It’s August, and across the length and breadth of North America, admission officers and senior university administrators are anxiously holding their collective breadth, waiting to see just how many students will arrive (and return) to their hallowed halls. Such is the life of the tuition/fee-dependent higher education institution and, let’s face it, with only a minute handful of exceptions, the vast majority of colleges and universities rely on tuition and fees for more than 90 percent of the operating budgets needed to fulfill their noble missions. Quite rightly then, recruitment and retention efforts command the lion’s share of our collective attention. However, for any university to move from surviving, to stable, to thriving, it cannot neglect to pay close and consistent attention to two crucial components of the fiscal triad, the endowment and the annual fund. Of the three, the annual fund is often the most neglected, but just as in the body, “the parts which seem weakest and least important are actually the most necessary,” they, like the annual fund, are foundational. This Connections, then, is a brief ode to the importance of that lesser part, the humble annual fund.
Most of us are quite familiar with annual fund drives, if not from our own alma maters hounding us once a year, then through the ubiquitous PBS/NPR drives which annoyingly interrupt “your regularly scheduled programming” (albeit with the prospect of scoring a nifty tote bag, or other swag). From these pledge drives you know that even small gifts, especially when they are consistently given, can make a big difference. That is why the typical pitch is aimed at amounts in the range of $120 to $1,200 with the encouragement that it be spread out over the year (although one-time gifts are always accepted!). It’s a highly effective model.
Among its many benefits, an effective annual fund program:
- Provides income both for specific projects and unrestricted funds
- Establishes giving habits and patterns that can be tracked
- Establishes a donor pipeline and helps identify donors with the potential capacity and propensity to give bigger gifts in the future
- Increases donor participation rates
- Enhances our chances of obtaining grant funding
- Helps improve and keep data about prospects up to date
- Is a great stewardship tool
- Helps reinforce core messages about an institution
- Helps identify enthusiasts who might be leaders or significant volunteers
- Strengthens the bonds between an institution and its donors
Operationally, these drives target different donor segments at different times of the year, beginning with the institution’s employees. As is only proper, last year the majority of the FPU Board of Trustees and Executive Cabinet contributed to the annual fund. Faculty and staff know better than anyone else the challenges our institution is facing, as well as the profound forever difference an FPU education makes in the lives of our students for the benefit of our communities. As insiders, we should require less attention from our peers in the Advancement Office, who can then invest their time and energy in cultivating donors outside the university. Consequently, if the annual fund is the foundation of all other fundraising efforts, then trustee and employee giving is the rebar in that foundation. So, won’t you please prayerfully consider joining me in signing up for payroll deduction. And, as always, one-time gifts are appreciated.
 Thriving colleges derive 5 percent of their annual operating budget from their endowment. Since the typical university draws no more than 5 percent from endowment revenues annually, this means that a healthy institution should have an endowment equal to the size of its annual budget. In FPU’s case, this means that our endowment should be in the $60 million range (about six times what it is currently). Similarly, the annual fund should generate 5 percent of the annual budget and thus, we should be raising $3 million annually. Currently, we are raising less than a third of that amount.