HAYIDION The Prizmah Journal
Leadership Giving: The Board’s Role in Your School’s Financial Future
There’s no way around it: giving needs to start from the board. Remin describes how to conceptualize and incentivize a board that holds its financial weight.
“The single greatest indicator of an organization’s fundraising success is the amount of board giving. June Bradham
Board giving sets the tone
The board is the most devoted group of volunteer leaders. If this group is not “at the head of the class” when it comes to giving, what are other prospective donors to think? One hundred percent annual board giving is just a start. The board needs to combine passion, vision, skills and ability to donate a meaningful percent of contributed revenue each year. (“Contributed revenue” refers to donations, grants and other operating gifts, as opposed to “earned revenue” such as tuition.) In addition to their operational impact, board donations send a message that reverberates through the community.
Additionally, donors making significant annual fund gifts are the very same people most likely to make lead gifts when it’s time for a capital or endowment campaign.
Even if you are not contemplating a big campaign right now, having a board in place that can donate a significant percentage of contributed revenue bodes well for your school’s current and future needs.
What percent of your school’s contributed revenue is donated by the board?
June Bradham, quoted at the beginning of this article, recommends that the board account for twenty-five percent of contributed revenue. That’s an eye-popping percentage for many boards. I routinely encounter board giving that accounts for less than five percent of contributed revenue. A leap to ten percent may feel insurmountable. One solution is to set a goal of increasing the board’s percent of contributed revenue by a targeted increment, e.g. two percent, each year.
Here’s an example of how the percentages translate into dollars: If your school is currently raising $1M per year, then the gold standard is a board contributing $250,000. Let’s assume the board is currently contributing $100,000 per year or ten percent of $1M. A two percent increase would be $120,000 per year or a $20,000 dollar increase. The final section of this article will outline one approach to building a board that can close the $20,000 gap.
The percent of contributed revenue metric is a great benchmark. It tells you where your board stands right now. If the percent is low, the metric is an effective motivational tool.
However, percent of contributed revenue is not the whole story. It is, in fact, a moving target. As you build your board with stronger donors, total contributed revenue will increase—the desired outcome. You’ll want to track the dollar amount of board giving as well as the percent of contributed revenue.
It’s easy enough to imagine periods where contributed revenue is increasing faster than board giving, even though the board is, in absolute dollars, giving more. You elect board members with more giving capacity. They invite some of their friends into the fold. You have a new set of donors giving at higher levels. Contributed revenue is now $1.5M. Your board that used to give $100,000 is now donating a record-breaking $250,000. Celebrate!
Board-building goal: Fifty percent of board members who can make an impact gift
How do you maintain board diversity while you increase board giving capacity? Aim for fifty percent of board members who can make a leadership or “impact” gift. Depending on the size of your school and its budget, leadership giving may be $10,000 per year, $25,000 or more. The fifty percent rule allows for a mix of parents, alumni, and other community members with a variety of skills, ages and points-of-view. Parents often constitute a hefty percent of board membership of Jewish day schools and certainly have much to offer. Other articles in this publication have pointed-out that parents constitute one board constituency, not the only constituency.
Let’s return to the school that raises $1M each year. Your board hasn’t been contributing much and your first major benchmark is a board that donates ten percent of contributed revenue. If you have eighteen board members, fifty percent is nine people who, as a group, donate $90,000 annually. (That leaves 10% or $10,000 to divide among the other nine members, who are assumed to be giving in the $500 to $2,000 range.) To reach the goal of $90,000 per year, it is ideal to have at least one board member donating $20,000 or roughly twenty percent of the total. Three or four people donate $10,000 or $15,000; and the remainder $5,000. The tiered scenario is the pathway to success. It is more likely than finding nine donors each of whom donates $10,000.
Concentration of wealth
Why all the emphasis on board members and donors who can make larger gifts? Wealth is concentrating. Organizations are discovering that a smaller and smaller percentage of their donors account for an increasingly large slice of total contributions, e.g., ten percent of donors accounting for ninety percent of contributed revenue. Furthermore, according to Giving USA, eighty-one percent of the $290B of giving in the United States in 2010 came from individuals.
In terms of types of financial wealth [net worth minus value of home], the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America. G. William Donhoff
Board-building: Strong committees
Skills and diversity considerations often over-shadow straightforward talk about money. That’s why the fifty percent rule is so effective.
That said, the board’s expertise certainly does matter. Most effective boards do their work through a committee structure. Look through the committee lens to define the skills that will be most helpful to your board at this time. Is it finance, nominating or marketing, as examples? Are you about to develop a new strategic plan? The committee lens is so effective because it not only directs you toward whom you need, but also insures the board member will be immediately put to good use.
One of the key reasons board members become disenchanted is that they don’t feel helpful. It is recommended that every board member agree to serve on a standing committee. Committee service is often the most engaging aspect of board service. Put board members in a position to be valuable—and they will feel valuable.
How do you build a leadership-giving board?
Jan Masaoka at blueavocado.org has developed a creative yet straightforward solution: a Blue Ribbon Nominating Committee that meets once for 90 minutes. That’s right, once. Once is the brilliance, as a busy, successful person may be willing to carve out time for a single meeting.
Prior to making the list of potential Blue Ribbon Nominating Committee members, define your board’s most critical need in addition to the ability to make an impact gift. This might be a marketing committee, a strategic planning group or buildings & grounds. Identifying this need is a critical step for two reasons: 1) you are focusing on the one or two places you really need help and 2) the prospective board member will be well-utilized and have a satisfying experience. Then identify people you wish were on your board and people you think know people you wish were on your board. Think big. Invite them to serve on your Blue Ribbon Nominating Committee—which meets once and then disbands. Your goal is eight to twelve people in the room. You may have to contact two dozen to get this number.
At the Blue Ribbon Nominating Committee meeting, welcome participants and then have the Board Chair & Executive Director make a ten to fifteen minute presentation that focuses on one or two key strategic initiatives that the board will be addressing in the short-term (not a dog & pony show about your programs and statistics). Make clear what the new board members can and will be doing. Then give attendees a form on which they can submit nominations. Include space where the committee member can indicate why s/he thinks this nominee might be interested in your school and the task at hand. Be clear you will be saying, “Joe Smith suggested I give you a call…”
The Blue Ribbon Nominating Committee does one thing: provide a list of promising names that combine expertise you are seeking and financial ability. It will be up to the board’s standing nominating committee along with senior staff to follow through with the actual board recruitment process.
A document called a Board Prospectus is recommended to support the recruitment effort. This combination marketing and “reality” piece describes your school’s philosophy and strengths; key data points, e.g., budget, number of students, faculty, etc.; and board expectations, including giving and attendance.
Most importantly, pick up the phone and see if the prospective nominee will get together with you for coffee. Major gift fundraising is all about personal relationships. Board development is no different.
Build that board!♦
Diane Remin is the founder and president of MajorDonors.com and a nonprofit board member. She can be reached at email@example.com.
One hundred percent annual board giving is just a start. The board needs to combine passion, vision, skills and ability to donate a meaningful percent of contributed revenue each year.
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