Timothy C. Caboni

Vice Chancellor for Public AffairsProfessor of Educational Leadership and Public Policy

University of Kansas

Presentation to the Tennessee Independent Colleges and Universities Association

13-14 December 2016

Institutional Advancement

History of U.S. Educational Philanthropy

Difference between Charity and Philanthropy

• Charity - concerned with the immediate condition of individuals and connotes serving the poor

• Philanthropy - more impersonal and dispassionate approach to bettering the human condition through institutionalized giving - focused on root causes of human problems andsystematic reform

Early American Origins

• Began in 1961 - Massachusetts Bay Colony– Sent 3 clergymen back to England to raise

money to support Harvard

• This process of sending solicitors to England for college fund raising continued for almost a century

• Revolution ended this

Many Early American Institutions Named for Benefactors

• John Harvard - gave 779 pounds and a library to start Harvard

• Yale’s initial gift to Collegiate School in CT was a modest shipment of goods from England

• Nicholas Brown provided $160K to the College of Rhode Island

• Charles Tufts gave land• Henry Rutgers gave a bell and $5,000 to the trustees of

Queens College• University of Chicago stands out - John D. Rockefeller -

$600,000 gift in 1889

The Annual Alumni Fund

• First Formal Association of Graduates - Williams College - “Society of Alumni” 1821

• Oldest Alumni Fund - Brown 1823

• Oldest Public Alumni Fund - Michigan 1897

• Early imitators were: Princeton, Amherst, Dartmouth and Cornell

• 1936 Survey - fewer than half of American colleges had an annual alumni fund

4 Eras of Fund Raising

• Era of Non-specialists (1900-1919)

• Era of Fund Raising Consultants (1919-1941)

• Era of Transition (1946 - 1965)

• Era of Staff Fund Raisers (1965 - Present)

Noteworthy Trends

• Shift away from church-affiliated and individual and personal solicitation to direct institutional appeals of an organized and professional nature

• Shift from charity to philanthropy

• Fund raising plays an important role in all aspects of institutional life, rather than being limited to crises or major changes in direction

• Widespread acceptance of fund raising among state-assisted colleges and universities

THEORETICAL CONSTRUCTS

Theories of Fund Raising

• Systems Theory– Interdependence of Organizations and Their

Environments

• History of Philanthropy in the U.S.– Giving is about 2% of GDP

• Theory of the Commons (Lohmann)– Commons form to produce common goods (desirable

outcomes)

• Social Exchange Theory

Theories of Fund Raising

• Stakeholders and Boundary Spanners• Autonomy and Accountability

– Fund raising driven by institutional needs

• Resource Dependence– Diversification of funding streams (protects autonomy)

• Magic Buttons• Coorientation Theory

– Matching institution needs with donor needs (mutually beneficial)

Theories of Fund Raising

• Situational Theory of Publics (Grunig and Hunt)– Level of Involvement, Problem Recognition and Constraint

Recognition (active, aware and latent publics)

• Hierarchy of Effects– Repeat Behavior– Fund Raising Techniques (Mass Media, Controlled Media,

Interpersonal Communication “Ladder of Communication Effectiveness”)

• Integrated Relationship Management– Fund raising encroachment

FUNDRAISING ETHICS

Core Traits of a Profession

• Extensive period of training and socialization

• Professional associations

• Code of conduct or ethics

• Systematic body of theory and mastery of knowledge

• Ideal of service and client welfare– Fund raising clients - institution and donor

• Autonomy

Professional Self-regulation

• Greenbrier II - No body for sanctioning

• Formal social control mechanisms – Code of Ethics and Donor Bill of Rights

• Informal social control mechanisms– Norms

What are Norms?

• “Shared beliefs about how an individual should act in a particular situation”

• Prescribed and proscribed patterns of behavior• Without a normative structure, individuals in the

profession would be free to act as they saw fit• Norms assure that professional choices adhere to

the ideal of service• “Collective conscience” of the profession

Two types of norms

• Inviolable– Violation is the most egregious and warrants the most

severe sanctions

• Admonitory– Inappropriate behavior, but does not require the severity

of sanctions reserved for violation of an inviolable norm

Inviolable Norms

• Exploitation of institutional resources– Taking advantage of an institution’s funds, or other

things of value the institution possesses for personal gain

• Institutional disregard– Behaviors which would damage the reputation of the

fund raiser’s employing institution

• Misappropriation of gifts– Using funds for purposes not intended by the donor

Admonitory Norms

• Commission based compensation– Fund raiser’s salary is paid in-part, or in-full as a

percentage of dollars raised

• Dishonest solicitation– Untruthfulness when asking for a gift

• Donor manipulation– Exploiting individuals who have lost, or are losing the

capacity to make sound decisions

Admonitory Norms

• Exaggeration of professional experience– Embellishing the fund raising work done for a previous

employer, or at one’s current institution

• Institutional mission abandonment– Attracting gifts for activities and programs for which the

institution has no need

• Unreasonable enforcement of pledges– Taking legal action against a donor or their families in

the pursuit of gifts promised to the institution; refusal to return a gift when a donor is unhappy with its use

What Does this Mean for the Profession?

• Moral boundaries do exist for the practice of fund raising in colleges and universities

• Because fund raisers presumably use norms to self-regulate, it is an additional marker of professionalism

• Identified normative patterns protect both institutional and donor clients

• Mirror the formal code of ethics and Donor Bill of Rightsfor CASE (revision is necessary to incorporate the institutional client)

Beginning Questions

• Is an appropriate volunteer fundraising board in place, and do its members fully understand their leadership role and responsibilities?

• Has your institution systematically examined its fundraising potential?

• Is the development office appropriately organized and configured for optimum productivity and results?

• Has your institution made the prerequisite investments in institutional advancement to attain the desired results?

• Does the president play an appropriate role in leading the fundraising program and integrating it into the institution’s superstructure?

ANNUAL FUNDRAISING

Gift Pyramid

• 60% of gifts come from 10% of donors

• 15-25% of gifts come from 20% of donors

• 15-25% of gifts come from 70% of donors

Measuring Annual Fund Returns

• Average gift = total dollars / # of gift

• Percent return = number of gifts / # mailed

• Projecting potential returns = # mailed x % returned x average gift

Building and Maintaining the Base

• Acquisition mailings – Enlist new donors –Never Givers

• Renewals – produce income (sybunts, lybunts)

• First time givers – renew at 50% rate, after that, 70-80%

• 50% or your returns come in the first week

MAJOR GIFT FUNDRAISING

PLANNED GIVING

•Bequests•Wills/Legacies

•Estate Gifts•Net Worth Gifts

MAJOR GIVING•Endowment Campaigns

•Capital Campaigns•Special Projects

•From Individuals/Corporations & Foundations

ANNUAL GIVING•Support Groups

•Special Events and Benefits•Annual Campaigns

•Direct Mail Program•The general public

Investment

Involvement

Interest

Information

Identification

Pyramid of Giving

Efficiency vs. Effectiveness

• Difference between effectiveness (maximizing the net between total gifts less fund raising costs) and efficiency (minimizing the average cost per dollar raised)

• The objective of an institution's fund-raising program should not be to spend as little as possible each year to raise money, but to maximize the net.

Efficiency vs. Effectiveness

A program that annually produces $2 million at a cost of $160,000, or 8 percent, may look good and is indeed efficient, but one that produces $3 million at a cost of $300,000, or 10 percent, is presumably of more help to the institution [i.e., more effective] -- it is bringing in $860,000 more.

Return on Investment Analysis

• ROI = Funds raised as a percentage of fund raising expenses

• Bottom line cost percentages are not a useful measurement for internal management purposes

• Performance of one kind of fund raising program cannot be evaluated against others

ROI Analysis

Moving from strategic plan to campaign plan:

• Translating strategic objectives into fund raising objectives

• Striking a balance among campaign goals• The product line – scalability and

marketability• Making the rules clear and simple• The campaign prospectus and case

The feasibility study and the role of counsel

• Choosing and using counsel

• Design and purpose of the feasibility study

Volunteers and staff

• Real work for real volunteers

• Job descriptions

• Choosing the campaign chair

• Staff-driven or volunteer-driven?

The Value of A Campaign

• Identifies and develops new leadership

• Focuses public attention on your institution and its programs

• Unites constituents; strengthens staff and volunteer morale

• Has positive effect on public image

• Identifies new prospects for ongoing annual support programs

and deferred giving

• Raises donor sights for annual giving and future campaigns

• Helps set institutional priorities

Phases of the Campaign:

• The “quiet phase” or “nucleus fund”

• The kick-off and early public phase

• The importance of intermediate goals

• Charting progress: the trendline

Campaign phases (cont.)

• The homestretch

• Victory, celebration, and the renewal of the planning cycle

Principles of Gift Charts

• The first two gifts should equal 10% of the goal: $100,000

• The next four gifts equal an additional 10% of the goal: $100,000

• The remaining gifts are flexible and can be broken down into various categories: $800,000.

• This chart is most effective with fundraising goals of $25,000 or more

$1M Gift Table

A change in solicitation status;(e.g. when a prospect “moves” from the

‘cultivation stage to being

‘ready’ to be solicited.)

A “move” is:

Compared with an ‘action’:

Which is the activity,

or interaction you have

with the prospect.

(e.g., a phone call, a meeting,

or a campus tour)

Pipeline concept

• Distribute prospects throughout every stage of the solicitation cycle,

• Continually introduce new prospects into the cycle and,

• Move existing prospects to the next level of engagement.

Realities of Major Giving;

• 3 to 4 prospects for each $100,000 gift

• You get 75% of what you ask for

• It requires 7 to 8 personal meetings and

• 18 to 24 months to cultivate and solicit

Establishing a Reasonable Prospect List

• Available of days per week multiplied by

• Number of contacts per day multiplied by

• Number of weeks per year divided by

• Number of meetings per prospect

Sample calculation

• (dw x c) (3x2)=6

• ((dw x c) x wy) (6)x48=288

• ((dw x c) x wy)/mp (288)/4=72

• ((dw x c) x wy)/mp ((3x2))x48)/4=72

Penn Moves Management System

• 200 Meaningful moves per year• 5-6 Moves per week• 40 Weeks (52-vacation, training, etc)• Broken into:

– 50% (100) Cultivation– 30% (60) Solicitation – 20% (40) Stewardship

• 25 Major Gifts closed per year– $625,000 (25 x 25K)

Northwestern University Fundraiser Evaluation

Stages in the cycle

1 Identification

2 Research

3 Planning

4 Cultivation

5 Solicitation

6 Stewardship

7 Renewal

Asking for a Gift From Individuals: The Solicitation

Conduct solicitation in comfortable setting Decide on best solicitor(s) Frame and focus your introduction Discuss benefits and the vision of a gift Ask the prospect to consider of a gift of $X Wait for a response -- Do not speak again Agree on next steps before concluding

Making the Ask: Raising Sights

• “We hope that you will consider a six figure gift so that…”

• “I hope that you will consider making a leadership gift in the $$$ range…”

• “Your participation at the $$$$ level would enable the school to…”

• “We hope that you will consider funding the first 21st Century Professorship at the $1M level…”

Possible Negative Donor Responses

Tell us more about the project Who else is supporting this The timing is bad That’s a lot of money We’re not as wealthy as your other donors I’m not sure I want to support this project I need to check with my advisors

• Ask them how they envision the project and then let them describe their vision of what they want to accomplish.

• Take that information back and see if it fits into your organization’s mission or what your organization is trying to accomplish.

• Set another meeting with the prospect two weeks later to discuss the revised proposal.

• If necessary, be prepared to say that the project the donor wants to do may not fit with your organization’s priorities.

Responses to Objections to the Project:

• Get a sense of the donor’s complete financial picture.

• Listen to their needs and fears. • Develop a package that won’t adversely affect

them financially. • Educate them about various gift-giving vehicles

and payment methods available and then suggest that they work with their own financial planners in deciding how to make the gift.

Concern Over Ability to Make the Gift:

• Focus the ask not on the amount, but on the project.• Build a case for what the project will do and then get them

to respond more from the perspective of how to get it done rather than on the amount needed to get it done.

• That way, you can have more negotiating room on the amount. Once they’ve expressed a certain level of interest in the project, they’ll do whatever they need to get it done.

Objections to the Amount:

Intellectual Barriers to Success

Not making the case clearly Not showing need Asking for too much or too little Not having done the right research Not showing or defining success Not having engaged prospect during cultivation Not timing solicitation properly

Personal Barriers to Success

Seeing fundraising in a negative light Fearing rejection Feeling inadequate to receive support Feeling uncomfortable with wealthy people Not having/projecting positive self image Not feeling part of success

Contact InformationTimothy C. Caboni

Vice Chancellor for Public Affairs

University of Kansas

230 Strong Hall, Jayhawk Blvd

Lawrence, KS 66043

785-864-7100

Email: caboni@ku.edu

Twitter: @caboni

publicaffairs.ku.edu