize the school. National average endowment for long-standing independent schools are: $22K per student: 200 students = $4.4Million

ESTABLISHING GUIDELINES & POLICIES Fundraising guidelines Gift acceptance policy Donor recognition policy

TYPICAL TRUSTEE COMMENTS I’ll do anything except raise money I give my time that should be enough I don’t know people who can make big gifts No one told me I’d have to raise money We should raise the tuition instead of asking for money We have the Development Director for fundraising

WHAT YOU CAN DO TO HELP YOUR ORGANIZATION FUNDRAISE? Make a personal contribution to the best of your ability Speak frequently and positively about your organization Understand and endorse projects and support the fundraising efforts Identify and cultivate prospects, provide names and addresses Contact prospects personally by phone Open the door for solicitations or make an ask Accompany staff on solicitation/cultivation visits Personally thank donors for their gifts and keep in touch with them Drop a personal note to lapsed donors Monitor progress

TAKING EVERY OPPORTUNITY TO MARKET THE SCHOOL TO OTHERS Hello. My name is __________. I am a trustee at__________ ___________________________________________________ Insert an agreed upon standard message Insert a short personal story that represents what makes your school meaningful to you (BE SPECIFIC)

PROVIDE TRAINING Enthusiasm and motivation about fundraising is good but not enough, since very few people are trained in fundraising. We need to empower our board members and volunteers by offering training on “Fundraising Strategies” so we can maximize their efforts. The board members and development office volunteers also need to be trained in the following areas: What is the mission of the organization? What are we trying to accomplish? What makes our organization special? What has our organization so far achieved? Why does our organization need money? Why is tuition alone not enough? How much money does our organization need to raise? Who supports our organization now?

FUNDRAISING MATERIALS: TOOL KIT Tool Kit: We need to have an information packet ready. The Tool Kit will have the following information: Organization’s Mission Statement Organization’s Strategic Plan Organization’s Annual Financial Statement Organization’s Development Plan Organization’s Success Stories Testimonials Promotional & Marketing Information Fact Sheets Letters of Endorsement Facts that Make the Organization Stand Out

TRAINING SESSION REFRESHER-KICKOFFS-CAMPAIGN ORIENTATION Training sessions should be fast paced, challenging, energizing and informative: Training sessions should have three ingredients: Inspiration Information Motivation

INSPIRATION-INFORMATION-MOTIVATION Inspiration ignites, but information sustains Information builds confidence in volunteers and staff and they get motivated It is important to engage the heart, it is just as important to satisfy the left-brain needs of those who will ask, or be asked, for support. Key Talking Points: Statistics, financial as well as program materials, visual aids, budget annual reports, campaign reports, fact sheets.

MUNIRA’S STORY

PART V DONOR DEVELOPMENT PROCESS

DONOR DEVELOPMENT PROCESS 1 Identification 2 Research 3 Planning 4 Cultivation 5 Solicitation 6 Steward ship 7 Renewal DONOR DEVELOPMENT PROCESS

1. IDENTIFY Identifying potential prospects for initial or major gifts is an easy aspect of development. At every board meeting provide an opportunity for identification. “Since our last meeting, I have met the following individuals or heard about the following foundations who share our values and might be interested in our work.”

CREATING A KEY PROSPECT LIST Tier One includes prospects about whom a great deal is known and with whom there is already a relationship Tier Two comprises those individuals who need more cultivation. These are prospects who need more connection to the organization. Tier Three, these are people whose capacity is known because of their position. They may require more research, and certainly will need cultivation.

IDENTIFYING THE NEED Work closely with the principal and the board to know what is needed to close the year with a balanced budget Formula for determining the needs to be raised annually: Annual income = Tuition x Number of students + Other income Annual expenses = List of all the expenses for the year Annual fundraising amount = Annual expenses - Annual income Example: Annual expenses: $ 1,300,000 Annual income: $5000 X 180 = 900,000 + $100,000 = $ 1,000,000 Annual fundraising amount: $1,300,000 - $1,000,000 Annual fundraising amount: $300,000

2. RESEARCH Prospect Research is a technique used by fundraisers, development teams, and nonprofit organizations to learn more: Donors’ personal backgrounds Past giving histories Wealth indicators Philanthropic motivations Evaluate a prospect’s ability to give (capacity), and warmth (affinity) towards an organization.

3. PLANNING DEVELOPMENT PLAN Step1: Form the Committee Step 2: Identify the Need Step 3: Provide Training Step 4: Create Fundraising Materials—Tool Kit Step 5: Identify and Expand the Donor Base Step 6: Identify Fundraising Activities Step 7: Recognize Donors Step 8: Establish a Database Step 9: Monitor the Plan and Reporting Step 10: Establish Development Guidelines and Policies

4. CULTIVATION Cultivation is a strategic, disciplined, time-sensitive, focused and continual interaction with individuals. This is a method you will use to build a long-term relationship with the donor before you ask for their gift. Invite the prospects to Friend Raising Events and after any kind of event, a follow-up plan ensures a stronger connection with those who attended. Good follow-up techniques include immediate addition of names to the mailing list, thank you notes and personal phone calls. Providing information and sending the organization’s newsletter are effective way to cultivate prospects.

WAYS TO ENGAGE AND CULTIVATE Send an article of interest about something happening on campus with a personal note. Invite them to events and lectures that reflect their interests, or to a small dinner with a speaker. Invite them to lunch on campus with a tour of the facility. Set up a meeting for the prospect to meet a faculty member, student, dean, president, etc. Feature them in a publication. Invite them to come speak to student groups. Invite them to serve on a scholarship selection committee

5. SOLICITATION-MAKING THE ASK If the previous four steps have been well planned and implemented, this step will follow naturally. As relationships develop, the thought of asking for gifts becomes less troublesome. Be specific about what is wanted and describe the results that gift will have.

CASE STATEMENT Every fundraising campaign has a case statement at its center. Your case statement sets out the argument for supporting your cause. We often refer to this document as a "case for support.”

WE NEED YOUR HELP! Cost to educate far exceeds our tuition $836K Cost to educate our children $1,025K

MASTERFUL SOLICITORS They are always well prepared, but never seem rehearsed. Because they are well prepared, they anticipate and are able to respond to unexpected objections. Excellent listeners. They support the organization. They have made their own gift before asking anyone else to invest. Focused on the purpose of their meeting, they get right to the point after a minimum of small talk. They become so familiar with the steps in the solicitation that the process appears seamless.

SOLICITATION STEPS 1.Make the appointment 2. Plan the solicitation carefully 3. Coach 4. Gather and go, meet and greet 5. Engage the prospect 6. State the case 7. Invite the investment 8. Keep the silence 9. Work with the prospect’s answer and close 10. Follow-up

RECOGNITION Find out if and how the person would like to be recognized. Some individuals prefer not to have a public recognition. Respect that but send a personal handwritten thank you note.

6. STEWARDSHIP THE HEART OF DEVELOPMENT Stewardship – maintaining and evolving long-term relationships with donors. Stewardship can be viewed as cultivation after the fact. Effective stewardship Strengthens the donor/institution relationship Helps donors continue to feel good about giving Is a return on investment for the donor Provides continuing communication between the donor and the institution Is tied to the mission of the organization

WAYS TO STEWARD Handwritten note Phone call from staff, President and/or Trustee Greeting cards (birthday, sympathy etc.) Quarterly President’s Report Magazine and Annual Report Video/DVD Personal meetings Publicity Naming ceremonies Invitations to campus events Written report of endowment Token of appreciation

7. RENEWAL Donors usually like to renew their investment if they feel the gift has made an impact. Renewal is not just renewal of the gift: It is renewal of the relationship. Donors, if treated like partners with the organization in meeting community needs, will want to reinvest.

CHECKLIST FOR VISIT TO PROSPECT The Homework Know the case Know your prospect Make an appointment convenient for the prospect Rehearse the conversation The Visit The introduction The organization update The case The fundraising update The gift request The closure The Follow-up Send a letter of thanks

SCENARIO The School has a desire to build a science lab costing $250,000. The school has identified a grandparent who has the capacity to give the gift in total, but she has never given a gift over $20,000. The grandmother ‘likes’ the school, but has never been involved outside of attending the gala. Identify (done) Research (what questions to ask?) Planning (who, how much?) Cultivation (is this necessary?) Solicitation (who should be in the room, what is each person’s role?) Stewardship

PART VI THINGS YOU NEED TO KNOW BEFORE YOU ASK FOR DONATIONS

TEN REASONS WHY PEOPLE GIVE They are involved in the organization or the cause Representative from the organization really listen to them Emotions are stirred or their hearts are touched They are confident that contributions are used wisely Someone they know and respect asks them to give They understand that their gift will really make a difference They are clear about the organization’s need for resources They support the mission and want to go forward They receive appropriate recognition for the gift They feel good donating to a deserving charity that produces results

SEVEN REASONS PEOPLE FAIL TO GIVE Solicitation came infrequently or poorly Information was lacking about the difference their gift made They never felt wanted or needed The organization did not ask their opinions or include them in plans or programs No one asked them to give again or consider giving more They received no direct, personalized appeal by someone excited about the organization’s accomplishments They gave in the past and their gift went unacknowledged

SIX ESSENTIALS TO OVERCOME THE FEAR OF REJECTION Understand the importance of the need the organization is meeting and the impact a gift will have Feel passion for the organization or project Have adequate information about the organization to feel capable of handling objections Have been given enough information about the prospect to feel knowledgeable about interests and concerns Received effective training and coaching in how to ask Were supported by staff or volunteer leadership with tools including appropriate materials, research and resources

EVALUATION CRITERIA FOR VALUE OF EACH FUNDRAISER COST EFFECTIVE: Did the fundraiser produce an income commensurate with the involvement of time and effort of the staff and volunteers? FREQUENCY: How many are held? Are there so many that organization supporters are frustrated? STAFF TIME: How much quality time do fundraisers consume by the faculty, office, organization board and administrators? ORGANIZATION IMAGE: Do the constituents of the organization perceive the organization as always selling something and asking for money?

RECOGNIZE & APPRECIATE DONORS & VOLUNTEERS Donor Recognition Policy Publish an annual report to acknowledge even the small contributions Invite all $10,000 and above donors to a dinner Invite all volunteers to an appreciation dinner Send a letter from the principal to major donors on the use of their gifts

IDENTIFYING FUNDRAISING ACTIVITIES Fundraising events focus on both cultivating and soliciting individuals. 1. Friend-raising Events: Cultivation-Point of Entry Any event throughout the year even if there isn’t an “ask”should be considered as friend-raising 2. Fund-raising Events: Solicitation-Ask One or two fund-raising events annually

FUND DEVELOPMENT ACTIVITY TYPES Annual Funds (immediate needs) Special Events (immediate needs) Grants (immediate needs) Capital Campaigns (physical building) Endowment Campaigns (long-term needs) Planned Giving (long-term needs)

HOW DO WE CURRENTLY FUNDRAISE? SPECIAL EVENTS Most people consider events as the best way of fundraising because it is less threatening to ask someone to buy a ticket than give a contribution. In actuality, events have shown to be the least effective fundraising method. Problems associated with events: Associated Costs (can exceed 50% of revenue) Consuming of time and resources Burnout (volunteers and attendees)

SPECIAL EVENTS Reasons for an event: Board’s Role in Events Calling attention to your organization Celebration of the school and its accomplishments Educating and inspiring current leaders and donors Attracting new potential leaders Uncovering hidden constituents Board’s Role in Events Buy a table Invite and encourage people’s attendance Host the event

RESOURCES This presentation is based on the following book and article: BEYOND FUNDRAISING: NEW STRATEGIES FOR NONPROFIT INNOVATION AND INVESTMENT By Kay Sprinkle Grace BEYOND FUNDRAISING: WHAT DOES IT MEAN TO BUILD A CULTURE OF PHILANTHROPY? By Cynthia M. Gibson