Lecture 3 – What Fundraising Funds Lets explore why organizations raise money (i.e. answer the questions: what is fundraising going to fund?). Learning Objectives: Understanding of the three basic targets for philanthropy Understanding how philanthropy supports the organizations mission Apply personal case assignments to the classroom lessons

Lecture 3 – What Fundraising Funds Personal Case Discussion Hand in assignments Questions Challenges

Lecture 3 – What Fundraising Funds The Planning Process will undercover funding needs of the organization In order to design a development plan and implement a program, it is important to work with the finance office (and other departments) in order to prioritize the organization’s funding needs. E.g. if your organization requires $150,000 of operating support each year, a gift of $250,000 for the endowment is not going to add value Organization’s generally raising money to fund: General Operating Expense Capital Needs Endowment

Lecture 3 – What Fundraising Funds General Operating Expenses Pay for the expenses that carry out the mission of the organization Can be programs, can be salaries, can be services Also referred to “General Fund” or “Unrestricted Donations” Stigmatized Interesting Parody: Organizations mostly need General Operating contributions, but they are the hardest to solicit/acquire due to: Increasing trend of donors wanting ownership Overall negative stigma of “paying for administrator’s salaries” Difficult to marketing/report outcomes Sustainability (will need again next year)

Lecture 3 – What Fundraising Funds General Operating Expenses (continued) Are recruited through: Fundraising Events Direct Mail Appeals Corporate Sponsorships Internet Giving Grants (…however, requires some creativity) Planned Gifts (e.g. bequests) The task in recruiting philanthropy revenue to support General Operating Expenses is finding a component (or components) in your organizational budget where the impact of the gift can be measured. E.g.: Aftercare Program, Charity Care, …

Lecture 3 – What Fundraising Funds Capital Expenses “Brick and Mortar” New Buildings, wings, major renovations (that result in expanded or enhanced capacity) Large pieces of equipment E.g.: MRI, DaVinci Robot, TMS Chair, Van/Delivery Vehicle Donations to fund capital expenses are recruited through: Grants (foundations/government) Corporate Gifts Individual Major Gifts

Lecture 3 – What Fundraising Funds Capital Expenses (continued) Contra to General Operating Expenses, it is easier to recruit philanthropy revenue to support Capital Expenses because: The project timeline is finite It can be measured (you build it, order it, install it) Appeals to wider masses (due to: naming opportunities, committee work,...emotion) Its easier to recruit large gifts for capital since the overall project is also large Multi-year pledges The impact to the organization’s financial position – a bona fide revenue stream that can be leveraged! A Capital Campaign is a specific fundraising initiative that occur over a period of years to raise a predetermined goal Both timeframes and monetary goals of Capital Campaigns are both trending upward

Lecture 3 – What Fundraising Funds Endowment: According to the AFP Dictionary – is a permanently restricted net asset, the principal of which is protected and the income from which may be spent and is controlled by either the donor’s restrictions or the organization’s governing board. Many organizations have an endowment that provides revenue to support operations or a specific program Prominent in Academic Setting with growing popularity in Healthcare settings e.g. Endowed Chair – The revenue earned from the fund is used to pay the salary (or specifics mentioned in the endowment policy associated with that endowment)

Lecture 3 – What Fundraising Funds Endowment (continued) Endowment Policies provide the details of the administration (and often the investment) of the endowment 4% of interest earned from the ABC endowment goes to support the salary of the Chief of ABC. Any additional earnings above 4% will be reinvested into the ABC endowment The endowment will be invested in portfolio comprised of 40% stocks 60% bonds ADVANCED: policies should consider the mission of the organization Are recruited through Planned Gifts (mainly bequests) Major Gifts (primarily from Individuals) Special Campaigns (major, regular individual giving, events) Endowment funding is generally never recruited from Foundations or Corporations

Lecture 3 – What Fundraising Funds In Class Assignment: What does your organization fundraise for? What is the % or $ amount expected (or raised) for: General Operating Support Capital Needs Endowment Get actual numbers from the most recent completed fiscal year and the year prior (for comparison) Note: might be able to get from annual reports; may need to contact someone (let them know you are a student – it will make the conversation easier)