March 22, 2007 | Read Time: 5 minutes
As pressure mounts for nonprofit groups to hold billion-dollar campaigns, so do fund-raising challenges
Twenty years after fund raisers at Stanford University announced the first fund-raising campaign to raise $1.1-billion in 1987, colleges and universities still dominate the billion-dollar club, with 34 such campaigns completed and another 26 under way.
Last fall, Stanford raised the ante for big drives again, announcing that it is seeking $4.3-billion.
But nonprofit institutions outside the world of higher education are increasingly undertaking drives to raise $1-billion or more.
The Nature Conservancy completed its first billion-dollar campaign in 2003, exceeding that goal by raising nearly $1.5-billion, and is now planning an even more-ambitious campaign, which is scheduled to begin later this year. And in December, the Memorial Sloan-Kettering Cancer Center announced that it was extending a campaign begun in 2001 for five more years and doubling the goal to $2-billion.
While increasingly common, billion-dollar campaigns pose their own set of opportunities and challenges, experienced fund raisers say. The campaign can bring record-breaking resources to an organization, assuming people give more than they ordinarily would and outstanding pledges are paid promptly.
But as campaign goals grow ever larger, some charities have begun to rely on bequests and other planned gifts for an increasingly bigger share of the overall goal, says Bruce Flessner, a Minneapolis fund-raising consultant who is now working on three billion-dollar drives. That can be problematic because much of the cash might not be available for years or even decades after the campaign ends.
Mr. Flessner says that, 20 years ago, it was unusual to see bequests, annuities, charitable trusts, and other planned gifts make up more than 10 percent to 15 percent of a campaign’s goal. But now, he says, “I have seen this grow to about 30 percent.”
In some cases, it is even higher. Officials at the American Technion Society say that 35 percent of the contributions to its billion-dollar drive have been bequests and other planned gifts. Of the $780-million raised by the end of last month, the charity, which finances an Israeli university, has $548-million in hand.
Mr. Flessner says that pressure from board members to raise money and growing competition for multimillion-dollar gifts is one reason the percentage of planned gifts included in campaign totals has risen.
“The pressure is on groups to get to the billion-dollar range, to belong to the club,” he says. “This is a benchmark that you are a big-time player.”
The billion-dollar benchmark, however, means different things to different organizations, says Robert F. Sharpe, a Memphis planned-giving consultant. At issue is the fact that charities holding big fund-raising drives do not count bequests and other planned gifts in the same manner, making it difficult to compare their effectiveness in raising money.
Some fund raisers count such gifts at full face value during a campaign, in some cases arguing that donors deserve full credit for their contribution.
Other charities use a formula to come up with a figure that the bequest or other gift is likely to be worth when the charity receives it, given the donor’s age, inflation, and other factors.
The Nature Conservancy and other charities, like the Dana-Farber Cancer Institute, now in a $1-billion drive, have counted bequests only if the money is received while the campaign is in progress.
This discrepancy in campaign accounting methods is one reason the Council for Advancement and Support of Education has created a 10-member committee to devise standards for counting planned gifts.
The group, which is expected to announce recommendations by the end of the year, will examine different accounting methods, including one advocated by members of the National Committee on Planned Giving. That method involves reporting three campaign totals: cash or equivalent gifts like stock that can be used immediately; irrevocable gifts like a charitable remainder trust that will provide a donation at some point in the future; and revocable gifts like bequests that donors could withdraw.
For fund raisers, deciding how to account for and report the money raised in a billion-dollar campaign is a relatively minor problem. The staggering sums to be raised on a daily basis are a more-pressing concern.
At the University of Virginia, now in a campaign to raise $3-billion by 2011, for example, “we have to generate $1,025,045 every single day,” says Robert D. Sweeney, senior vice president for development. “If we do not do that, then tomorrow we have to generate more. There is a tremendous pressure to keep large gifts growing.”
Hundreds of Fund Raisers
To meet billion-dollar campaign goals, some nonprofit organizations employ hundreds of fund raisers, relying on major-gift specialists to help bring in the largest donations from wealthy individuals.
Fund raisers who focus on attracting big gifts were paid an average of $80,467 annually in 2005, the latest year for which data are available, according to the Council for Advancement and Support of Education.
They can be expected to be in contact with 100 to 150 prospective donors per year and to raise between $1.5-million and $4-million annually in a campaign.
But finding enough qualified fund raisers who can generate those kinds of returns for a billion-dollar campaign is getting harder all the time, charity leaders say.
“With all the campaigns going on now, it is putting enormous pressure on our senior-level members to find qualified staff,” says John Lippincott, the council’s president. Recruiting and keeping major-gifts fund raisers, he adds, are their chief problems.
That is true for the Nature Conservancy, which hopes to start raising money in October for a second campaign to raise more than $1-billion. “It is hard to find the caliber of people we want to hire,” says Stephanie Meeks, the charity’s chief operating officer. “We are moving more slowly than we’d like.”
