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Joseph Barbato is president of Barbato Associates, which provides writing and design services to the fund-raising programs of nonprofits. He has worked with dozens of nonprofits, including New York University, The Hole in the Wall Gang Camp, and The United Nations Foundation.
Chapter One: What Is Fund Raising, Anyway?
The ABCs of the Nonprofit World
Once, it was called begging. In 1641 a group of clergymen representing Harvard College went to England in search of funds. That was the beginning of fund raising in America.
Small wonder that fund raising still bears a stigma.
"Is there a seamy side to fund raising?" asked The New York Times Magazine in a 1997 interview with Vartan Gregorian, noted for his fund-raising successes as head of the New York Public Library and Brown University.
"Not for a good cause," said Gregorian.
The fact is, many people think it unseemly to ask other people for money -- no matter what the cause. Gregorian himself noted that he has found it hard having "to please a donor by suppressing your own views," as well he might.
Fund raising is about pleasing donors. A pleased donor gives money. A displeased one does not.
The donor is always right.
If all of this is so, why do people become fund raisers and fund-raising writers? It lies in the satisfaction of having helped bring money to a good cause.
Fund raising has given us literacy, open-heart surgery, Ronald McDonald House, churches to go to on Sunday, public-radio programming, and a restored Statue of Liberty and Ellis Island. It has saved lives, built monuments, cured diseases, fostered artistic careers, nurtured children, advanced scholarship, discovered planets, conserved natural areas, and encouraged social change.
The Council on Foundations once listed the foundation-funded projects that ultimately touched the lives of most Americans. They found that foundation money jump-started Emergency 911, public libraries, the Pap smear, Sesame Street, vaccines against yellow fever and polio, the invention of rocketry, the hospice movement, and the white lines on the shoulders of highways.
Because people have been begging on its behalf since 1641, Harvard is now one of the preeminent universities in the nation and the world. Did money make it so? Yep. If Harvard had much less money, would it make a difference? Yep.
Here is the rule of thumb: Money attracts excellence, and excellence attracts excellence. At universities, this means money attracts an excellent faculty, who in turn attract excellent students. With a 1998 endowment of about $13 billion, Harvard can afford excellence. Period.
And they are still begging! Harvard employs 271 men and women on its fund-raising staff for its current $2.1 billion fund-raising campaign. Why so many? After all, you might think that as some have said, "Any fool can raise money for Harvard, and many do." Yet even a cash cow has to be milked.
AMERICAN GIVING
Each year, Americans give about $150 billion to good causes, that is, charitable organizations. Where does the money go? Let's look at the three biggest gifts of 1998.
According to the 1998 Slate 60, which lists the year's largest donations, James and Virginia Stowers came in first with a gift of $327 million to create a medical-research facility in their hometown of Kansas City, Missouri. The Stowers, both cancer survivors, own a major family of no-load mutual funds, American Century Cos. They plan to bequeath most of their other assets to the institute.
In the same year, Martha Ingram, chairman of Ingram Industries, gave $300 million to Vanderbilt University, putting her right up there with founding father Cornelius Vanderbilt. The funds will go into athletics, health care, research, teaching, and other programs at the school, which is the alma mater of Mrs. Ingram's ex-husband and three of her kids.
Coming in third, David and Cheryl Duffield, who made their fortune in software, pledged $200 million toward finding a home for every stray or abandoned dog and cat in America. The Duffields want to end the euthanasia of homeless animals. They were inspired to make the gift by their affection for Maddie, a miniature schnauzer.
Fund raisers prompt gifts like these. They do so by communicating the good that an organization does, cultivating prospective donors who indicate an interest in the cause, and finally, asking the prospect for a donation.
There are all kinds of ways to do these things.
On a mass scale involving modest sums, Girl Scouts sell cookies door-to-door every year, and the Salvation Army places bell-ringing Santas at every shopping mall each holiday season. Similarly, direct mail is used to pitch everything from Easter seals to improved programming at the local PBS station. They may attract small gifts, but these are significant fund-raising programs: The famous March of Dimes, which literally invited Americans to send in dimes, underwrote the development of the Salk vaccine against polio. Girl Scout cookies bring in several hundred million dollars each year.
Alas, you cannot go door-to-door looking for million-dollar gifts. Few people can afford to make such major contributions. And once you know who can afford to give $1 million or more, you have to know whether they care about your cause, you have to establish contact with them, you have to cultivate them over time, and you have to convince them that making a gift to your good cause will satisfy their needs.
GOLDEN OLDIES
They didn't have PCs, scanners, and laser printers, but Americans have been writing fund-raising copy for generations.
The first fund-raising piece, "New England's First Fruits," was written at the request of the three clergymen who went to England in 1641 to raise money for Harvard. The threesome -- Hugh Peter of Salem, Thomas Weld of Roxbury, and William Hibbens of Boston -- needed "literature" describing the "selling points" of New England.
Talk about making the case for a college:
After God had carried us safe to New England, and had builded our houses, provided necessaries for our livelihood, reared convenient places for God's worship, and settled the civil government: one of the next things we longed for, and looked after was to advance learning and perpetuate it to posterity; dreading to leave an illiterate ministry to the churches when our present ministers shall lie in the dust.
In 1853 another classic fund-raising missive was written by Ann Pamela Cunningham after her mother made a trip down the Potomac River and found Mount Vernon -- the beloved Virginia estate of George Washington -- in ruins, with its roof collapsing, its portico propped up by unsightly supports, and its grounds overgrown.
Moved to act, she wrote a letter urging the "Ladies of the South" to raise enough money "to secure and retain the home and grave" of Washington "as a sacred spot for all coming time!" As published in the Charleston Mercury and other newspapers, the letter began:
A descendant of Virginia, and now a daughter of Carolina, moved by feelings of reverence for departed greatness and goodness, by patriotism and a sense of national, and above all, of Southern honor, ventures to appeal to you in behalf of the "home and grave" of Washington.
Ladies of the South, of a region of warm, generous, enthusiastic hearts, where there still lingers some unselfish love of country and country's honor, some chivalric feelings yet untouched by that "national spirit," so rapidly overshading the moral of our beloved land -- a moral blight, fatal to man's noblest attributes, and which love of money and speculation alone seems to survive -- to you we turn, you, who retain some reverence for the noble dead, some admiration and remembrance of exalted worth and service even where they are no more! Of you we ask: Will you, can you, look on passively and behold the home and grave of the matchless patriot, who is so completely identified with your land, sold as a possession to speculative machinists, without such a feeling of indignation firing your souls as shall cause you to rush with one heart and spirit to the rescue?
To seek such major gifts (the phrase generally refers to donations of $100,000 or more, although in smaller organizations $10,000 may be deemed major), nonprofit organizations maintain fund-raising offices. Only the offices are rarely called "fund raising." Rather, fund raisers have come up with a bevy of other names for the fund-raising office. Chief among them:
Development Office
Office of Institutional Advancement
Office of Resource Development
Resources Office
Sounds like something that should be based in Langley, Virginia, and involve covert activity, huh? Not really. "Development" is just a bit less direct than "fund raising." Even so, it may not be indirect enough. In her book Effective Fund-Raising Management, Kathleen S. Kelley identifies several euphemistic development job titles: public-support associate for the Louisiana Capital Area Chapter of the American Red Cross, scientific-resources manager for the Missouri Botanical Garden, and donor-acquisition officer for the Lesbian & Gay Community Services Center in New York City.
We've seen people given the title "deputy director" of a program rather than "director of development" just to soften the sell.
LOOKING BACK BRIEFLY
The history of fund raising in America is filled with wonderful stories about idealists, religious zealots, marketers, businessmen, and charlatans. We won't tell any here. (See Scott M. Cutlip's one-of-a-kind history, Fund Raising in the United States, if you want the full scoop.)
What we will tell you is that not much has changed over the years. Oh, the techniques differ. Until the 20th century, most fund raising was done by personal solicitation, by passing the church plate, by staging church suppers or bazaars, and by writing "begging letters." Now we're a bit better organized, thanks to computers and other technology, but don't we still solicit personally, stage events, and write letters?
Ben Franklin, who said something about everything, told fund raisers: "In the first place I advise you to apply to all those whom you know will give something; next, to those whom you are uncertain whether they will give anything or not, and show them the list of those who have given; and lastly, do not neglect those whom you are sure will give nothing, for in some of them you may be mistaken."
In others words, keep A, B, and C lists of prospects. Thanks for the tip, Ben.
0 The organized fund drive has its roots in the early 1900s when two pioneers, Charles Sumner Ward and Lyman L. Pierce, began raising large amounts of money for Young Men's Christian Association (YMCA) buildings. Both Y officials, they laid the groundwork for short, intensive campaigns. Soon others engaged in massive organized solicitations of the public to fund hospitals, churches, and colleges as well as civic, health, and welfare associations.
By the end of World War I, a number of for-profit fund-raising firms had emerged. This was the beginning of fund raising as we know it today. Arnaud Marts and George Lundy created the fund-raising firm Marts & Lundy; John Price Jones, a former Washington Post reporter, set up what is now Brakeley, John Price Jones Inc. In 1919 the Ketchum brothers set up Ketchum, Inc., in Pittsburgh. These and other pros were brought in to manage fund-raising campaigns for good causes. By the 1950s, major nonprofits began hiring internal fund raisers of their own.
How many fund raisers are there in the country today? Nobody knows. The U.S. Department of Labor batches fund raisers with other kinds of workers, so they are not much help. Kathleen S. Kelley offers what is probably the best estimate. Kelley's "informed guess" is that 80,000 people are employed as full-time fund raisers, either as staff members or consultants to nonprofits. They work for about 150,000 nonprofits. The leading employers: educational and health organizations.
In 1992 the National Society of Fund Raising Executives (NSFRE) surveyed members to find out where fund raisers work. The survey showed the main employers of fund raisers, in declining order, were education (25.3 percent); health, hospitals, and medical centers (19.4); human services (13.5); arts, culture, and humanities (7.7); youth (6.6); religion (4.2); environment and conservation (1.7); and retirement communities (1.6). The remaining members were consultants (4.6), not employed (.4), or not classified (15).
THE NONPROFIT WORLD TODAY
On a Tuesday in mid-April 1997 the grand poo-bahs of America's good causes gathered in Cambridge, Massachusetts, to signal the arrival of the nonprofit sector. They included leaders from the Ford and MacArthur foundations, the Urban Institute and Save the Children Federation, and scores of other institutions. The occasion was the opening of Harvard University's Hauser Center for Nonprofit Organizations, itself the result of an act of philanthropy -- a $10 million gift -- from two New Yorkers, Rita and Gustave Hauser.
"Nonprofits used to be a synonym for groups that had neither money nor power," Sara L. Engelhardt, president of the Foundation Center, told a reporter from the New York Times. "Increasingly this sector has both. If Harvard is opening a center on this scale, the nonprofit sector has clearly arrived."
The nonprofit sector goes by many names -- the "nonprofit," "nongovernmental," "independent," "voluntary," "social," or "third" sector. Call it what you will, it is the part of our society that acts voluntarily to help solve important social problems. It is not the private sector, in which commercial companies sell things to make a profit. It is not government, which provides services paid for by taxes.
The nonprofit sector is the rest: churches, hospitals, schools and colleges, museums, youth groups, civic leagues, community-development organizations, dance companies, philanthropic foundations, public-policy think tanks, small literary publishers, day-care centers, and advocacy organizations, among many others. All are recognized by the Internal Revenue Service as charitable institutions. All rely on fund raising to do their work.
The nonprofit sector has been important since America's colonial period, but never as much so as today. As the crème de la crème of the nonprofit world gathered in Cambridge that spring day, good causes had become the fastest-growing sector in our society, with 1.4 million nonprofit organizations. Harvard, with its popelike blessing, had now joined more than 30 colleges, with schools, departments, or programs of teaching and research dedicated to nonprofits.
As the country enters a new century, nonprofits are growing faster than either government or business. According to the Independent Sector, a group devoted to the field, in 1994 some 16.4 million people worked in, or volunteered for, some 1.4 million nonprofit groups, as opposed to 101.3 million people working at some 23 million businesses and 25 million people employed by 87,000 governmental organizations. The figures -- the latest available -- show a remarkable one-third growth in the nonprofit sector since 1982. This is opposed to a 25 percent growth in the numbers for government and business.
THE GROWTH OF PHILANTHROPY
The strong economy of the 1990s made the richest 20 percent of Americans richer. Suddenly, wealthy people found themselves with extraordinary new wealth. Following their own instincts -- altruism, egotism, tax write-offism, or maybe old-fashioned Andrew Carnegie-ism ("He who dies rich dies thus disgraced") -- the rich began giving as never before.
Ted Turner, vice chairman of Time Warner, stunned guests at a black-tie UN Association dinner in New York and pledged to donate $1 billion -- $100 million a year for ten years -- to a new foundation benefiting the United Nations. Bill Gates, founder of Microsoft, and his wife, Melinda, took more than $17 billion and created a private foundation -- the wealthiest in the country -- devoted to diverse causes.
This was new money -- from booms in technology, entertainment, and the stock market -- and alongside the fortunes of aging benefactors like Paul Mellon and Walter Annenberg, it spelled an enormous boost in philanthropic dollars. By the end of the century, there were 94 billionaires in the United States and about 60,000 households with annual incomes of $1 million or more.
At the same time, there began an enormous transfer of wealth; baby boomers would inherit an estimated $5.6 trillion from their parents over the next several decades, two Cornell University economists reported in the early 1990s. In their planned giving departments, many nonprofits had tax-advantageous ways to help structure estates so that transfers occurred in ways that benefited everyone.
The growth of philanthropy (the word comes from the Greek for "love of humankind") in the period spurred action everywhere. Foundations and other organizations began holding workshops and field trips aimed at helping the wealthy -- especially "the really extremely wealthy," as one provider remarked -- learn how to give their money away.
More than 75 graduate schools -- about five times more than in 1990 -- offered advanced degrees in philanthropy for students interested in managing nonprofits or raising money for them. Not surprisingly, nonprofits expanded their development operations to go after the new wealth.
In the late 1970s, Joe worked as senior development writer on a capital campaign at New York University whose goal was $111 million. That was a major dollar goal at the time. By the 1990s leading universities were launching campaigns of more than $1 billion.
Even public universities, increasingly forced to rely on private funding, entered the big-dollar fray. The University of Michigan, for instance, involved 100 staffers in its development office plus another 100 in individual schools and institutes in a successful $1 billion campaign. Other public institutions conducting campaigns -- each for $1 billion -- included the University of Virginia, the University of California at Berkeley, and the University of North Carolina at Chapel Hill. By then, Harvard had raised the bar with a $2-billion-plus campaign.
In 1999, facing tight post-cold war defense budgeting, the U.S. Military Academy at West Point weighed in with a $175 million Bicentennial Campaign, the first major private fund-raising effort in the history of the service academies.
From storefront social-action agencies with no paid staff to multimillion-dollar institutions like New York's Museum of Natural History, nonprofits are on a roll. They seem destined to stay there well into the 2000s.
Copyright © 2000 by Joseph Barbato and Danielle S. Furlich
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