Strategic confusion stifling planned giving in private schools

Introduction

I recently decided to take a walk on a chilly winter day in Melbourne. Upon opening my front door, on the horizon I noticed large dark clouds gathering, so I grabbed my trusty old golf umbrella from the hall cupboard and set out to brave the elements.

Not that far down the road it started to pour with rain, and it was at that moment I couldn’t help but think – gee I’m glad I brought my trusty old umbrella to stop me from getting soaked.

It was this moment that got me thinking about the Australian advancement industry (it’s funny where I derive inspiration from at times) and recall how so many private schools really aren’t well prepared for when tough economic conditions prevail.

It also got me thinking about what avenue those schools could use to better protect themselves from stormy economic days.

Suddenly I had a lightbulb moment! The most logical place, I thought to myself, was bequest programs as they are cheap, cheerful (well sort of) with the power to transform! Yes - these I thought would make the perfect umbrella to help protect private schools from the elements.

Yet I digress… I will return to my trusty umbrella shortly...

What the stats tell us…

Now let’s get serious for a moment - one of the big future growth areas in fundraising in the coming decades is expected to be in the area of planned giving.

In the recently released 2020?Giving USA Annual Report it is projected:?

That over the next 25 years, nearly $6 trillion is expected to go to charitable organisations through bequests, trusts and other planned gifts. Just last year, over $43 billion was transferred to non-profits via bequests alone.*

*Giving USA 2020: The Annual Report on Philanthropy for the Year 2019, GivingUSA.org

The Australian not-for-profit sector too has not been immune from this growth pattern, growing consistently for over a decade now.?

Philanthropy Australia has estimated that over eight percent of us now leave a gift in their Will to charity and that this has been steadily growing for the last ten years.?

So it is clear there is a real opportunity for more private schools to benefit from this growth area in the giving sector, and along with their supporters transform our education landscape as we know it.

An opportunity being lost

So the statistics tell us there is a staggering amount of money and other assets donated through planned giving globally and yet, it is the opportunity to benefit from these ‘fundraising spoils’ that I frequently see going begging at many education institutions across Australia.

Many private education providers don’t have fundraising agendas to speak of and even less still have bequest or any other form of planned giving program. This must change and quickly.

Leaving an organisation a gift in a will is a powerful way for donors to make a real difference and create transformative change. Yet, bequests in particular remain the great untapped resource for so many schools and even universities – the question is why?

The bequest program is the most commonly used of all planned giving tactics, mainly because they are easy to start and very inexpensive to operate compared to other fundraising alternatives. Therefore, it seems a logical place for any education provider to kickstart their fundraising programs.

One of the big advantages of a bequest program too, is that helps future proof an organisation, or to put it another way, provide that trusty old umbrella for those inevitable financial rainy days that often come along in the education industry.

In the charitable sector, events over recent times have highlighted that charities are needed now more than ever and by a larger section of the community. This growth in demand for charitable services, along with recent significant falls in revenue and resources, are driving charities to engage with their donors more strategically, leading to stronger growth in bequest program investment.?

As a consequence, charities are now stealing a march over their education fundraising cousins as they have quickly come to the realisation that future proofing their charitable revenue streams through bequests and other planned giving tactics is a straightforward cost-effective way to protect and perpetuate their ongoing missions. It also allows their supporters to play their giving forward, where they otherwise don’t have the current resources available to donate now.

Many private schools would do well to take note of this fundraising trend and jump into action.

Future economic challenges for the education sector

Private schools would do well to follow the lead of the charitable sector in Australia and embrace planned giving wholeheartedly if recent (and predicted) industry trends are anything to go by.

In recent years the education sector in Australia has continued to see falling or stagnant private school enrolments, falling government funding, significant decreases in international fee revenue due to COVID-19 and ever-increasing competition from public schools.

Education providers of all sizes will ultimately need to develop additional income streams to meet current industry challenges and rely less on annual tuition revenue and government funding.

In Australia too, we will confront further harsh economic realities according to most economic experts that will impact adversely on our education sector into the future.?

Make no mistake, the multi-billion-dollar government stimulus packages rolled out around the country, will have to be repaid by the taxpayer. If history tells us anything, our education system will certainly share the load, along with our health, law enforcement and public sectors as our governments tighten purse strings. Don’t count on any tax breaks either coming our way for the next decade or three!

Given this uncertain economic future, it is inconceivable why more private schools aren’t investing serious resources into their fundraising activities. Why do so many education providers continue to place planned giving fundraising in the ‘too hard basket’ or ‘we’ll get to later’ strategic pile?

Despite funding from bequests being integral to raising funds for most major charities in Australia, it is often the unpredictable nature of bequests that can leave education providers strategically confused as to how best to engage their donors to forecast and eventually realise this revenue with any certainly.

Often too, the existence of this strategic uncertainty also betrays a significant lack of confidence in their fundraising cases for support and their strategic missions for many education providers.

All this results in cautious or inconsistent investment in fundraising programs and particularly tactics that require long-term investment and patience such as bequest programs.

So how should private schools overcome these economic challenges and set themselves up for planned giving success through bequests??

Meeting the bequest program challenge – ten panaceas for success

In order to successfully engage a donor so they decide to include their philanthropic intentions in their Will and leave funding to your institution, the following areas must come together for a program to work:

1. Get leadership on board right from the start with your program - without this support you are doomed to fail.
2. Create an authentic and compelling case for support that speaks directly to your institution’s mission and vision.
3. Create a fundraising strategic plan with tangible and achievable KPIs – this should also extend to having a marketing plan for your fundraising programs.
4. Hire experienced staff to manage the planned giving program (sides of desks approaches definitely don’t work!)
5. Determining what products your planned giving income will be directed towards e.g. scholarships, capital works, bursaries, or better still, untied?
6. Undertake prospect research constantly and consistently - including regular wealth screening of prospects.
7. Market your program constantly and demonstrate bequest impact at every opportunity - tell and sell remarkable stories!
8. Develop a bequest solicitation strategy that is personal, targeted and implemented consistently well.
9. Implement a stewardship program to recognise bequestors in their lifetime.
10. Constantly review results, canvass donor sentiment, and readjust your strategy as required.

Setting goals for bequest programs

Goal setting is also a very important consideration in running a bequest program.?

Setting goals is an effective way to focus attention on the things that are important in your program. It allows you to create a vision of the direction you want your program to take.?

When we have a goal, we tend to increase the amount of time and effort we spend on an activity and develop effective strategies to achieve that goal.

Setting annual bequest program goals can seem challenging, yet it is something that all programs should do.

Goals can be set around various key areas including:

• Realised income and/or assets
• Number of intended bequests
• Number of current prospects AND
• Program brand recall and enquiries among alumni and supporters

A good starting point is to look at your past bequest history going back over at least five years to establish a baseline average and then set growth targets for each one of these indicators you plan to track.

When setting realised and intended income goals, it can be advantageous to establish your median gift value over the five-year period and set your projections from there.?

If you have no established history, then benchmark other like institutions that do have established planned giving programs and set your goals accordingly.

As a guide, when setting growth goals, the current average annual growth rate for charitable sector in this region of the world is around 10 per cent for net realised income, so use this as a starting point having regard to past giving history at your organisation.

Whatever your goals just make sure they are achievable, as there’s nothing inspiring about an impossible goal!

Conclusion

With the current challenges facing our education sector in Australia, now is an opportune time to commence or reinvigorate a planned giving program at your school, using bequests as your main tactic.?

The benefits that flow from a well-designed bequest program are immense and provide a way for donors to give life to their philanthropic intentions and make a real and meaningful impact at your institution and if nothing more, it will provide that trusty old umbrella you can rely on when a storm arrives.

*Alastair Lee is an education advancement specialist and international award-winning thought leader in the education industry and has held many key leadership positions over the last two decades in enrolment marketing, alumni and fundraising within the university and private school sectors in Australia.

He is also Founding Director of AlumGrow Consultancy – a firm that assists education providers of all sizes to sustainably and strategically engage their alumni, donors and student prospects to foster greater financial and in-kind support and increase enrolment enquiries, helping them to secure their financial independence.