The Fund Raiser

No Strings Attached

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By Mark J. Drozdowski

Everyone knows it takes money to make money (although not necessarily to earn it), and that certainly applies to development departments.

The cost of raising money can be significant; even the most streamlined operations spend about a dime to raise a dollar, and most spend closer to a quarter. For some, the cost is downright embarrassing.

It should come as no surprise, then, that it takes more money to raise more money. That extended axiom holds true for capital campaigns in particular. To wage a successful campaign, colleges typically invest in new positions, additional travel, marketing efforts and publications, and cases of Pepto-Bismol.

The good news is that the cost-benefit ratio improves the more money you raise. When campaigns attract large contributions, that tends to offset the incremental costs of doing business. The bad news is that you still need to account for those expenditures before the money starts rolling in.

So when I arrived at Fitchburg State College a few years ago with the mandate to run a capital campaign, I knew I had to consult the budget first. Our cash reserves provided some comfort. But we had other designs on most of those dollars, and I couldn't shake the piggy bank too long.

Instead, I argued, we should fuel our campaign with money from the annual fund -- i.e., small, unrestricted gifts that come in every day, all year long. Our annual fund consists of both restricted and unrestricted donations. Think of the former as gift cards designated for specific retail stores: You're limited to shopping within the store, but once inside you can purchase whatever you want. If a donor contributes to the campus baseball team, for example, we must spend the money on that team, but we can buy bats and balls or send the team to Florida. Purely unrestricted gifts give us ultimate flexibility, requiring us only to use the money to support the college (and if we don't, we're in big trouble).

Historically we've performed below what I would consider an acceptable level for annual giving. I knew that smarter thinking, better marketing, and more consistent practices could yield a greater return. Naturally, our intake of "gift cards" would increase but so, too, would the number of unrestricted donations. As my kids would say, easy peasy lemon squeezy. Who knew I'd be right?

I thus created a self-sustaining organism, a campaign underwritten by the very funds it was attracting. Pure genius. Problem was, it wasn't quite enough. Yes, our annual-fund marketing efforts were paying off in spades. And, yes, our phone-a-thon results were better than usual. Yet big-ticket items such as campaign brochures, consultant fees, and kickoff festivities threatened to usurp our booty.

Enter phase two. Seems we have an extraordinary array of facilities on the campus that remain unnamed. Most of our primary buildings were named years ago for previous presidents, politicians, and other folks we liked or owed. Very few were named for donors, largely because we didn't have any, or at least none at that level. A careful inventory of classrooms, lecture halls, auditoriums, labs, and public spaces revealed plenty of options to sell to donors.

And, in almost every case, the facility was already built and fully furnished, wired, and otherwise outfitted as needed. In other words, we wouldn't have to spend much money, if any, on actual construction costs. So what would become of the $200,000 donation given to name a spiffy classroom? Bingo: It would remain unrestricted. More campaign fuel.

Believe it or not, our donors didn't mind that arrangement. In fact, most of them actually applauded the tactic. They get their names permanently emblazoned somewhere (as long as the structure or space survives), receive credit for supporting the campaign, and provide us with critical dollars with which to operate.

Which brings me to phase three. You're no doubt familiar with the conventional wisdom that suggests unrestricted dollars are the best to have and therefore the hardest to raise. But in our case -- and maybe we're just doggone lucky -- raising those dollars hasn't proved all that hard.

I've been amazed by the number of donors who have made significant contributions without restrictions. More to the point, they have actually insisted that their gifts carry no strings. Those donors are current or former board members, people who are intimately familiar with how our operations run and how fund raising works. They are giving substantial amounts, yet are foregoing opportunities to create an endowment, to memorialize a loved one, to gain some degree of prestige by naming a scholarship or related fund, or to earmark dollars for their favorite department or athletic team.

What they're saying, in essence, is that they appreciate the conventional wisdom stated above and want to do what is in the college's best interests. They are, after all, financial stewards of the place.

That's why the board has endorsed policies aimed at increasing unrestricted gifts in general. When I arrived on the scene, donors could restrict contributions of any size. Imagine trying to account for a $25 gift split five ways. Or hundreds of them. So we introduced a policy requiring a minimum donation of $100 to earn the right to restrict.

What's more, our threshold to establish an endowment was $10,000, which posed several problems. One, it gave people the false hope that they could set up endowments with "fund drives," a series of bake-sale events designed to cobble together the ten grand over time. Most efforts failed, of course, leaving us with annoying little accounts that made no one happy.

Such a low threshold also did nothing to raise donors' sights: A five-year commitment of $2,000 annually hardly constituted a stretch gift.

Finally, we figured that $400 to $500 in interest--the amount that a $10,000 endowment would generate each year -- no longer went very far in today's higher-education economy. It didn't even cover a semester's worth of books. So we raised the threshold to $25,000 -- and got no complaints.

Both strategies, along with a smarter annual-giving program, have resulted in a deeper river of unrestricted funds flowing through the foundation. Add to that the big chunks of change donated by our board members -- the lead contributors in this "quiet phase" of the campaign -- and we have a sufficient supply of campaign firewood.

As fund raisers, we always seek creative ways to define and defend the annual fund, hoping people will believe we really are spending their donations on students, faculty members, programs, and facilities. We are, of course, but in meaningful ways? Are we being "strategic" with those dollars, or frivolous?

Our materials tout the President's Fund, a fairly substantial amount set aside each year that the president uses to support activities and projects, usually student-driven, that cannot be financed otherwise. Those initiatives are, thus, made possible by unrestricted contributions. For a while, donors just have to trust that we're using their money wisely; eventually, we have to show them some returns on their investments.

In a few years, we'll show our lead donors that their stringless investments did, in fact, pay handsome dividends. Give us a restricted gift, and we'll spend it on anything you please. Leave the strings off, and we'll use it to raise even more money. So far, the message has resonated. Now we just have to do our part.