Catholic School Development Foundation (CSDF) will be a not-for-profit operating foundation whose exclusive purpose is to provide development and fund raising counsel to Catholic elementary and secondary schools. By definition, an operating foundation is "An organization that uses its resources to conduct research or provide a direct service." (Foundation Directory, 1995, p. vi.)
While most operating foundations depend upon large endowments, the concept driving this foundation relies instead upon a "living endowment." This term, wide-spread in Catholic school circles, refers to the sisters, brothers and priests that educated several generations of immigrant families while themselves living a vow of poverty. Historically, our Catholic schools have had no financial endowment; rather they flourished at very low cost to families because of extremely low overhead--thanks to their living endowment.
To operate CSDF via a living endowment does not mean that the consultants working through CSDF must be vowed religious. Nor does it mean that CSDF employees live a life of poverty. In fact, compensation can be every bit as good as for-profit firms. To understand how this is possible one must first understand the for-profit consulting fee/cost structure.
The industry-standard fees charged by for-profit firms for campaign work average $15,000 per month per client. Of this amount, about one-third goes to the consultant doing the work, another third is overhead (primarily training costs and the cost of making presentations across the country for new work), and one-third is profit to the owner of the firm. This standard income/expense structure creates a problem for the "for-profit" and an opportunity for the "not-for-profit."
The problem for conventional firms lies in young consultants who see the monthly fees charged, compare it to their paycheck, and conclude "I can do this on my own." Consequently, the established national firms face constant turnover, recruitment and training costs while suffering a chronic lack of experience in the consultants who actually do the work. At the same time, they have created a barrage of new regional competition. Over the last ten years there has been an explosion of development consulting firms, most with no one in the firm except the owner. The business card may read "John Doe & Associates" but there are rarely any associates.
The opportunity for the not-for-profit lies in the one-third of fees that normally would be profit. What if, instead of buying a house on the beach for a firm owner, those profits were set aside each month in a cash reserve to serve Catholic schools that cannot afford development counsel? While Jesuit High School may easily afford high monthly fees, St. Ann's Indian School cannot. By setting aside the "profits" from one client, CSDF could afford to send a consultant to St Ann's. In doing so, CSDF consultants will be the new living endowment serving those schools least able to afford development counsel.
- Two clients in Year 1, four in Year 2, seven in Year 3. From this point forward, growth can proceed much faster.
- Sales growing steadily from Year 1 through Year 3.
- Break even for three consecutive years as CSDF establishes its name and reputation. Generate earnings in year four allowing us to begin gratis consulting projects.
Catholic School Development Foundation exists to provide development counsel to America's Catholic elementary and high schools.
- Focused on this single objective, we are specialists, not generalists.
- Relieved of profit pressures, we take the long-term view of building lasting relationships between the school and its supporters.
- We will always act in the long-term interest of our clients. If you are not ready for a campaign, we will say so. Then we'll do everything we can to get ready.
- We are development consultants, not fundraising consultants. We take a comprehensive approach to the financial health of the school.
- Our primary job as consultants is very much like that of a teacher. In our case, we teach by 'doing.' This implies, of course, a partnership between teacher and student.
- Knowing the unique circumstances of raising money for schools, we only employ consultants with specific experience in this area.
- Though we are a not-for-profit organization, to attract experienced specialists we must compete with the largest firms in the country. While we operate on a sliding scale, we ask clients to remember this as they consider our proposal.
- Campaigns can be stressful. Prayer keeps us positive, calls to mind the mission behind the money, and reconciles misunderstandings. It overcomes fear in those who ask and softens the hearts of those who give. This is why we believe prayer is an integral part of success.
1.3 Keys to Success
The keys to success are:
- Ability to attract and RETAIN qualified personnel.
- Perception in the marketplace as a specialist serving Catholic schools.
- Establishing trust with potential clients as a non-profit devoted to their cause.
The 'capital' in a consulting firm walks out the door every evening at five. The only real equity rests in the experience levels of the people in the firm, for they represent the ability of the firm to attract future business.
Keeping experienced people is difficult. Since the late 1980s there has been an explosion of new consulting firms serving non-profits with fundraising and consulting services. Many consultants, now independent, were trained by the large national firms. The organization that discovers how to attract and retain qualified people will ultimately win the day. This, above all else, is the key to success.
Why is it tempting for people to set up their own firms once they have a modicum of experience? The answer lies in the nature of a not-yet-mature industry: fundraising consulting is the ultimate 'low entry barriers' business.
- There are no education requirements.
- There are no professional degree requirements.
- There are no licensing requirements. The person giving a ten dollar haircut must be licensed. But a consultant leading a $10 million campaign--putting an organization at great risk--requires none.
- Ultimately, getting work is a function of relationships, not experience and knowledge. Because so few Board members have experience with major gift fundraising, it is difficult for them to separate experienced professionals from good salesmen.
- It only takes one successful campaign to launch a career as a consultant, especially if that school was a high-profile prep school.
- Finally, start-up and office expenses are minimal. Since clients never visit the firm, a home office will easily suffice. A good voice mail system can give the impression of a much larger, more established firm. Many one-man firms have been established for less than $5,000.
In short, it is relatively easy to establish an independent firm. But if an organization is going to grow, it must retain qualified personnel. To do this, it must be more attractive for consultants to stay than to leave. This is the central issue we will discuss later.