| October 2008 · Tishrei 5769 |
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Day School Growth and Excellence: Advice for a Tumultuous Economy
Given the current economic situation, PEJE has asked four
experts for thoughts and advice on different aspects of fundraising
and financial
management. Read below for insights from Barbara Maduell, senior
consultant at the Collins Group; David Saginaw, managing director of
development at United Jewish Communities; Terry Moore, director of
consultants at Independent School Management; and Steven Lorch, head
of
school at the Solomon Schechter School of Manhattan. We've also
included the best of some recent articles, publications, and websites
that
contain more information.
Should fundraising be conducted differently in an economic
downturn? If so,
how? If not, why?
Barbara:The current economic climate is an
opportunity for you to sharpen "best practices" and keep your school
well positioned for fundraising success. Here are five strategies for
a fiscally healthy and forward-thinking development effort this
year:
- Make sure you are investing in
communicating with your donors, and conveying the urgency and
relevance of
supporting your mission--especially now. From the perspective of
current students and alumni, show and tell personal stories about how
your day
school is preparing the next generation of ethical, resilient,
collaborative, adaptive, and globally-engaged
leaders.
- Keep your current donors close.
Encourage trustees and professional leadership to take the time to
meet with major donors personally in order to reinforce the
intersection of their values and your school's. Remember that donors
give not only
because your institution has needs, but because you meet needs that
are important to them. Remind donors at all giving levels that their
contribution is making an impact every
day.
- Review your fundraising constituency
goals as needed. Look at
sources of wealth and your local economic climate. Should this be the
year to revise goals upward for specific high net worth grandparents
and
community members?
- Be creative and
flexible about multi-year campaign efforts. Ask donors to consider
longer
pledge periods or back-loading payment
plans.
- Acknowledge people's concerns, but
don't assume everyone
shares yours. While donors may be looking at the organizations they
support more carefully, be confident that many people have the
capacity to
invest in your program. They'll do so if they understand the short-
and long-term benefits to your community's children.
How does
the "script" change when soliciting donations in tough economic
times?
David: Concerns about an impending (or already arrived)
recession
seem to be at the forefront of the minds of consumers and everyone in
an industry that relies on them. The not-for-profit world relies on donations, which logically would be the first victim of the proverbial
belt-tightening of the American consumer. However, not all
not-for-profits are
created equal, and day schools can position themselves to remain a
primary "expense" to their donors.
The following suggestions
are
drawn from a variety of articles from The Chronicle of Philanthropy as well as other
publications, and the
suggestions of experienced federation and UJC professional staff
members:
- Be positive and empathetic--Do not start a conversation with "I know
it's going to be a tough
year." If a donor believes that the economy is going to affect
their giving, don't try and convince them that their perception is
wrong. This is
their reality and we must deal
with it.
- Vary your ask--Annually made
gifts are not the end-all-be-all. A recession is a great opportunity
to open the donor up to the idea of planned
giving. If a donor expresses how they would "like to do more"
but times are tough, etc., use this as an opportunity to tell them how
they
could do more by endowing their gift or creating a
bequest.
- Tell a good story--Show just how
big an impact their
donations are making. Try to cater the story to the donor's known
interests. The better the story, the more they realize just how
important their
gifts are.
- Revise your case for
giving--Use the recession as a tool to emphasize the importance of
gifts.
How should schools manage their finances
differently in economic crises?
Terry: We at Independent School
Management
have been watching the recent economic events just as everyone else
has. Naturally, we're aware that school leaders are concerned, some
are
even fearful. The real question, of course, is how do we handle such a
difficult economic crisis? We offer the following
recommendations:
- Hopefully schools have banked
cash reserves equal to 15% of the operating budget. If you have,
and they are needed, now is the time to use them. Do not hoard them.
They are there for just a time as this. If enrollment declines because
of this
economic crisis, use the reserves to maintain program
control.
- Downsize via attrition--If your
school is
experiencing enrollment declines, downsize faculty by not replacing
faculty who retire, resign, or leave your employ. If you have to
consider layoffs,
know that this risks the faculty culture and should only be done
because there are no cash reserves to carry through difficult
times.
- Do not borrow money to weather
this crisis--No one knows how long this crisis will last (or if
it even
will). Borrowing money at this time is risky and jeopardizes your
school's viability. If you must borrow money, consider borrowing it
from your
endowment.
- Maintain tuition increases--we
really have no choice except to raise tuitions by the cost of living adjustment plus 2%. We
must give faculty annual raises and costs will continue to increase.
Therefore, decreasing tuition increases in this economic environment
will be
disastrous.
- If you have a Strategic Plan,
keep to it! You may not be able to complete all of your
strategic
initiatives in this economic crisis, however you very well may need
the projected increases. Remember, a Strategic Plan is a plan and
subject to
change because of unforeseen opportunities and threats.
Should schools do anything differently
about financial aid during a poor economy?
Steven: At the Solomon
Schechter School of Manhattan, we've tried to create a financial aid
system that would stand up to nearly any eventuality. Among the
consistent
features of our approach that haven't changed over the years are the
method and content used to assess a family's ability to afford
tuition; even the
key people involved in the process have remained unchanged. In
addition, the policy has always been need-blind admission and
sliding-scale
tuition, with the board committed to raising funds to cover any
variances in the financial aid line due to unanticipated demand. We
think that our
families have confidence in our system in part on account of its
consistency.
Of course, the current economy and its
impact on
families is one of the more extreme eventualities that you can
imagine, and our financial aid system will undoubtedly be tested.
Nevertheless, we
continue to believe that it will stand the test of this crisis. If
schools have a formula that they believe fairly assesses parents'
ability to afford tuition,
the financial aid process really doesn't need to change. It may be that
the numbers of families that can and can't afford tuition will shift, resulting in pressures on other areas of the budget,(such as fundraising)
in order to meet the schools' obligation to support families, but the
formula
itself should remain effective.
In schools where the
policy and procedures have not been consistent, or which have a
history of
holding the line on their financial aid budget irrespective of demand,
other approaches to financial aid may be needed in response to
the
current economic climate.
Helpful
links:
President of NAIS Pat Bassett gives some
context on the
economic crisis on his blog.
The Chronicle of
Philanthropy has a list of articles and suggestions for charities
in turbulent times.
The NAIS website shares some thoughts and links for
financial sustainability.
The National Business
Officers Association's Fall Newsletter is dedicated to the
situation.
Steven Lorch discusses Moral Complexity and Financial Aid.
The
Resource
Alliance's recent newsletter has an article on how to "recession-proof your
fundraising."
Author and fundraising expert Marc
Pittman writes about How to Fundraise in a Recession.
The
organization Step by Step Fundraising covers some Mistakes to Avoid.
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