Launching an Annual Fund at an International School
“Is the school run so poorly that it has to fundraise?”
In this post (a little longer than usual, sorry), I’m going to talk about the Annual Fund at international schools: what it is, why it’s important, what it should be, and what it shouldn’t be.
The Annual Fund is the foundation of all giving at an international school; every year, it allows us to introduce to new community members the why’s and how’s of financially supporting the school, and re-introduce it to current members. It prompts discussions about the need for support, leads to transformative gifts, and creates an ongoing culture of philanthropy.
As a prerequisite, let’s assume that we have the characteristics of an international school that can become a Fundraising school, and that we do not practice transactional fundraising.
The Annual Fund is a fundraising tactic that takes place (as its name suggests) each year. The money raised is part of the current year’s operating budget; it does not go into a slush fund or roll over to the following year. Just like tuition (and summer programs, and income from the Endowment (if we have one)), we forecast how much income we will receive, and we create our budget based on that expected income. This means that the school must be willing to predict how much it can raise from these annual donations (just like it predicts tuition revenue), and to include it in the budget.
Schools with no history of fundraising are understandably reluctant to do this. But if we’re not willing to budget for it, then let’s admit what we’re saying: we’d like to get it, but we’re not confident enough in our ability to raise it to be willing to risk a shortfall. By default, then, we’re saying that our Annual Fund is a “nice to have,” not a, “must have,” it’s not critical to helping the school achieve its mission, and we have no real expectations of our community, let alone our leadership.
Schools that can’t get past this point often turn the Annual Fund into a mini-capital campaign: “If we receive the money, we’ll do this.” Then we look around for what “this” might be: a new piano? Something for the playground? More ipads? And very quickly, we see that it’s difficult to identify things that aren’t frankly rather uninspiring, short-term objects that (to quote the most dismissive voice in the room) amount to little more than making privileged kids even more privileged. It also gives me a reason to not support it: as much as I wish the best for your kid, my kid doesn’t play piano, so no Annual Fund gift from me this year. How is this ever going to amount to a culture shift that ensures a predictable annual income that allows the school to budget for its aspirations and leads to long-term financial security for the school?
Having realized that the, “mini-capital campaign Annual Fund” format isn’t going to develop into the predictable growth we need, we take the plunge and add an Annual Fund revenue line to our forecasted revenue. How much do we forecast? Our feasibility study will probably amount to looking at our current families (to start with) and estimating how likely each of them would be to participate if we can tell the right story, and if yes, how much they would give. It needs to be a number that can do something important, but it also needs to be achievable. Now that we’ve got that number, it’s on all of us - Trustees and Leadership - to go out and get it.
At this point, please let’s not slide back into transactional fundraising; no galas, bake sales, raffles, etc.. Donations need to be given freely, and must be unrestricted (supporting the entire budget). Some people will give unhesitatingly (especially after the culture of giving is entrenched), some just need to be asked by the right person, and some people will have questions. And our canvassers quite rightly need to be able to explain passionately and articulately why we need to raise this money.
Happily, there’s an answer, and it’s the same for all schools: the Annual Fund helps our school to achieve our most ambitious aspirations. What exactly those aspirations are depends on the school, but we better be able to enumerate them. If you had an extra $500,000 or $1,000,000 per year, what would you do? What positions and programs would you add? How would they help you to achieve the school’s mission?
Of course, the questions usually don’t end there. I often hear, “Why don’t you just charge what it costs?” or, worse, “Is the school run so poorly that it has to fundraise?” My answer to this (and again, this is applicable to all non-profit schools) is that there is a gaping difference between the meaning of the words, “Elite,” and, “Elitist;” we want to be an elite academic institution, but we do not want to become economically elitist. We believe that we could charge much more for the education we offer, but many of our families are self-payers who are already making sacrifices to give their child an education from our school; raising our tuition, while it would help us to achieve our aspirations, would make us even more economically elitist than we already are. We believe that when everyone in our community gives to the best of their ability, we can achieve our aspirations without resorting to further exclusionary tuition increases. As icing on the cake, in most countries, donations are tax deductible, while tuition is not.
“But what’s it for?” is still a question that is likely to come up. As we’ve already discussed, the school forecasts its revenue from all sources, and bases its budget on that forecast. In a very real sense, annual fund donations (just like tuition revenue) pay for everything that makes our education special, whether it’s need-based scholarships, professional development for teachers, a new Director of Service Learning position, or low student to teacher ratios, etc. A robust and growing Annual Fund gives us the confidence to reach for more of our aspirations. If there is anything that excites a donor about our school, then they should consider that their Annual Fund donation is helping to support it.
Now, I will be the first to admit that the response I’ve just given rarely makes people swoon. In fact, I once had a parent tell me, “Let’s face it, Clive, the Annual Fund is a tax on parents to keep the lights on.” My response to him was that a) if our deepest aspirations were to simply keep the lights on, we wouldn’t be fundraising, and b) parents aren’t the only donors*. But it’s true that some donors would prefer to restrict their gifts to something about which they are passionate. It’s for this reason that some schools allow donors to select “broad buckets” where they can direct their Annual Fund donation (Scholarships, Athletics, The Arts, etc). I don’t knock schools for doing this, but the issue with this approach is that it’s somewhat misleading: most donors don’t understand that they’re not adding to the existing budget… they are simply helping us to achieve the budget that has been set.
Having said that, at Fundraising schools there are real ways for donors to restrict their donations: one of which is the Endowment. I’ll talk about that next time.
* This parent joined our PTA Annual Fund Giving Committee and was one of our most successful canvassers!