Energizing Your Institutional Messages for Fundraising
Kristin V. Rehder, Principal
Kristin V. Rehder & Associates Survey
CASE District I and II Conference
February 1-4, 2003
New York City

• Presentation
• Survey of Fundraisers Best Appeals in the 2003 Economy

Note: In preparation for a session I gave on "Energizing Your Institutional Messages for Fund Raising" at the February CASE District I and II Conference in New York, I surveyed over 30 vice presidents, gift officers, and fundraising consultants at private schools, teaching hospitals, major universities, liberal arts colleges, and consultancies across the country. For the text of that presentation, please go to my website at www.kvrehder.com and look under Hot Topics.

The following is a compilation of most, but not all, of the responses I received to my on-line survey, with institutional names omitted. My hearty thanks to all who participated.

• It's certainly a tough climate, but to the extent that people can in these uncertain times, talk about narrowing their focus on things that really are at the top of their list, and hopefully that includes the college;
• Discuss the fact that we are in a long term effort and hopefully people will feel comfortable making a commitment now, understanding that they can really step up to complete the bulk of it over the next several years, if that's better for them;
• Help people understand that the college has been around for a long time and will be around for a long time, and it is getting stronger in many ways even through these tough times...we're hoping that those who really can still make a difference right now do so, while those who can't right now, we understand and hope we can continue the conversation in the time ahead.

This is complex to answer because each donor is so different. Here are some scenarios:

• Wealthy donor who does not want to give stock now because the market is depressed and the value of his gift will be much less than in the future.
  1. We are suggesting balloon payments. The donor pledges more than she would pledge now if she had to start paying this year. She signs a pledge form promising to fulfill the entire pledge in five years and does not commit to yearly gifts. Of course, the donor also signs that this gift is binding against her estate. Donors believe that the market will begin recovery within a year or so.
• Stretch donor who is worried about fulfilling a pledge due to the uncertainty of the economy.
  1. They commit to a gift that is comfortable and agree that we can come back and resolicit them when the economy recovers. They feel good; we have the mandate to return.
• Donor who needs a specific income now and sees the market going down the tubes.
  1. This is a great time to help older donors make a landmark gift during their lifetime by investing in a CGA. Planned giving can be a win-win for some donors now and for an institution. It's not the whole answer, but it can work for some. We recently wrote a CGA for a 91 year old donor whose CDs matured; the rate he was offered was significantly lower than before. The CGA we wrote yields 12%. He is ecstatic.

Another discussion opportunity involves the pledging of stock (this could work for both closely held and publicly traded stock). This would be appropriate for individuals who have said they can't make a gift due to current market conditions, or are waiting for a certain stock to "come back."

• Donor makes pledge of specified amount of stock
• Pledge agreement stipulates that the pledge will be completed (i.e. stock is transferred to the charity) when the stock hits an agreed upon price within a specific period of time.
• If the stock hits the price within the designated time frame, the donor transfers the stock to the charity.
• If the stock doesn't hit the price within the stipulated timeframe, both parties agree to re-visit the pledge and, perhaps re-structure it.

This approach allows the donor to retain control over the asset and execute the gift in a fashion that is sensitive to her/his financial circumstances.


Relative to a charitable gift annuity.

• Another possible scenario is a charitable lead trust (CLT.) CLT's are NOT for people who are concerned about their income—indeed, they are a tool for the very wealthy. We just did two of these at the end of the year.
• CLT's pay income to the charity for the term of the trust and then the assets go back to the donor or the heirs of the donor.
• These are very attractive vehicles in times of low interest rates like now.
• They allow the donor to maintain control over their asset while still making a significant gift.

Feedback [from our staff to this question] revolves around participation and sensitivity:

• In no way do we want you to extend yourself beyond your comfort level in these tough economic times. A gift of any size is a gift and we are so grateful as every gift of any size makes an impact.
• The Financial Aid case is huge right now.
• Participation counts now more than ever as classmates and other alumni do give with the knowledge that others are doing anything they can as well.

For a donor who has been adamant with me about not paying his outstanding pledges (now worth about $100K) nor making any new commitments as part of the campaign, until the market turns around.

• His portfolio has declined about 60%.
• He says will not make any new commitments that will impact his "lifestyle." Talks about how his portfolio is his only retirement plan.
• Donor is also a volunteer. It is interesting that by talking about someone else's financial issues, the donor was educated about new ways to make his own commitment. Sometimes you are educating the volunteer at the same time the volunteer is working to educate someone else about giving. This also gives the volunteer a new vocabulary with which to think about and discuss giving and giving strategies.

The suggested strategy:

• Pledging stock and then making the gift when the shares reach a predetermined "striking" price. This was like a light bulb going on for the donor.
• Allows the prospect to make a commitment without actually making the gift when the market is low.

An additional option is to put an expiration date on the pledge so that if the predetermined striking price is not reached in that timeframe, a new agreement can be made, perhaps with some willingness to gift the stock at a lower striking price.


A charitable gift annuity could be quite appealing to a prospective donor in their late '70s or older who:

• wants to make a charitable gift but feels uncomfortable making an outright gift because of unknown income needs in the future
• likes the idea of a fixed and predictable income stream, in light of recent volatility in the stock market
• in spite of drops in the market, holds blue-chip stock that
  1. is still worth more than they paid for it, are considering selling the stock and would like to avoid paying capital gains tax, and/or
  2. has reduced the dividend payout for that particular stock
• has money in savings or CD's and is receiving a relatively low rate of interest
• is comfortable with the idea of giving up an asset as long as they can retain the income
• needs or likes the idea of generating an income tax deduction

• The message is simple—patience.
• Things are very unsettled, and many of my donors are in a wait and see mode. I'm using this time to continue to cultivate relationships and find new POTENTIAL donors. I'm having a hard time finding something upon which to put a positive spin. Most of the [millions] we have in gifts over the past two years have been cash—2.5M is in deferred.
• Your question for donors who need income though would lead me to talk about things like CRTs or Annuity Trusts if they're looking for stability or a fixed income. But [current] tax proposals are making things even more confusing right now.

• XYZ College appreciates all you have meant to the College and expects to be an important part of your future philanthropic giving. Now may be a time when your circumstance does not allow your most generous giving. We will continue to keep you informed about the College and involved in its progress.
• XYZ College has undertaken a renewal of student residences, which offers unique, once-in-a-lifetime naming opportunities for two new dormitories. We expect to approach a very few alumni who are in a position to consider naming these new dormitories.
• We also begin our Letters of Agreement with the phrase, "Barring unforeseen circumstances, Joe Jones pledges...." We expect payment, but we recognize that disaster can strike.
• We continue to put emphasis on financial aid because we ask donors to understand that difficult economic times ask even more from those with lesser resources. Those who can give to financial aid in times like these should recognize their gifts are more vital than ever because the need has increased.
• We have shifted some of our resources to stewardship, believing that the best preparation for the future is the careful expression of thanks to our previous donors.

• For AF donors, stressing the College's unprecedented need during this time of hardship for loyal support. Need for increased financial aid dollars etc. At the same time, focusing on the need to support core values that are important during times of uncertainty.
• For major gift donors, stressing flexibility, ability to pay over five years, and generally being understanding. Accepting lower than usual gift amounts and encouraging donors to make a commitment, with the understanding that if things improve they can increase their commitment.
• Also for major gift donors and older alums, stressing the benefits of planned gifts in terms of reliable, certain, constant income streams, the ability to translate stocks into income, the attractiveness of vehicles like lead trusts now b/c interest rates are so low.

Right now it's all about gift annuities;

• We've used postcards effectively with annuity rates listed as teasers; phrases include:
  1. Dividends down? CDs coming due? Maybe investing in [College] is the answer. AND
  2. Don't Let [College's] Best Annuity Rates Slip Through Your Fingers (late October announcing rate change effective January 1, 2003)
• So Little in Life is Guaranteed—the message that follows is basically that [College's] gift annuity rates are fixed and guaranteed
• We talk about the safety of a charitable gift annuity—guaranteed rate backed by [College's] total assets (important in light of corporate mistrust)
• Basically in a bad economy annuities are safe (at least at [College]!), return appealing rates that are fixed and guaranteed (compared to lagging dividends and low CD rates), and have tax-favored income treatment
• If folks want to have more flexibility than a gift annuity offers, or they want to include multiple charities, then we steer them toward a charitable remainder trust. However, as I said, we're all about gift annuities right now!

Prospects should consider giving:

• to build for the future—stepping up with a gift will ensure "tomorrow" and emphasizes a sense of optimism
• to help steward and preserve worthwhile, sustained and sustainable endeavors
• to join with others (leadership) to advance something that is making a difference

In all of this, it is important for the nonprofit to demonstrate:

• high degree of accountability, "delivering on promises"
• transparency re financials and more full information on same
• robust, smart, forward-looking management and involved volunteers
• relevance, importance, value of services provided
• being donor-centric—and creating opportunities for gift designation (even if fungible, such as Heifer Project International, Dartmouth alumni fund with its five "buckets")
• reinforcement of the notion of community (it's about participation even more than dollar amount)

The messages should be emotionally based (Marc Gobe's Emotional Branding very hot right now), using stories, testimonials, etc. and emphasizing personalized asks via mail-merge letters, list-servers, personal visits, etc.


On the gift planning (need income) side:

• many of their stocks are not paying dividends—annuity rates are quite attractive right now, can make a gift, get some income, and at [College] the gift portion of the annuity can be used immediately. This means they can start their endowed fund, give to one of our building projects, etc., now.
• can make a planned gift for another family member they wish to help/support and help [College]

On the concern about making large commitment in uncertain times:

• education is an important way to help affect change in the world, share examples of students' work and involvement. Talk about specific examples of alumnae making a difference in the world.
• flexibility in working with the donor on a gift and payment schedule that works for them

• Since our top institutional priorities at the moment are buildings, we are telling prospective donors that we must act now because our outdated dorms place us at a competitive disadvantage. Prospective donors understand the need and remind us that this is a great time to borrow money since interest rates are low and our credit rating is strong! We are struck by the fact that donors are quite vocal about the need for us to get good value for our dollars. Although our constituents cheer when we say that we're building for 100 years and will not do so "on the cheap," we find ourselves working extra hard to define "value engineering" and express our commitment to it!
• Until the prospects of war became so much more apparent a few days ago, I believe that most prospective donors had already accepted their market losses since March 2000 and re-calibrated their lives accordingly; there were signs of a philanthropic springtime. But these last few days have been dreary again.
• Fundraising in this environment varies from one individual to the next, and we need to keep reminding ourselves of that. One of our most wealthy alums has a company whose stock price is at an all-time high right now. He is feeling flush, willing and able to make and honor new commitments. Most are not feeling nearly so good.
• Donors with existing pledges are honoring those pledges on time. New commitments are hard won. People are indeed interested in stabilizing their incomes; we have had some (but not very many) inquiries about how we, through life income gifts, can help individuals with their financial strategies.

• First, a lot depends on how close you are to the prospect. For example last week on some visits, one of the questions I used was "so what do you think this market is going to do?" Then by gauging the reaction you can determine how they have faired in this current market. You can't assume they have done poorly, we have one donor who shared that he has been shorting the market for the past 24 months and as a result has done quite well; another has been heavily into bonds and shared how much his bonds have appreciated. Granted, others have suffered in this market so to those we focus on what their interests might be and some sense of when the time might be right to have a serious discussion of gift amount. All assets have not gone down, we completed two gifts of real estate prior to December 31 due in part to the strong real estate market. Those with significant bond holdings are doing well, etc.
• So, here's part of our justification: The needs and aspirations of [College] have not diminished, while we recognize some have suffered significant losses (including our endowment), we have survived tough economic times and we must always be looking forward and working diligently to help her be a much stronger institution serving the students for whom we make a major difference in their lives. For those that the time is not right, when will be a better time? For those that might find the time right some have said they feel lucky and a sense they should step forward and carry the burden for those that can't at the moment.
• I know of colleagues that are trying to secure a two-step pledge. It goes like this, what can you pledge today, and if things get better, what are you willing to commit to and what is a definition of things getting better. For example, they have secured a pledge from one individual who has most of his assets in one stock that on 12/31/04 if the stock is worth $50, then the gift is $100,000, if the stock is worth $65 then the gift is $250,000, if $75 then $500,000 and finally if the stock is worth $90 or higher then $1 million. I'm not sure many donors are willing to go to this level of detail, but it worked in this case.
• Bottom line, LISTEN to the donors share their present financial circumstance and be sympathetic, or rejoice if it's strong.

• Another possible scenario is a charitable lead trust (CLT).
• Celt's are NOT for people who are concerned about their income—indeed, they are a tool for the very wealthy. We just did two of these at the end of the year.
• CLT's pay income to the charity for the term of the trust and then the assets go back to the donor or the heirs of the donor.
• These are very attractive vehicles in times of low interest rates like now.
• They allow the donor to maintain control over their asset while still making a significant gift.

• Re our Annual Fund—we have not seen much drop in the $$ side. We were about 5% ahead of last year at 12/31. Now the # of donors was down for both alumnae and current parents so the average gift was obviously up as of 12/31. I guess only the next 6 months will tell how successful we are in capturing all those donors.
• Re our capital campaign, however, we have seen a slow down in people making their decisions. We have some whose ask has been on the table for many months. The sense I get is that they are afraid to make a multi-year commitment with the uncertainty of the economy. Our only response at this time is to say that we can be flexible with their payment schedule and hopefully that will give them the time to feel comfortable about things turning around. I am sure the possibility of war won't be of much help for us.
• I think the only thing we can say to potential donors is to reiterate the importance of the School's mission. In these uncertain times, what better place to provide a healthy, value-based environment for today's women?
• I think we are fortunate be cause we are an educational institution and we have found that in tight times non-profits like ours continue to remain on people's list of priorities.

Our watchword now is flexibility, being in the quiet phase at what could be considered the worst possible time. As we make our leadership asks, we are not lowering our sights/asks, but we are being super-sensitive and receptive to people who want to delay their answers. We'd rather have people say "come back in 6-12 months" than give us a smaller gift now, just for the sake of campaign timing. So we may end up extending the quiet phase.

We're saying that we'd like to talk about a significant gift to the campaign. (Some people still have money. It's a mistake to lower our sights for everyone.) If they indicate, as many have, that their net worth has declined dramatically, we say let's talk about a gift now that is manageable and about the possibility of partnering in the recovery. In this way, the higher ask is already on the table and the door is open for another conversation when the economy improves. Folks are generally flattered that we still think of them as having a lot of resources!

• We are making certain our donors understand they can complete their commitments over a period of years. This is so obvious to gift officers that it might not seem to merit mentioning. But it's a mistake to assume it is obvious to donors—especially to donors considering their first capital gifts.
• We are making certain our donors understand the timetable for completing their commitments is flexible—i.e., that we are eager to work with them in order to make it possible for them to make gifts that will make a significant difference to [School's] students and faculty.
• If it seems appropriate, we are trying to help donors determine the most effective way to make gifts now. They may have large cash reserves after selling poorly-performing investments. If so, we ask them to consider whether, rather than using this cash to make their gifts, they should give those assets that have continued to grow in value, thereby taking advantage of remaining appreciation.
• We are placing increasing emphasis on asking prospective donors, regardless of their age, whether they have provided for [School] in their estate plans. The theory is that this will give us the opportunity to thank and steward them—and thereby increase their inclination to make major outright gifts when the market turns around and they're feeling less concerned about their finances.
• We are making certain donors know that [School's] needs aren't about to go away. It helps that we are not yet officially in campaign, because it makes it that much easier to say we'd like to come back and talk to them as the school's priorities are finalized...and as their ability to help [School] improves.

• Where income is required, we are especially quick to talk about annuities, as the rates are extremely favorable when compared to other types of investments, especially debt-based investments.
• We continue to stress, however, the two-fold benefit of such giving: benefit to the donor, benefit to the institution. In these troubled economic times, we don't want people flocking to us as organizations that will help them bail out of financial difficulties. That's not what we were created to do. What we principally do is provide benefit to those who attend and teach at our institutions.
• We stress that institutions suffer from the same financial pressures as do individuals. So, when individuals suffer, we suffer, and in some cases suffer more. Which means that we need their philanthropic support now more than ever.
• We stress that our needs, even in the midst of better economic times, are not trivial, and that they really are needs, as opposed to wants.

• Speak passionately about your capital facilities needs.
• Remain understanding of people's personal retrenchment plans in this low-tide economy, while seeking to gain their support for your mission.
• Show that your capital efforts reflect adjustments to your master capital plan based on the constituency's real circumstances in this economy.

• If you can't/don't feel comfortable about a give year commitment, something (significant) is terrific.
• We can talk long-term later. With endowments going down, operating dollars are even more important.
• Large Annual Fund gifts make the difference. $5,000 for the Fund helps to offset a $100,000 downtick in the endowment and allows us to keep offering the same level of education in an uncertain market.
• We are doing more with planned gifts in general (trusts, annuities) you may feel poor today, but I bet you are still better off than 10 years ago!!!!

The one thing I would emphasize is that with almost any life income arrangement, a person can secure a more attractive income stream than is available from virtually any investment portfolio. A CRT has a minimum payout by law of 5%; gift annuities pay even higher, guaranteed fixed rates. If a person is inclined to make a gift and part with capital assets (and right now most charities need support more than ever, so he/she could really have more impact than during boom times) but wants to lock in a good income, he should look at a life income deal. Economically speaking, it's almost a no-brainer—between the income, the tax deductions, and the absence of fees. Big charities usually charge no fees for set-up or ongoing maintenance and investment of the trust/annuity—unlike commercial investments.

Well, I think the main thing is that we are continuing to talk to people and are understanding when they express concern about the future, etc. Our job is to continue to plant seeds and to cultivate during this time. For some, their economic circumstances do not mirror the economy and they can make a gift. For others, we need to provide them with information about our needs and make sure they are aware that these times are tough for the institution as well—and that their gift, while always meaningful, is even more critical now. So:

• Listen to the concerns of prospects
• Keep planting seeds & cultivating for the long term
• Try to uncover those who are not affected by the current conditions
• Emphasize the critical nature of their support for the institution during these uncertain times

• In these times we all need to make choices about what's most important. Critical that our investments/expenditures make a difference. [College] does make a difference and your gift can and will here. We also recognize that if you've made a commitment it is just that—a commitment made in good faith that you can and will fulfill when circumstances allow, which they currently might not.
• If you are contemplating a commitment but unwilling to make a long term one now, we also agree that these are long-term relationships and long-term conversations that we will continue to revisit.
• Given what appears to be propping us up at the moment—more people giving despite smaller average gifts—we are also pushing the notion of continuing support even if at a reduced level.