October 12, 2022
By Linda Wise McNay, Ph.D., Ailena Parramore & David M. Paule
Heads of school often have a plethora of comparative data at their fingertips to assist in analyzing their schools’ programs. From academics and admission to athletics, there is no lack of resources to provide benchmarking data. However, when it comes to fundraising, heads of school and their development offices are often siloed in their strategic analysis of efforts, with little comparative data to offer insight outside of their own year-over-year goals and achievements. How are your school’s development efforts in comparison to other schools? Did you fare as well (better? worse?) than other SAIS schools over the past five years? How did the pandemic affect your school’s fundraising efforts and is that on- or off-trend for the market?
In a coordinated effort to provide much needed comparative data on independent school fundraising, the nonprofit development consulting firm Our Fundraising Search partnered with SAIS in July 2022 to conduct a survey of heads of school to measure trends, challenges, and opportunities in independent school fundraising1. This survey aimed to compare results against a similar survey conducted in 20172 and offers a current perspective of independent school development efforts, while also offering some insight into how the landscape has changed in the past five years.
The View From Above
Before delving into the survey results and subsequent recommendations, it’s always wise to start with a 360° view. For us, that’s the Giving USA annual report on philanthropy in the USA.
Giving USA is an initiative of the Giving USA Foundation, and research is conducted by the Indiana University Lilly Family School of Philanthropy at IUPUI. For 65 years, this report has provided insight into giving to charitable organizations across the U.S.
This year’s report shows that U.S. charities received an estimated $484.85 billion from donors, which includes individuals, bequests, foundations, and corporations. While that is a 4.0% increase over 2020, it remains flat after adjusting for inflation.
“The story of charitable giving in 2021 is closely tied to the events of 2020, a historic year that included a global pandemic, economic crisis and recovery, efforts to advance racial justice, and an unprecedented philanthropic response. In 2021, Americans continued giving more generously than before the pandemic. However, the growth in giving did not keep pace with inflation, causing challenges for many nonprofits,” said Laura MacDonald, CFRE, chair of Giving USA Foundation and principal and founder of Benefactor Group. “In 2021, many donors returned to their favored causes, with many of the sectors that struggled in 2020 making a recovery in 2021.”
Who Is Giving?
Individual donors remain the single largest piece of the pie, with giving estimated at $326.87 billion (or 67% of all giving). When combined with bequests, which are charitable gifts given posthumously by individuals, that total increases to 76% of all charitable giving.
Foundation giving grew by 3.4% in 2021. With 19% of all charitable giving coming by means of these institutions, foundations are second in overall giving. Most noteworthy, giving by foundations has grown for 10 of the last 11 years. 2021 was the second-highest amount (adjusted for inflation).
Where Are the Donations Going?
Education, which includes K-12 schools, higher education, and libraries, continues to be the second largest recipient of giving in the U.S. (14%), coming just after religion (26%). Unfortunately, though, while overall charitable giving was up, when adjusted for inflation, giving to education fell in 2021 for the first time since 2013 by almost 3%.
Giving to religion grew by 5.4% (0.7% adjusted for inflation). Considering that religious giving has remained flat for the last several years, religious independent schools should take this as encouragement.
2022 Fundraising Survey Results
The following findings are based on information provided by the 149 SAIS heads of school who responded to the survey, a 39% response rate. The profile of the average school respondent, highly similar to the 2017 survey, was a 58-year-old day school with an alumni base between 1,001-3,000. 55% of respondents have fewer than 500 students, 58% are K-12, and 58% have a budget of less than $10M (down from 62% in 2017).
Most schools (73%) are raising less than $1M from fundraising, while a concerning majority (53%) are carrying more than $1M in debt.
If you are amongst the 34% of schools who are debt-free, throw yourselves a party! That is certainly no small feat, and you should make sure to inform your constituents of that fact, especially when asking for capital gifts.
In comparison to the 2017 survey, where the average debt of school respondents was $5.4M, this trend has, unfortunately, not changed much in the last five years. 28% of schools are carrying between $1-$5M in debt, while an additional 25% are carrying more than $5M in debt.
Development committees continue to be under-utilized.
The data most concerning in comparison to 2017 is the involvement of the board of trustees in fundraising efforts, particularly via the development committee.
Listed as one of the most challenging activities for a head, 23% of schools reporting do not have a board development committee, which is an increase of 2% over five years ago. Additionally,
To summarize, 77% of school respondents either have no board development committee or have a committee that does not participate in active fundraising activities to further the mission of the school.
Most schools have a multi-faceted approach to annual fundraising.
This has held true since the 2017 survey; however, we’re seeing a strengthening of approaches, most likely due to the sophistication of digital services catching up to the demand of the donor market.
The most used solicitation/marketing methods are email (92%), online giving (90%), social media (80%), personal solicitations (79%) and direct mail (72%). Additionally, 63% utilize monthly giving as part of their annual giving campaign, and 70% engage donors through annual events. Email as a solicitation method is up by 6% since 2017, while monthly giving is also up by 13%. The most under-utilized tools are phone (52%) and text (30%).
Capital campaigns are on the rise.
Not surprisingly, a majority (64%) of responding schools are either in a campaign or are in the planning stages for a campaign. In comparison, only 36% of schools in 2017 were in campaign mode. Considering the uncertainty the last two years presented, many nonprofits opted to either pause, cancel, or delay campaigns. As the world is emerging post-pandemic (albeit still with some uncertainty), it is no surprise that a higher percentage of schools are launching campaigns.
Also of note, 36% reported having raised less than $3M in their last campaign, which is down from 56% in 2017. This infers a greater percentage of schools have had success in the past five years with campaigns over $3M, as well as with securing major gifts in general.
Most schools are under-endowed but working on it.
Listed as the #1 most challenging fundraising activity by heads, most schools are grossly under-endowed … but they seem to be tackling it! While 24% of schools reporting do not have an endowment, this has decreased by 16% since 2017. Optimistically, 48% have a planned giving program (an increase of 6%), while another 28% are in the process of developing one. As 29% of schools do not have an endowment at all, and 25% have endowments of less than $1M, it is encouraging to see a greater number of schools making this an area of strategic focus.
Heads are spending time raising money.
A collective applause is being heard throughout development offices across the southeast! Responding heads of school report spending an average of 24% of their time on fundraising tasks. While the minimum reported was 5%, the maximum was 75%. Most often, heads are engaging with donors through signing letters/notes, attending committee/campaign meetings, meeting one-on-one with donors, attending cultivation events, conducting public speaking, or making personal telephone calls.
While the overall percentage of time heads of school reported spending on fundraising activities decreased by 3% since 2017, they report an increase in participation in each category of fundraising activities. Most notably, they report a 20% increase in attendance at development committee meetings, a 6% increase in participation in cultivation events, and a 3% increase in one-on-one meetings with donors.
When it comes to hiring development officers, heads significantly weigh personal attributes and “mission fit” higher than experience or credentials.
When asked to rank which qualities heads value in their development officers, 50% ranked fundraising credentials as the least important hiring qualification (only 10% listed it as the highest) while 50% also ranked “mission and cultural fit” as the most important hiring qualification.
Take-Aways and Recommendations
So, how did you do? Did you improve compared to the standard? Did you do better than the sector? If so, brag about it to your board of directors. They need to know. If you did the same or worse, you need to analyze why. Determine the key drivers of your performance, whether good or bad. If you under-performed, it’s critical that you take action to both understand and address the reasons. Sometimes it helps to have an outside third-party to objectively assess your school’s development efforts.
Here are some recommendations we have for all schools, in general.
Some Parting Thoughts
In our experience, there are a few things that distinguish successful organizations in general, and successful fundraisers in particular:
There is no doubt in anyone’s mind that the last several years created a substantial number of barriers and obstacles for all nonprofits and their fundraising programs. However, we believe independent schools have opportunities right now to move faster in expanding their fundraising models, maybe even ahead of other sectors. At Our Fundraising Search, we have the luxury of working with clients who are best positioned for success and we see a tremendous future for independent school fundraising.
1For additional information on the 2022 survey, contact Our Fundraising Search.2“The 2017 SAIS Fundraising Trends Survey” was conducted by Linda Wise McNay, Ph.D., of Our Fundraising Search, and John Marshall, head of school for Union Academy and former assistant head for development of Wesleyan School.
Our Fundraising Search helps nonprofits build and grow high-performing teams using proven strategies for fundraising excellence. Strategically located in Atlanta, Georgia, Our Fundraising Search helps busy nonprofit boards and CEOs successfully fill critical executive and development positions. Comprehensive services include annual fund counsel, board recruitment and training, capital campaign counsel, development assessment, development search, endowment counsel, feasibility studies, fundraising coaching, fundraising counsel, interim staffing, planned giving basics, pre-campaign counsel, and strategic planning.
In this recording, we joined SAIS President Debra Wilson for the new Trustee Education Series focused on best practices in independent school governance, including boundaries, confidentiality, committee structure, and more. The curriculum is designed for heads of school, board chairs, and trustees.