|resources news you can use staff publications staff presentations e-newsletters links||
Building for The Future – Endowment and Planned Giving
In the opening of his new book, Good to Great, business writer Jim Collins begins with an observation that gets right to the point. He says:
“Good is the enemy of great. And that is one of the reasons we have so little that becomes great. We don’t have great schools, principally because we have good schools. We don’t have great government, principally because we have good government. Few people attain great lives, in large part because it is just so easy to settle for the good life. The vast majority of companies never become great, precisely because the vast majority become quite good – and that is their problem.”
The zoo and aquarium industry provides quite a good example of what Collins is saying. There are hundreds and hundreds of good zoos and aquariums in this country and around the world. Certainly, we should all be proud of the overall quality and success of the profession. But how many “great” zoos and aquariums are there? Why are there so few? Is it because the majority of them lack the vision and dedication of leadership that Collins found to be necessary in great companies? I’m sure that is the reason in some cases, but I propose another. Most zoos and aquariums – good ones – are so busy trying to survive that they never get the chance to thrive. Most lack a permanent base of resources upon which to build, so they are living from year to year to generate just enough funds to operate.
To be sure, when looked at as businesses, zoos and aquariums are complicated organizations. To operate, they require multiple layers and types of funding involving earned income, tax levies and public appropriations, membership and annual giving, sponsorship, and grants. It is a difficult to manage so many streams of income, especially when there are so many factors – such as the weather, politics, the economy and the complexities of working with a living collection – that cannot be controlled.
I have been working with zoos and aquariums for most of my career – from 1975 to 1987 as a staff person and as a consultant since 1987. I have had the privilege of helping dozens of zoos build membership, create annual giving programs, generate levy support, build attendance, develop business plans, and prepare for and implement capital campaigns. Over the years, I have seen marketing and development programs flourish in the “zoo world” because of the hard work of talented staffs and active, dedicated volunteers. Through their efforts – year in and year out – zoos are able to meet current and short-term operating and capital needs.
But is that enough? I don’t think so. Generating just enough money to balance the budget every year, or to build the next blockbuster exhibit, is striving to be “good,” not “great.” Zoos and aquariums have to think bigger and shoot higher. To become great, they need to think of themselves as institutions, not just attractions.
Of course, the “great” zoos and aquariums are already doing this. You know who they are. They are not limited to the money they earn at the gate or to available public funding. They are running mega-campaigns, have top-tier volunteer leadership on board and are competing with the major higher education, healthcare and cultural institutions in their communities for contributed support. And perhaps most importantly, they are looking beyond current and short-term needs. They are looking to the future, and are preparing for it, by creating endowments capable of sustaining their organizations as permanent “institutions.”
I am confident that building endowment – as a permanent base of support – will become one of the key priorities for every zoo or aquarium (regardless of size) in the nation in the years ahead. Endowment provides a steady flow of the operating and programmatic income – much of it unrestricted – that is needed by every institution. In addition, seeing a growing endowment gives confidence to new donors being asked to invest in the future of an institution.
Even though many endowments were ravaged by the stock market in recent years, having a significant, permanent base of support gave many organizations the cushion they needed to survive tough times and allowed them to not only carry on during these periods but to plan and prepare for the future.
To build endowment, many zoos and aquariums are refocusing their priorities. They are supplementing their membership and annual giving efforts – efforts designed to build a large and active base of support – with donor-centered activities designed to build relationships: relationships that result in major gifts. This can be accomplished through both outright major gift programs or through the creation of an effective planned giving program.
This article addresses how to build your endowment through planned giving. It is a type of fundraising that offers enormous potential for any nonprofit and, I believe, is particularly well suited for zoos and aquariums. With large and active donor bases in the form of membership programs and high awareness levels in the communities they serve, along with desirable donor demographics in the form of long-term members, donors and volunteers, zoos and aquariums are well positioned for planned giving success.
Planned giving is a development process whereby the prospective donor is provided with a number of options on how to structure a gift to an organization. Many individuals combine outright giving (gifts of cash or property) with planned giving techniques to maximize their support for an organization. Individuals often make larger gifts through planned giving than they would through outright methods. Charitable donations from planned gifts are not cash, and they require planning on the part of the organization and the donor. Unlike memberships and annual giving, planned gifts come from a donor’s assets, not from his or her income. It is a donor-centered approach that calls for individual treatment and requires that you look out for the best interests of the donor. Planned giving should be considered an essential part of any comprehensive development program.
If your zoo or aquarium is not currently operating a formal planned giving program, you may be gambling with the future of your organization. But don’t despair. Getting started is relatively easy, and your program can evolve slowly and gradually over time. Here are a few things to think about that may help you get started.
Understand Your Prospect Pool
One mistake that is made by many development people (and volunteers) is that they believe that an individual has to be a major donor to be considered a planned giving prospect. Research and experience tells us that this is not the case. In fact, long-time members with a history of giving to such initiatives as your annual fund or Adopt-An-Animal Program are probably better prospects for planned giving than most of the major donors to your last capital campaign.
“long-time members with a history of giving to programs such as your annual fund or Adopt-An-Animal Program are probably better prospects for planned giving than most of the major donors to your last capital campaign.”
Docents and other volunteers who generously and regularly give their time to the institution are also excellent prospects, particularly if they have a history of giving.
Understand your prospect potential by examining your donor files to identify long-term members and supporters, people who have gradually upgraded their levels of giving, those who give to special appeals and people who volunteer. Pay particular attention to donors who have given to specific animal-related requests. As Mike Malloy, Vice President for Development of the Philadelphia Zoo, says, “Our planned giving program appeals to the hard-core animal lover who supports us.”
[photo of Philadelphia Zoo gatehouse: caption: As America’s First Zoo, the Philadelphia Zoo enjoys high visibility in the community as a cultural treasure. But it is typically the “hard-core animal lover” who supports the Zoo through a bequest or other planned gift vehicle.]
You need to know as much as possible about your prospects. Do they have highly appreciated assets? Do they have family? Do they have fixed income needs? Use electronic prospect screening programs and your own data file analysis to uncover valuable information on your donor base, and then dig deeper to determine real gift potential, or the true inclination of the donor. You are looking for information that will help you build a relationship with the donor and construct giving options that will help the donor as well as your institution.
Remember, there is vast wealth in your own membership and donor files. Over the next couple of decades, the World War II/Depression era generation will transfer tens of trillions of dollars to the Baby Boomers. This transfer of wealth will also result in a significant increase in assets given to nonprofit organizations. There are literally billions of dollars at stake for zoos and aquariums.
Develop Your Case for Support
Do the math for people and come up with real numbers. Many of today’s donors are “investors.” They require and expect details on actual costs before making their decisions. You can use the “20 times” rule to make it easy: If you want to endow the annual costs of your education program, which are $100,000, it would take an endowment fund of $2,000,000 (at current value) to do so.
This is obviously a very simplistic way of looking at your case for support, but the point here is to do your homework and develop a case that has a number of compelling giving opportunities, backed up by real numbers and as much detail as possible.
Obtain Board Agreement and Participation
Establish Gift Acceptance Policies and Procedures
While gifts through any of these programs have common characteristics – they require planning and will be made out of a donor’s assets, not income – they are also extremely different from one another. It is important to remember that it is your job to do what is right for the donor based on his or her unique needs and situation. Take a look at the web site for the Shedd Aquarium. Shedd makes excellent use of a chart that is popular with planned giving professionals to help donors in the selection of giving vehicles that are right for them.
There will come a time when a donor will offer you a gift with unusual conditions. It may involve a gift of property you aren’t sure you should accept or a gift of closely held stock that is difficult to value. Your gift acceptance policies will not cover every situation, so make sure that the board – through the Executive or Development Committees – is given a role in making final determinations on the acceptance of a gift.
Enlist the Services of a Planned Gift Advisory Committee
[photo of Cincinnati Zoo: caption: The Cincinnati Zoo uses its popular Lights Before Christmas and other programs to recognize and cultivate members of its legacy program – The Futures Society.]
Establish a Comprehensive and Ongoing Marketing Program
Today, planned giving prospects are much more financially savvy and sophisticated. So instead of selling them on the virtues of planned giving, you have an opportunity to market your own program and organization. Make maximum use of your web site, newsletters and other development marketing tools to create awareness of your planned giving program and to generate leads. Publicize your program in all written materials on a regular and sustained basis. Place articles in your newsletter, and in local papers and with the media if at all possible, to feature cases where an unlikely donor made a real difference in your zoo or aquarium by participating in your program.
Create a legacy society that will give recognition to any donor who has made a commitment to your planned giving program. These programs will capture the attention of potential donors and provide you with an opportunity to build a stronger relationship with someone during his or her lifetime. This not only solidifies your relationship with the donor but frequently results in increased levels of outright giving or additional support through planned gifts.
[photo of the three brochures from Toledo, Cincinnati and Philadelphia: caption: The creation of a Legacy Society provides an opportunity to connect with your donors, thereby increasing their level of interest in and commitment to your institution. The Toledo Zoo’s Silverback Society has been in place since 1994.]
Create effective materials for your program and establish a revolving direct mail program to reach out to your pool of prospects. Use a letter and brochure to generate qualified leads, and follow up with additional information to begin dialogue with your potential donor. Hold education programs on estate planning and related financial topics with experts and speakers at your zoo or aquarium, but beware of people who are there to “sell” their own products. Finally, don’t forget to market your program to the professional community. Estate planning professionals, attorneys and financial advisors can steer donors your way or at least reinforce the attributes of your program with their clients.The creation of a planned giving program, as part of a comprehensive development effort, can help your zoo or aquarium build a permanent endowment base that will ensure your institution’s success for years to come. Remember, “good is the enemy of great.” Strive for “greatness” by building your endowment and taking some of the pressure off of your development program. Good luck.
Schultz & Williams is a national consulting firm based in Philadelphia providing management, fundraising and marketing consulting for nonprofit organizations, along with full-service direct marketing, database and creative/production services.