The COVID-19 crisis has created a climate of uncertainty for development professionals. Schools are reviewing the results of a highly unusual fundraising season and trying to project income for the new year. Almost half of all schools experienced a decline in overall fundraising revenue for the 2019–20 school year, exacerbating an already insecure budgeting environment.
Questions such as “What will school look like in the fall?”; “Are we going into a recession?”; “Will our enrollment decline?”; and “Will our leading donors continue to give?” plague Board and staff members who are trying to predict the school’s income. Accordingly, ISM recommends that you take a disciplined, stepwise approach to create fundraising projections for the coming year.
Step 1: Analyze Your Data
There is no substitute in development budgeting for careful and detailed data analysis. This will allow you to predict trends and accurately project fundraising totals.
- Determine the average percent increase or decrease in giving among all constituencies over the past five years. Compare that average with the changes in giving your school experienced during the 2008–09 recession. Were those changes different than the percent increase or decrease from normal years? If it was, could factors other than the recession account for the difference? Multiply the average percent change to your 2019–20 results for a prediction for the 2020–21 school year.
- Giving by your leadership donors (normally those who give $1,000 or more to your annual fund) is an important bellwether for your entire annual fund, since this group normally represents 80% of the total. Examine the past three years of giving for each of your leadership donors. Are they expected to give again in the coming year? Whom do you expect to respond positively to an appeal to increase their gifts? Who will likely give the same or less? Who will not renew? On average, how many new parent leadership gifts do you receive every year? Compute an annual fund result based on leadership giving representing 80% of the total.
- Compare the amount derived from step 1a and the total that results from the data in step 1b. Average the two to make a data-driven prediction of fundraising income for the coming year.
Step 2: Create Scenarios
A recent survey examining current donor attitudes states clearly that donors and prospects continue to support the charities they love. This makes it especially important for schools to actively steward their relationships with donors and construct a Case for Giving that is responsive and relevant.
However, further research warns that we must be prepared for decreases in our projections. In line with your whole school budget, ISM recommends that you create a “worst-case” scenario that projects a 30% dip in fundraising revenue derived from the projection of #1 above and a “best-case” scenario that projects an increase of 5%.
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Step 3: Be Conservative
For budgeting purposes, given the uncertainty of the economy, we recommend a “budget” scenario that splits the difference between the best and worst cases, or a 10% reduction of the projected total derived in #1.
This careful and conservative approach to fundraising projection avoids using the fundraising total as a “plug” number for an unbalanced budget. It also creates a budgeting precedent for subsequent years as the economic situation improves.
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