LeadingAge Magazine · March/April 2012 • Volume 02 • Number 02

Foundations of Fundraising: Mission, Reputation, Stewardship

March 13, 2012 | by Dianne Molvig

Fundraising is ever more important in an era of shrinking reimbursements. Providers are adopting new approaches to fundraising while observing time-honored ethical principles.

Where would your organization be without the benefits reaped from fundraising? Lindsay Fick, president/CEO of Saint Simeon’s Episcopal Home in Tulsa, OK, doesn’t miss a beat in answering that question. “I can tell you from an operational perspective, fundraising makes a big difference here,” she says.

The organization’s foundation raises funds for any capital need, such as an expansion or a new roof, freeing Saint Simeon’s from long-term debt. Increases in residents’ rates go solely to cover rising operating costs, such as for labor and food service, not capital expenses. Plus, a benevolence fund, also fed by fundraising, helps cover expenses for residents who deplete their financial resources.

“Because of fundraising,” Fick says, “we can stand today in front of our residents and family members and tell them that 100 percent of what they pay to us goes toward their care or their loved one’s care.”

As is the case at Saint Simeon’s, many not-for-profit aging services organizations say fundraising ties directly into fulfilling their mission. For instance, at Virginia Mennonite Retirement Community (VMRC) in Harrisonburg, fundraising fuels the Good Samaritan Fund, which covers the gap between what Medicaid pays and the actual cost of resident care. About a third of VMRC’s nursing home residents and 10 percent of its assisted living residents are on Medicaid. The Good Samaritan Fund brings in about $300,000 to cover costs for 12 residents each year, reports Maureen Pearson, director of communications.

Fundraising is also paying for 100 percent of the construction costs of new VMRC communities based on the Green House model. Eventually, this $5 million project will include a neighborhood cluster of 10 homes providing nursing-home level care, with up to 10 residents living in each house in a single-family-home environment.

“Without fundraising,” Pearson says, “I don’t know how we’d be able to continue to provide for those seniors who have outlived their personal finances.” Fundraising also enables VMRC to “stay true to our founder’s vision,” Pearson adds, “of caring for elders in the community who are not physically or financially able to care for themselves.”

Likewise, at Front Porch, based in Burbank, CA, fundraising ties into the mission encapsulated in the slogan, “Live life your way.” Residents can take that a step further by creating the kind of community they want to live in, says Keith Church, a foundation executive who oversees two of Front Porch’s four partner foundations.

The vast majority of donors are Front Porch residents and their families. Residents decide what they want for their community and target their donations accordingly. “Without fundraising,” Church says, “we wouldn’t have a full-time spiritual care provider. We wouldn’t have intergenerational music and arts programs. We would struggle to keep some residents here after they run out of money. We wouldn’t have the sense of genuine community we have here. We’d feel a lot more like a hotel.”

Faced with cuts in government reimbursements and other fiscal challenges, aging services organizations’ need for charitable support is “great and growing,” says Michael Bell, foundation executive director at Suncoast Hospice in Clearwater, FL, past chair of the LeadingAge Philanthropy Network Steering Committee, and a member of the LeadingAge board.

As the need grows, Bell sees a couple of fundraising trends taking shape. One is the shift away from the exclusively internal focus of aging services fundraising. Historically, fundraising relied on donations from residents, families and employees. While internal giving continues to play a key role—and in many organizations remains the major, even sole, source for charitable giving—Bell sees some organizations aiming to attract more donations from the outside community.

“I think that’s partly due to necessity as the need grows,” Bell says. “And it’s also due to a maturing of fundraising efforts. Universities now have their development efforts down to a fine art, and hospitals and health systems have advanced greatly in their fundraising strategies. It may be our turn.”

Another tendency—perhaps still too new to call a trend, Bell notes—is the move away from traditional, time-limited fundraising campaigns. Typically, campaigns would last for 18 to 24 months, and donors would have three to five years to pay their commitments. The recession triggered a shift, Bell says, as donors lost confidence in the markets and became more cautious in multi-year financial pledges.

“They might ask for more time, perhaps for five to seven years instead of three to five, to make the same size gift,” he explains. “As we come out of the recession, I don’t see us ever going back to the traditional patterns. I think we’re going to be in a ‘forever campaign’—an ongoing quest to attract major gifts. That requires a different approach and strategy.”

Bell cites four key areas that pose challenges to aging service organizations as they pursue effective, ethical fundraising. He feels organizations must strive to:

Engage Multiple Players From Within the Organization
To be successful, fundraising must actively involve the CEO, board members or trustees, volunteers and team members from the organization’s staff, in addition to the fundraising director. “The donor’s relationship needs to be with the organization, not with one fundraising professional,” Bell says.

At Christian Church Homes of Northern California, based in Oakland, fundraising historically brought in just one percent of the revenue stream. A few years ago, the board decided to ramp up the fundraising effort, and last summer they hired John Rodenberg to be the first director of fund development.

As Rodenberg sees it, “fundraising can’t be a tangential part of your organization.” Board members must be highly committed to and engaged in fundraising, he says, as they have key contacts in the broader community. And the CEO ought to spend up to half of his or her time on fundraising, even if there’s a full-time fundraising professional on staff. Rodenberg says his role as the fundraising director is to be the facilitator who makes the connections.

“Even if a fundraising professional has ‘vice president’ in his or her title,” he explains, “when you’re working with high-capacity individuals or trying to secure a grant from a foundation, you’re dealing with people who want to meet with the president. And it’s up to the president to seal the deal.”

Broaden the Donor Circle
Aging services organizations aren’t about to leap into such fundraising strategies as cold calling, Bell observes. But he feels they can take steps to expand campaigns beyond the inner circle of residents, family and staff. People in the broader community can come to view aging services “as good for the quality of life in the community,” Bell says, even if they don’t imagine themselves or their family members ever using those services.

Creating such a perception relies on building trust in the broader community, says Les Helmuth, executive director of the VMRC Foundation. “When you have that trust solidly established,” he says, “anything can happen. Donations come out of the blue.”

One of his favorite examples is a gift VMRC received from a local woman a few years ago. She’d never been a resident nor had anyone in her family, and she had no connections with anyone who worked at VMRC.

But a friend had told her about how the organization served the community’s elderly, including those of limited financial means. That spurred the woman to leave half her estate, or $756,000, to VMRC. “That gift wasn’t the result of anything I did,” Helmuth says, “but because of the reputation of our organization.”

Similarly, at Saint Simeon’s Episcopal Home, fundraising success relies on the organization’s “sterling reputation in the community,” says Phyllis Dotson, the fundraising chair for the foundation’s board. Thanks to that reputation, Saint Simeon’s was able to raise nearly $30 million through two major capital campaigns in recent years for a new assisted living community and wellness center and renovations to a memory care center.

Saint Simeon’s also notches up its community profile by holding one major fundraising event each year. Called Western Days, the occasion is “typical Oklahoma,” Dotson says. Attendees come in casual attire to enjoy food, music, raffles, auctions and a country store stocked with crafts and baked goods made by staff and residents. Western Days draws some 800 people and raises nearly $500,000. What’s more, the event “galvanizes supporters,” Dotson says, and makes more people aware of Saint Simeon’s importance to the community. “We draw three generations to Western Days,” Dotson says. “It’s a fun party for everyone.”

For some organizations, broadening the donor circle has a different meaning. Christian Church Homes receives no donations from its low-income residents. So donations come from foundations and corporate sponsors, including companies from which the organization buys products and services. “We try to establish reciprocal relationships with our vendors,” Rodenberg says.

Although the donor group differs in makeup, building community stature is again critical. One way Christian Church Homes reinforces that is with a high-profile annual dinner event that draws the mayor, the congressional representative and other community leaders. “It’s fantastic for publicity,” Rodenberg says. “It’s an opportunity for us to cultivate new relationships.”

Exercise Caution With Vulnerable Donors
In many instances, residents are the primary donor group for aging services organizations. Thus, ethical fundraising requires ensuring that the donor is able to afford the gift, both financially and emotionally, Bell advises.

“We must make sure we don’t say or do anything that could be seen as influencing,” Bell says. “Family members, who may live several states away, may question just how involved we were in their loved one’s decision.”

In these times of stretched fiscal resources and growing need, it can be difficult to say no to a gift. But sometimes that’s exactly the right thing to do, Helmuth points out. He recently turned away a resident who wanted to establish a $100,000 gift annuity. As Helmuth talked with the resident, he realized such a gift would put the 83-year-old man at risk of being unable to afford his care through his remaining years.

For donors in that position, “I prefer they leave us a portion of their estate at death, which may be years off,” Helmuth says, “rather than giving us a gift now that helps me reach my current-year fundraising goals.”

Still, the possibility always exists that family members will question an elder’s gift-giving decision. Natural tensions may arise around the family money. At Front Porch, residents make up the vast majority of donors. So it’s critical for the organization’s fundraising to be donor-driven, Church emphasizes.

“The donors are in charge,” he says. “This is about doing what they want to do—not what our board or our executive director or I want to do. I can explain to the family the nuts and bolts of what mom wants to do with her gift. But then mom is in the best position to explain to the family why that’s important to her.”

Use Gifts According to Donors’ Intentions
Staying committed to honoring the donor’s intent can be “especially challenging,” Bell notes, “in these days of decreased cash flow and operating reserves.” Yet, he describes it as the universal ethical concern for all causes, of any type, in conducting fundraising.

Saint Simeon’s uses various strategies to help toe the ethical line, according to Carolyn Blair, executive director of the organization’s foundation. “We carefully honor donor intentions regarding any type of restriction they place on a gift,” she says. The foundation has two full-time staff, and Saint Simeon’s chief financial officer “serves as our checks and balances for our fundraising activity,” Blair adds. Also, an electronic tool, called Raiser’s Edge, tracks gifts to assure they’re spent appropriately.

In the end, honoring donors’ intentions is about practicing responsible stewardship, says Rodenberg. He believes that must be the overarching principle for any effective, ethical fundraising endeavor.

“If at any point, donors—whether they be individuals, corporations or foundations—feel an organization hasn’t recognized their gifts or been a good steward of the resources they donated,” Rodenberg says, “they’re not going to give to you again. So you have to be ethical and responsive every step of the way.”