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Capital Campaigns are not Athletic Competitions
Fundraise to Meet Objectives, Not to Beat Rivals
By Rotarian Del Martin, Buckhead Rotary in Atlanta, GA

An ever-increasing trend in higher education fundraising in the United States today is the mind-boggling size of many capital campaign goals. Such inflated goals can lead to accounting “corner-cutting” that quite often causes internal morale problems and unrealistic external expectations, such as crediting the full value of an unrealized bequest, or for a gift that the institution received (and spent) years before the campaign began. Consequently, these record breaking campaigns do not always yield the actual funds needed to meet the high expectations raised by the campaign publicity.

Too often, campaign goals are based on what rival institutions report they have raised (or plan to raise) rather than on an analysis of the college’s greatest needs and careful evaluation of the giving climate among its donors. These “competitive” goals have two things in common:

1.      the goal is based on what the rival college has raised (or announced), and

2.      the goal is almost totally related to needs (and “wants”) with little regard as to ability to raise the funds.

Many smaller colleges are setting enormous goals relative to their size and fund-raising capabilities. Further complicating this dilemma is a number of other trends: cutbacks in state and federal aid; decreased corporate giving, the Bear market, increased competition for the philanthropic dollar, and now, the threat of imminent war.

A Blessing and a Curse for Presidents and VPs

For College CEOs and Advancement Vice Presidents, these complications and challenges can come with great personal opportunities. The larger the campaign launched, the more impressive the resume for presidents and development officers. But how many of these people will be around when it is time for the campaign victory celebration? It is common knowledge that the current turnover rate among development professionals (and college presidents, for that matter) is far shorter than 10 years. Is that due in part to the pressures of these “mega-campaign” goals? We believe it is. This increasing trend of larger and larger campaign goals places a sometimes overwhelming burden on those staff leaders held responsible. And therein lays the potential for cutting corners.

Cutting Corners in Counting

Most corner-cutting occurs when deciding what to count toward a campaign goal (especially when the goal has been set on rivalry rather than realism.) Many years ago, campaigns were conducted for a single capital project, such as for a new academic building or a student center. The success of such an effort was easily determined: the college either had the cash in the bank or a definite payment schedule from its donors, or it did not.

Today the single-project campaign has been replaced by the “comprehensive” campaign, which seeks to raise funds for many purposes at once: building projects, renovations, endowment, program support, ongoing operating support. This trend has developed as higher education fundraising has become more sophisticated and the needs have grown, but also because of the pressure institutions feel to set higher and higher goals.

How does this “goal inflation” lead to accounting-corner-cutting? Below are several examples that have become quite common:

·         Counting deferred gifts. Deferred gifts are those contributions that will not be received until sometime in the distant future, such as intended bequests and trusts. Crediting millions of dollars to a campaign based on an unrealized bequest can be a great distortion of how much money was actually raised (and how much money is actually in hand to spend now on needed projects).

·          Counting revocable deferred gifts. A life insurance policy or a bequest intent from a young person not only will be unusable to the college for many years, but it is quite possible that such “last wills and testaments” will be changed, or insurance policies allowed to lapse.

·         Recapturing large gifts from the past. One state university, which set its goal specifically to surpass the goal of a rival university, recaptured five years worth of gifts prior to the start of the campaign in order to count several large gifts toward the new campaign. While not necessarily “wrong” if done within reason, such a practice can inaccurately communicate the success of a fundraising effort and confuse donors and faculty.

·         Counting those funds which the college expects to raise for operating support over the campaign time period. This has become a standard practice, and helps to validate the need for small gifts and annual support, but in some situations can lead to false expectations. For instance, when an institution announced the successful completion of a $200 million campaign but only gave its faculty a two percent raise that same year, there was much confusion and anger. The campaign communications had not been clear about the fact that the amount of “new money” raised had only been a small portion of the goal.

None of these practices in and of themselves is wrong; however, honesty (as well as enlightened self-interest) dictates that campaign communication be as straightforward as possible. As goals are met or exceeded, information should be clearly communicated regarding:

·         How much cash was received or pledged in a specific time period;

·         How much of the campaign total represents deferred gifts;

·         What portion of the funds was designated and used for ongoing operations and is not available for new projects;

·         Which campaign projects were fully funded and which were not.

Clear communication such as this is essential to maintaining a reputation for integrity, professionalism and stewardship. It may also help all institutions in this time of economic challenge, as increased goals become more and more difficult to attain.

 Setting Campaign Goals

So, if goals are not supposed to be based on what a college’s nearest and dearest rival has announced, what is the best way to establish a campaign goal?  It has long been a given that capital campaign goals should be tied to institutional long-range planning. A college’s campaign goal should grow out of institutional priorities, which must include input from all of the constituencies (alumni, parents, friends and donors, faculty, administrative leadership, trustees, philanthropic leaders, business leaders, and related institutions). Research must be conducted to determine the dollar-figure amount associated with the institutional priorities, and then that dollar figure amount must be analyzed thoroughly:

·         What portion can be funded through available funds?

·         What portion can be funded through public funds?

·         What portion can be funded through earned income?

·         And what portion is most likely to be attractive to philanthropic funders?

 At this point, a well-conducted campaign study should be undertaken, particularly if the dollar amount is higher than previous goals. Such a study provides the input from potential donors necessary to refine the campaign goals and objectives. Most donors of large gifts are not influenced by a campaign in and of itself, but by the vision represented by the institution’s leaders, and the appeal of the project. When campaign goals are established in such a way, the institution and its donors truly “win”.