NAIS - Advancement as a Safeguard Against Future Uncertainty

If the last 20 years has taught independent schools anything, it’s that things change—and schools often find themselves unprepared for evolving circumstances. Many of us lived through the 2008 recession, gaining a hearty appreciation for sound fiscal management, and yet many schools didn’t build adequate reserves once they regained their financial footing. Schools jumped right back into the buildings and grounds arms race.

Enrollment continued to be a challenge in many areas of the country, and yet expenses and tuitions kept going up. Enter COVID-19, and we again found ourselves facing disruption but of a very different kind. As an October 2020 Wall Street Journal article observes, the “long shadow” of our current crisis could extend to 2024 or beyond. After COVID-19, there could be another pandemic or another economic collapse. The volatile nature of our society ensures this is not the last such crisis we will face. Knowing that, how can we bolster our schools against the headwinds that will eventually come?

As school leaders ponder this critical question and seek to develop strategies to help them navigate incredible uncertainty and prepare for future shock, they should turn their attention to how the school’s advancement function can play a pivotal role in thinking beyond the pandemic. The work of the advancement team can have a tremendous impact on the overall lasting health of a school—if school leaders commit to and invest in advancement. Many schools aren’t currently set up to do the strategic work of advancement, and they may need to change how they think about and prioritize it to ensure the long-term health of their schools.

An Integrated Approach

Addressing new and increasing challenges requires school leaders to ask critical questions about their approach to advancement and to ensure that they have truly integrated teams. Many schools have no significant collaboration between admission and development, for example. While the communications office might report to development directors, alumni relations directors, and enrollment managers, schools must move from a rubber-stamp version of integration into a collaborative, revenue-generating unit.

A highly functioning advancement team must reduce overhead, maximize efficiency, and think outside of their own silos to ensure a maximum amount of revenue is being generated at all times. This kind of integration is an intentional and mutually accountable partnership between admission, communications, and development: a team with an overall shared revenue goal, transferable skills and training across departments, and a business development role or function embedded within it.

The process for creating such a team is not as labor-intensive as imagined and starts in a logical place—a conversation between the head of school and key stakeholders. Before employees or teams can integrate, they have to understand each other’s roles and department goals first. Sitting down together is the first step. It may take several meetings, but laying the path is invaluable to future success. Begin with giving the entire team an overview of each office’s primary data points, key performance indicators, challenges, and successes.

Once each respective area has a clear understanding of the challenges and successes of other departments within advancement, begin to make the case for a more streamlined or collaborative model. For example, state the goals for the revenue-generating arms of the school, and ask questions like “Let’s design the external functions of the school as if we’re starting over. If our goal is to increase efficiency in fundraising, community relations, and admission, what are ways we could reach outside of our immediate silo to do that?” Get out whiteboards and giant sticky notes (or the virtual equivalent), and workshop the ideas. In many cases, greater integration will be the inevitable consequence of a creative conversation.

Once teams understand each other and have begun working in tandem, make sure to meet regularly. When integration becomes a norm, not an idea, create a meeting structure that incorporates all areas and prioritizes efficiency and empowering all team members to be creative and fulfilled in their roles. (See “Go Deeper with CASE” on page 81 for more information about the fundamentals of integrated advancement.)

A Different Take on the Annual Fund

Regardless of whether the pandemic has served as an inflection point for rethinking advancement operations, there are a few key areas to focus on and more immediate strategies to employ that can impact the next fiscal year and beyond—laying the groundwork for longer-term school health amid disruption.

The annual fund, the backbone of advancement operations, presents a significant opportunity for evolution. Whether your annual fund program raises $100,000 a year or $3 million, this amount typically fills a crucial budgeting hole. During the pandemic, schools have often found their donors to be incredibly generous, but those schools that made their annual giving goals for 2019–2020 generally did so because they had 50% to 75% or more pledged or in-hand prior to December 31, 2019, according to a Council for Advancement and Support of Education (CASE) flash survey from fall of 2020. It’s a simple and intuitive truth that asking early and asking often allows schools to reach their goals more consistently. If it isn’t in your practice to ask for the bulk of your leadership gifts in the fall, strongly consider shifting in that direction. The more you front-load annual giving in the first semester, the more you can focus on capital gifts, planned gifts, and gifts to the endowment in your second semester. In doing so, you’ve ensured that your operating budget goals are met before looking to other sources of funding. Then, if/when you’re in crisis mode, you’ll have the flexibility to spread out fundraising initiatives or move the timing of significant asks with plenty of room left in the fiscal year.

Most important, a move toward front-loading your annual fund may open up time and opportunity to raise money for a forward-funded program. Forward-funding—the practice of raising in this school year what you will spend in the next school year, or more simply, the ability to budget with actual, not hypothetical, dollars in a given fiscal year—requires careful consideration about whether such a move will work for your school. It’s a huge lift, one that takes years of planning and implementation as well as true collaboration among the head, chief business officer, and board of trustees. But forward-funding your unrestricted program could ensure that no matter what happens in a given school year, you have real dollars to budget with for the following year, not to mention additional time in which to close any kind of fundraising gap generated by a crisis.

Endowed Financial Aid

In a post-COVID world, the increasing pressure for financial aid dollars and demand from families is unlikely to go away, especially as tuition continues to climb. While a precious few schools have the luxury of waiting lists and deep pockets, most schools struggle to find the right balance of families who can pay and those who require tuition discounting. Even at the most elite schools, financial aid is seldom fully endowed or funded. Given the reality of the net tuition revenue (NTR) model, imagine how impactful a higher portion of funded financial aid will become.

Independent schools are used to raising big capital dollars for buildings and concrete initiatives, but if the pandemic has taught us anything, it’s that the classroom is officially no longer within four walls. Moreover, our collective and individual psychology will crave human connection and person-to-person impact when this is all over. The time is ripe to approach donors about something other than bricks and mortar and to embrace an emotional, human appeal to serve students and the school with endowed gifts to financial assistance.

A campaign for financial aid is not without its challenges. For one, you need to raise big money to move the needle. To see a payout of even $1 million in financial assistance, you need upwards of $23 million in the bank with a relatively aggressive 4.5% draw. If your donor base has the capacity, however, every $1 million that you can add into your budget is a potential game changer for your institution and for the families those dollars serve.

A second challenge is to consider how additional endowed financial aid could impact your current student population. For most schools, filling seats is of the utmost priority, so creating funding to fill those seats is a welcome injection of cash into the budget and the enrollment/NTR goals. For schools with a more competitive market position, fully funded or partially funded seats could mean taking away spaces from otherwise full-pay families, siblings of current families, or legacy students who represent potential losses in terms of future giving. For competitive schools, only the board and leadership team can determine if a commitment to socioeconomic diversity outweighs the potential fiscal impact. Market position, however, is a relative phenomenon. There are some schools whose cachet means they will likely never have trouble filling seats. For others, given the rate at which tuition outpaces inflation, it’s possible their school’s current strength may not stand the test of time, even in today’s highly affluent areas. A long-term strategy rooted in endowed financial assistance could insure the fiscal strength those schools have come to enjoy.

The strength of the stock market is a third challenge that cannot be ignored. The consensus after the 2008 downturn was to avoid endowment giving as markets were in peril. Markets generally pick back up, however. The market has, miraculously, been fairly good throughout this most recent crisis. Given the larger narrative arc of markets and their propensity to deliver returns, endowed financial aid funds to ensure long-term funding for students in need is wise.

Advancement as Safeguard

Whether your school is responding to this crisis to stay solvent or looking at this crisis as a time to reflect and grow, now is the time to act boldly. Schools have responded in ways we never thought imaginable prior to last March. We must carry that momentum and energy to all areas of school life and operations. Even if your school finds itself with an enrollment bubble and significant generosity from your donors at this moment in time, you cannot rely on that influx of funding forever. The pandemic fallout will not be as immediately taxing as it will in two or three school years. The families who sought out independent schools for an in-person learning option may not remain with you until graduation and may see your institution as a stop-gap measure. Additional pledges you received from highly engaged donors will likely return to pre-pandemic levels when the perceived immediate threat to the school dissipates.

We have been saying for years that the independent school business model is broken, that affordability is in question, and that our product is increasingly expensive. Advancement writ large can play a significant role in combatting the uncertainties. But hope is not a strategy. We must take action and try new ways of doing business if we are to weather uncertainty in a post-COVID world.

What’s the Future of Advancement at Your School?

Discuss these key questions with your board:

How sustainable is our future?
How can we ensure affordability for
future generations?
Are our revenue-generating offices working
to maximum efficiency?
Have we considered all avenues for safeguarding our school against a future disruptive event?
Are we prepared to make changes now so we don’t have to make disruptive changes in the future?

Go Deeper with CASE

For more in-depth insights about the integrated approach that the Council for Advancement and Support of Education (CASE) advocates as well as practical steps for making all areas of external affairs more collaborative, check out the School’s Toolkit: Integrating Your School’s Advancement Office. Whether your advancement program is mature and looking to be more collaborative, or your small office is struggling to keep up with the many demands placed upon it, this guide for international and independent schools offers straightforward ways of becoming a stronger program, one step at a time.