Financial sustainability is the challenge of the times. The need for additional revenue is growing, pressuring development officers to increase voluntary support — now the fastest-growing revenue stream at many schools. Fortunately, it is almost always possible to increase the total raised — to fulfill a school's fund-raising potential.

However, to do so, you must pay close attention to the changing needs of the 21st century. This chapter focuses on what is changing and how to manage the changes in those programs variously described as "advancement," "development," and "external affairs."

THE NEED

Even before the current economic recession, which has added an additional level of concern, independent schools have faced new financial challenges as they have strived to:

increase tuition and, at the same time, remain affordable, particularly for the middle class;
hire teachers in a highly competitive market created by the large group of faculty members who are retiring at the same time that the number of younger people who wish to, and can afford to, enter the field is declining;
cope with flat or declining enrollments due to demographic changes, the financial concerns of middle-class parents, and increased competition from public, parochial, and other private schools;
underwrite the recent growth of personnel as schools respond to program innovation to prepare students for the 21st century, the expanded role of technology, and a growing awareness of, and sensitivity to, different learning styles;
increase financial aid to preserve the economic diversity central to the mission of all 21st century schools;
enhance and maintain facilities to deal with increased competition from the public sector and other private schools, and without incurring too much debt;
provide security in an era of social unrest; and
save for the future.

THE CHANGES

As your school designs development programs to meet those needs, you should be aware of some important trends:

Competition for philanthropic support has increased. To compete effectively, each school must clearly distinguish its brand and persuasively describe its needs.
New donors think differently. Younger prospects have an investment mentality. They want fiscal details, and they want to obtain all their information on the World Wide Web.
There are fewer donors, but they are making larger gifts. Identifying and courting these top prospects will be key to your fund-raising success.
There is a new focus on ongoing major gift programs and on planned giving that encourages donors to make larger gifts.
The best development programs are increasing in scope and sophistication. This calls for experienced fund-raising professionals who continue to learn on the job.
Trustees are taking more responsibility for the development program as fiduciaries, fund-raisers, and donors.
Technology is playing a vastly increased role in communication and solicitation.

BRAND, CULTURE, AND COMMUNICATION

Before your fund-raising can be successful, you must distinguish your "brand." Many independent school leaders view branding as inappropriate commercial advertising, undertaken to sell and promote a product. However, as independent schools strive to distinguish themselves from their peers in a more competitive environment, you, too, must communicate a distinctive and compelling brand. Through branding, your school can create a clear identity, explaining not just that the institution is "unique" but also why.

At best, this clear identity fosters a culture of philanthropy in which pride in your school is evident and giving is a privilege. In schools with a culture of philanthropy, the constituents understand the vision and goals, and they are told often that their support is valued. Campaigns generate excitement, alumni continue to be involved in meaningful ways, and the school's trustees model philanthropic leadership. Once you establish such a culture of philanthropy, potential donors are much more likely to support your school generously, consistently, and with pleasure.

Moreover, you must effectively communicate your school's brand in what consultant Carol Cheney has described as "a stunning electronic revolution." You should have an interesting, lively, informative, and up-to-date website. Your donors must be able to access fiscal data, campaign plans, and fund-raising results on the web easily and whenever they wish.

Effective communication in the 21st century also includes email blasts, publicity on your homepage, podcasts, video sharing, and social networks. No school can continue to rely upon group meetings and direct mail alone.

THE CHANGING DONOR

First and foremost, development is about people, about building and nurturing relationships with those whose generosity can empower your school. You should evaluate prospective donors not only individually but also as members of a demographic group.

Baby Boomers, who were born between 1946 and 1964, were once the bedrock of independent school philanthropy. They value teamwork and consensus; they are trusting and loyal donors. There are still many Baby Boomers who are current parents, parents of alumni, alumni, and grandparents. They may continue to be an important component of your pool of major donors, but now there are other important constituencies on the scene.

The newer groups for whom schools must shape new fund-raising approaches and messages are "Generation Xers" (born between 1965 and 1978) and "Millennials" (born between the mid-1970s through the late 1990s). They like efficiency and quick service; they are entrepreneurial, brand-conscious, impatient, and steeped in technology. Unlike the Baby Boomers, who see their children as the school's customers, these newer groups view themselves as your school's customers and their gifts as investments in the school's present and future welfare.

These younger donors want:

Quick, efficient service: The current parents and alumni of the future expect immediate access to your school's mission statement, strategic plan, operating budget, annual fund progress, capital campaign case statement, and other documents on the web. They want current, updated data even if they decide to access it at 2 p.m. on a Sunday afternoon.
Education: The Generation Xers and Millennials have lots of questions: Why is tuition so high? How does the school invest its endowment? How much does it cost to raise a dollar? Who are the trustees, and what do they do? Increasingly, they will seek this kind of information as frequently as information about the educational program.
Engagement: The donors of today seek engagement in the life of your school. They want to be stakeholders and participants. They want to help solve problems, create plans, and provide expertise. They lead busy lives, but they will carve out time to volunteer if their service is interesting and worthwhile.
Return on investment: Newer donors have a business mentality. Because they view their gifts as investments, they are interested in the nature and quality of the return. They are intrigued by planned gifts that offer significant tax benefits to the donor as well as to your school.
Confidence: The Generation Xers and Millennials must have confidence that your school's finances are well planned and well managed, that the administrators and trustees are good stewards of your school's resources, and that their gifts are having a significant and timely impact.

The donor pool is changing in three other important ways.

First, more parents are new to independent schools. Because they attended public or parochial schools, they may not understand how key philanthropy is to excellence in the independent sector, and they may believe that your school, which charges a relatively high tuition and has an appealing plant, also has sufficient funds. Before you solicit these potential donors, you should educate them about the economic realities of independent school education, the financial constraints of today, and the need for and uses of voluntary support. Without that education, an annual fund appeal may have little meaning.

Second, as the population ages, increasing numbers of donors are now older than 65. For many of them, planned giving options, which offer benefits to both them and your school, are the best way to maximize their philanthropic support.

Finally, women donors are now in a position of unprecedented earned and inherited wealth and economic power. They respond best to a sensitive, well-planned, and well-informed solicitation and to ongoing individual stewardship of their gifts.

THE CHANGING FUND-RAISING PROGRAM

In the 21st century, independent schools are looking at a new and expanded fund-raising landscape. No longer is it adequate to have an annual-giving program and the occasional capital campaign. Today, your school's development agenda should include: (a) annual giving, (b) major gifts (before, during, and after campaigns), and (c) planned gifts.

Major Gifts

Perhaps the most important change in fund-raising has been the widely expanded major gifts programs at many schools. Although fewer donors are making major gifts, major donors — the top 10 percent in terms of the potential to give — are making larger gifts. This small group, likely to give 90 percent to 95 percent of the total money raised each year, is essential. In 1982, according to the Council for Aid to Education, 33 percent of the total raised in campaigns at educational institutions came from gifts of $1 million and above. Twenty years later, gifts of $1 million and above accounted for 70 percent of the total raised.

Therefore, your school should seek major gifts at all times. You should always be prepared for the major gift prospect who is ready to make a gift today. Your school's development staff or volunteer solicitor should always be able to provide:

an up-to-date strategic plan that identifies priority facility and endowment projects;
an up-to-date case statement that outlines institutional needs, the plans to meet the needs, and the costs;
short-term and long-term endowment goals;
a list of named gift opportunities;
gift acceptance and crediting policies; and
a ready corps of solicitors.

To have an effective major gift program, your school must also have an annual major gifts budget (often independent of the operating budget), annual major gift fund-raising goals, a regularly researched and cultivated major gifts prospect pool, a reliable prospect and donor tracking system, and an expanded focus among trustees, the head of school, and development professionals on planning and implementation. If your school has a small development office, the chief development officer should devote at least 20 percent of his or her time to major gifts. In the larger office, the time commitment of the director and other staff members should be substantially greater. Without exception, development directors who devote major time to major gifts achieve substantially higher voluntary support.

What should your school's staff members do during this "major time"? They should pay attention to the big four: research, cultivation, solicitation, and stewardship:

Through research, they should identify that essential 10 percent of donors with the potential to make a large gift.
During cultivation, they should build close relationships with those prospects, educating them and changing them from outsiders, who may be aware of a need, to insiders, who feel responsible for meeting it.
At solicitation visits, volunteers and staff members should ask prospects sensitively and effectively for specific levels of generous support.
And through stewardship, they should nurture the donor's relationship to the school, making him or her feel good about the gifts.

Each part of the process is important because top prospects and donors are treasures who should be treated with sensitivity and care before, during, and after a gift request. At every step of the way, they should know that they are important to the welfare of your school — because they are.

Planned Giving

Planned giving, a market-oriented approach to fund-raising, is the path to larger gifts. A planned gift can help the donor as well as your school. The donor reduces taxes, increases income, or satisfies another personal financial need. Your school receives a significant gift.

During the last decade, many schools have added planned giving programs to their fund-raising menus to meet the increased need and to offer major donors the opportunity to combine outright and deferred support. However, throughout the independent school world, planned giving programs are still too rare.

Why have schools, even some with sophisticated development programs, held back from this fund-raising frontier? There are three primary reasons:

The benefits of a planned gift are often delayed, and trustees at independent schools are focused on today. These same trustees do understand that endowment growth is vital to their school's future financial sustainability, but they may not realize that planned giving is crucial for endowment growth. In fact, in higher education, it is often said that approximately 75 percent of the endowment principal has come from bequests alone.
The solicitation of a planned gift can take a long time — more time than many development professionals believe they can and should devote to the task. However, in today's economy, schools are asking these same professionals to achieve higher goals, which can best be met through a planned giving program.
Planned gift vehicles, which can be complex, often intimidate the staff. But managing the technical and legal aspects of a planned gift is the responsibility of the donor's financial advisor or attorney. Your school's staff members should focus on the donor's motives and needs — and must understand planned gift vehicles only in general terms and on a practical level.

Donors who make planned gifts not only want to support the school, but they also have one of the following motives and needs:

To reduce or avoid taxes. "I wish I could sell my farm, but I would have to pay such a large capital-gains tax."
To pass assets on to children or grandchildren. "My children can't send their children to college; it's going to be up to me."
To increase income at retirement. "Yes, I still have some stock, but the dividends are so small."
To turn non-income-producing assets into cash. "All my money is in my business. I'd rather have it in my bank."
To make a future gift that doesn't affect current cash flow. "I need all of my money now. I can only support the school after I die."

In response, all a solicitor or staff member need say is, "You may be a candidate for a planned gift. May I ask one of my colleagues or volunteers to call you?"

The smallest independent school can surely begin a program of bequests that takes little time and few resources. Bequests appeal to older prospects who wish to support the school but fear they may run out of money during their lifetime. And bequests appeal to donors of all ages who want to combine an outright and a deferred gift to reach a higher level of support.

Can your development staff members handle major gifts as well as manage the rest of their assignments: annual giving, capital campaigns, alumni relations, events, and so on? Yes, they can, and, in fact, in the 21st century, they must. Many schools are adding full-time planned giving officers. Others are carving out a 25-percent or 50-percent commitment from a current staff member.

In addition, they are underwriting active planned giving websites and educational opportunities for the staff. They are establishing gift acceptance and counting policies so that donors can understand which planned gifts will be welcomed and how the school will credit them. These schools understand that planned giving may be a new and challenging program, but it is one they cannot afford to ignore.

Annual Giving

Despite the larger emphasis on major and planned gifts, the annual fund, which depends upon loyal and habitual donors, remains a most important drive. It can introduce all your school's constituencies to the institution's philanthropic needs. It can create new relationships to be nurtured. It can provide essential operating funds. And it must grow each year just to provide a constant percentage of your school's budgetary support.

The best annual funds also are changing.

First, they are making much greater use of technology, including musical popups, podcasts, and videos. Busy parents and alumni are deluged with direct mail; some don't even open the annual fund appeal. Younger prospects, in particular, want to read about the case for support on the web; they want their gift requests by email; and they want to make gifts online.

Second, face-to-face annual gift requests have assumed new importance. The savviest professionals realize that a personal visit offers the opportunity to get to know those who can become major prospects during an upcoming campaign. The visit offers donors an opportunity to ask questions, and it provides the solicitor with the opportunity to discern the most sensitive and effective approach to each family. The result? You can raise significantly greater gifts.

Third, many schools now realize that grandparents, who are paying tuitions with increasing frequency, can contribute significantly in the annual giving arena. At many institutions, they are making the largest capital campaign gifts. Too many schools overlook their important potential role.

Annual giving is usually a grandparent's first gift, an introduction to philanthropy, and an indication of interest and potential. Therefore, your school should have a separate annual giving mailing that speaks directly to grandparents' interests, as well as a separate grandparents' committee that writes personal letters and makes follow-up calls.

THE CHANGING DEVELOPMENT OFFICE AND STAFF

Even with today's economic challenges, the most forward-looking schools are increasing their development staffs to manage change effectively. They are hiring planned giving officers in anticipation of increased immediate or deferred support. They are keeping professionals hired during a capital campaign in order to sustain a major gifts program between campaigns. These schools may be cutting personnel in other areas, but they know that it is penny-wise and pound-foolish to cut an effective development staff.

At the same time, the most forward-looking schools are asking more of their development professionals. Managing change requires all development staff members, no matter what their titles and duties are, to be:

Happy to raise money. Gone are the days when alumni directors and event planners were exempted from raising funds.
Fully computer-literate. No longer should a school have only one employee who fully understands the tracking and analytical capacities of the computer software. Today, every staff member must be able to access and analyze information and data.
Knowledgeable about the donor pool. Your development staff members should never have to ask a previous major donor questions like "How do you spell your name?" or "Are you calling about a particular gift?" Everyone who answers the phone or greets guests must know the names of the school's top donors and prospects and the best person to whom to refer their calls. That's part of Cultivation and Stewardship 101.
Focused on professional growth. Although there may be few college courses in fund-raising, there are many opportunities to learn. All staff members should read books and magazines in the field and attend conferences, either in person or online.
Able to write clearly. In an era of often sloppy and fast communication, the best development officers are increasingly conscious of the importance of being literate. No staff members should write a solicitation or thank-you letter that would receive a "C" in a high school writing course. And, in the email era, no staff member should dash off email messages that are hastily written, poorly proofread, and full of faddish shortcuts and abbreviations. Poor writing leaves a lasting negative impression.
Flexible about assignments. Yes, he or she may be the annual fund director. But today, every staff member is also a major gifts officer with at least a few prospects assigned for ongoing cultivation and stewardship. And every staff member should be willing to help others during particularly busy times. Your development staff members should have clear priori ties, but they also need to be flexible and to work as a team as well.

That also means that your development professionals must become more knowledgeable about technology and the Internet — about computer databases (including their reporting and evaluation capabilities), desktop publishing, and web-based donor research. If your school's fund-raising is to be successful, modern technology cannot be ignored: You must educate staff members on a continuing basis and underwrite technology costs, even if your institution is among the smallest.

Your development director, who leads your school's advancement program, has particular responsibilities in an era of increased reliance upon voluntary support. He or she must oversee a program that is guided by an annual development plan that documents what is to be done, by whom, why, and with what intended results. As schools struggle to accommodate young donors who want frequent engagement, it is the development office staff that is most often asked to plan new initiatives and to host new events. With a plan in hand that includes 10 top priorities for the year, the development director can responsibly ask, "What on this list should I give up if I am to take on a new and unexpected assignment?"

In addition, your development director should be a member of the senior administration team, a respected professional and a ready resource for the school head in all of his or her fund-raising efforts. The development director should also attend meetings of your board of trustees to hear firsthand the nuanced discussions and final decisions about policies, plans, and goals.

THE ROLE OF A 21ST CENTURY BOARD

Responsible trusteeship has never been more important than it is today. Trustees cannot afford to think only about the present; they must plan for the long term. Trustees cannot focus only on efficiency; they must be creative and visionary. And trustees cannot be responsible strategic planners alone; they must be participants willing to make their school a philanthropic priority.

As fiduciaries, trustees should:

keep the strategic plan up-to-date and approve a prioritized list of current facility and endowment needs;
set short-term and long-term endowment goals;
provide adequate funds for a full-scale development program; and
be knowledgeable about the development program — its plans, programs, goals, and timetable.

In the 21st century, no board should welcome a trustee who says, "I will do anything but help with fund-raising." Or "I cannot make the school a philanthropic priority at this time."

To the contrary, your board's committee on trustees should assemble a philanthropic board. This begins with a written job description that is shared with trustees in advance of their recruitment. The description includes each trustee's responsibility to make the school a personal philanthropic priority during the period of board service and to make early contributions to the annual, capital, and planned giving programs to set an example for and raise the sights of others.

What does "philanthropic priority" mean? It speaks not to the amount of the gift but rather to its nature. Each of your school's trustees should decide that, during the term of trusteeship, the school will be one of his or her top charitable priorities. For some, this will mean a $5,000 campaign gift; for others, it will mean a $5 million commitment. However, all your trustees should declare, "Because I care so much about the welfare of this school, I have made one of the largest gifts I have ever made to any charitable institution."

Some of those in the community who have major gift potential should be well represented on the board. Because independent school boards should reflect the economic diversity that is valued in the student body, every trustee need not be capable of making a leadership gift. However, some must be willing and able to provide the philanthropic leadership that will inspire other top donors. Major gift prospects who join a board are more likely to make the leadership gifts that are essential if a school is to achieve its fund-raising potential.

In addition, as key volunteers in critical times, every 21st century trustee should play some role in the development program. Those who do not initially feel comfortable soliciting gifts can help in many other ways, including:

planning and evaluating the program;
identifying potential donors by reviewing the school's mailing list;
building close relationships with top prospects and continuing relationships with top donors; and
educating the community, both formally and informally, about the importance of voluntary support.

It is up to your school's committee on trustees to explain these roles candidly to potential trustees so that no one feels after joining the board that the rules have been changed in the middle of the game.

THE SCHOOL HEAD'S RESPONSIBILITIES

Nobody ever said that it is easy to be a school head, but many say that it has never been more challenging than it is today.

The traditional school head was an educator, an administrator, and a counselor. In modern times, the school head is also a financial planner, a crisis manager, and a fund-raiser. In fact, development duties must be near the top of every school head's list.

Furthermore, the allocation of time has changed. To be effective, most school heads now find that they must devote at least 20 percent of their time to development. And during campaigns, this time commitment increases, often to 50 percent or more.

It is unlikely that today any new school head will be hired unless he or she is willing to cultivate donors and to solicit funds. In addition, the 21st century school head must:

Set the stage: Donors give generously to schools that they understand, appreciate, and admire. The school head is communicator-in-chief. He or she should inspire commitment to the school's mission and generate enthusiasm for its current goals.
Build an internal team: Too often development is poorly understood within a school. It is up to the school head to educate the top administrators and faculty and staff members about the important impact that increased voluntary support will have on them all.
Inspire volunteers: Building the volunteer team begins with the board of trustees. This often includes board retreats devoted to development. It calls for a collegial and joint effort of the head, board chair, and development director to set clear goals, inspire fund-raisers, and express deep gratitude to those who volunteer.
Establish close relationships with top prospects and donors: Sometimes this requires travel to meet with alumni or grandparents who live out of town.
Evaluate the program: Managing multiple changes in advancement takes a carefully planned and well-evaluated program and a carefully hired and well-evaluated professional development director. It is the school head's responsibility to do both.

It is also up to the school head to nurture and empower the development director. In recent decades, the average tenure of independent school development directors has been five years (NAIS StatsOnline Survey, 2009–10). Clearly, that is not a sufficient time to establish the numerous close relationships upon which fund-raising success depends. School heads must make sure that their development professionals have manageable loads and, as a result, help them avoid burning out.

Finally, the school head should make sure that the fund-raising techniques used are appropriate given the school's culture, climate, and history. In today's world, a school head cannot say, "Do not solicit funds every day." But he or she can say, "Please don't do it this way."

CONCLUSION

The world of school advancement is changing rapidly, requiring increasing focus and resources from many key stakeholders. It is also true that, as advancement becomes more professional, both staff members and volunteers are discovering that fund-raising is a pleasure. They realize what a privilege it is to bring together a generous donor and a worthy cause. They understand that philanthropic investments not only bring essential resources to the school but also bring joy and satisfaction to the donor. They look beyond asking for a gift to the meaning of the gift. In this way, they help build the culture, pride, and programs that independent schools need to thrive in a changing world.