Information on the concerns and resources of various donor

communities is vital.

The Role of Environmental Scanning

in Effective Fundraising
.Annette Gibbs

Fundraising has become a crucial activity on the American higher education

scene. Once the primary province of private institutions, public colleges and
universities are now finding it imperative to develop organizational structures
and activities to enhance their fundraising capabilities. Private gfts are neces-
sary to reduce the level to which institutions must rely on tuition revenue (Git-
low, 19951, and they are essential for determining the level of educational,
research, and public-service excellence to which the institution aspires (Camp-
bell, 1995). Colleges and universities have a tradition of raising private funds
for supporting outstanding faculty, and recruiting students by offering schol-
arships and other forms of student financial aid. Today, there is an additional
expectation that some portions of institutional operating budgets will be met
through alumni, corporate, and foundation contributions (Johnson and Rush,
1995).
More and more organizations-for-profit and not-for-profit-are turning
to environmental scanning as a supplement to or as a systematic part of their
planning. Educational institutions, in particular, are finding that they are not
distinct organizations isolated from their environment. The economic, politi-
cal, social, and technological changes occurring outside the walls of academe
are requiring the concentration on external data for institutional decision mak-
ing. Planning in isolation or focusing only on internal intent, therefore, as
though the college or university is immune to external change, is not only
inadequate planning but probably destructive. For example, most college OR-
cials knew, or should have known, that the birth rate of traditional-age college
students was in decline. Those data were available eighteen years before the

NEW MIECTDNSnx H i m E ~ T K Wno.

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58 STRATEGIES FOR A TIME OF SCARCE RESOURCES

specific freshman-year college registration. The reality, however, was that

numerous colleges suffered severe downturns in freshman student matricula-
tion, plus the corresponding decrease in tuition revenues necessary to continue
business as usual. Because fewer freshmen mean fewer sophomores the fol-
lowing year and fewer students continuing through that particular cohort’s
senior year, business cannot continue as usual. Merely addressing present
problems, making incremental adaptations, and analyzing present funding
sources are no longer sufficient.
Environmental scanning, to be effective and to further enhance planning
approaches and goal setting, focuses on future events, circumstances, issues,
and decisions. Future data, not present information, are used to forecast and
predict. When planning a potentially successful capital campaign, for exam-
ple, fundraising officers would concentrate on “staymg ahead of the economic,
social, political, and technoloBcal conditions of the environment in which they
operate” (Stoffels, 1982, p. 4). Scanning focuses on identifymg the major envi-
ronmental areas of import to the institution, designating the personnel respon-
sible for each area, and establishing the structure for collecting and
disseminating the data.
The crucial questions regarding the institution’s environment for fundrais-
ing include the following: What changes are taking place? What forces are
behind these changes? What do we want to be relative to the changes? Where
should we seek funds?
A simple illustration might be that if College X has determined it wants to
be financially secure by having a large endowment fund, then its environ-
mental scan would focus on, at a minimum, the economic. political (govern-
ment, community, church, and so forth), social, and technological changes that
will provlde the context for making decisions as to from whom funds should
be solicited.
Some colleges and universities undenake environmental scanning through
informal means such as reading local newspapers and national publications
like The Chronicle of Higher Education or The Chronicle of Philanthropy. Institu-
tional officers may meet with other college administrators at reponal or
national conferences to discuss developments in one section of the country and
consider the likelihood of such occurring in their respective areas. In contrast,
other higher education institutions are finding it advantageous to engage in
formal environmental scanning by monitoring changes in employers’ hiring of
their graduates, gathering data about shifts in research funding or student
financial aid, and measuring the climate for support among state or federal
congressional representatives.
The environmental forces that will affect the institution’s future can be
either threats or opponunities facing the college or university. In the case of
institutional fundraising, the major threats and opponunities should be iden-
tified penodically by each program-from annual giving to planned giving.
Depending on how formal or sophisticated the environmental scan, each threat
and opportunity could be weighed for analysis and for determining the relative
 ROLE OF ENVlRONMENTAL SCANNING IN EFFECTIVEFUNDrUlSlNG 59

impact on the future of the total fundraising operation. The environmental-

s m g role of institutional planning, therefore, is to direct movement toward
i t s major opportunities and away from its major threats (Kotler and Fox, 1995,
p. 126).

Methods Used in Educational Fundraising

Depending on the fundraising imperatives of the college or university and the
size of its fundraising staff, an institution might employ up to a dozen primary
methods to raise funds. Some of these methods include annual giving pro-
grams, personal solicitations, direct-mail solicitations, corporate and founda-
tion support, small-business solicitations, project funding, capital campaigns,
major pfts, and planned giving.
Annual Giving Programs. Many educational institutions consider the
annual fund to be the backbone of all fundraising activities. Colleges and uni-
versities use this annual solicitation to invite support from all their con-
stituencies and to direct the revenues generated toward unrestricted purposes.
These unrestricted funds can be applied to the institution’s operating budget
and thus become an attractive source of yearly income for the college or uni-
versity Alumni, friends, members of the community, parents of current stu-
dents, faculty and staff, and any.other specifically designated individuals might
be considered appropriate to receive these annual giving requests and other
communication from the institution.
Annual giving programs can be used to develop widespread interest in the
institution, cultivate volunteer leadership to champion the cause, present the
case for the institution each and every year, and assess how the institution’s
publics feel about it (Louden, 1993, p. 70). Because these yearly pving activ-
ities at most colleges and universities are established and well known among
their institutional alumni and supporters, those who contribute funds and vol-
unteer help are also excellent sources for identifying and developing potential
donors.
Successful annual p i n g programs are those conducted by institutional
fundraisers who know their donors and why they gve. Stewardship and com-
prehensive planning can lead to an expanded base of donor S U ~ ~ Othat, K in
turn, can be significant in elevating the level of funding. Such planning should
include scanning the environment for changes within the donor community,
the impact of these forces, and where the annual giving program should be,
considering the institution’s internal mandates as well as the external changes
surrounding it.
Personal Solicitations.A comprehensive fundraising program b e p with
the identification of potential donors. continues with developing and increasing
their interest and involvement with whatever aspect of the college or university,
proceeds to major giving, and concludes with an ultimate gift or bequest.
Face-to-face solicitation by a peer of the potential donor is the most effec-
tive method of fundraising. The illustration of a ladder depicts the relative
60 STRATEGlES FOR A T ~ MOF
E SCARCE RESOURCES

effectiveness of various approaches used to solicit gifts (Rosso, 1991. p. 59).

From most effective to least effective, the ladder’s steps in descending order are

Personal wit by a team (two people or more, one being a peer of the prospect,
usually a volunteer, plus an institutional representative)
Personal w i t by one person
Solicitation by personal letter w t h a follow-up telephone call
Solicitation by personal letter wthout the follow-up telephone call
Personal telephone call by a peer urlth a letter follow-up
Personal telephone call wthout letter follow-up

These kinds of data and their relationship to successful fundraising at a

particular institution are indispensable for planning purposes. They bring to
the forefront those issues relative to the use of volunteers, their selection and
training, the size and other time commitments of the institutional fundralsing
staff, and the increased expenses involving travel and time commitments of
staB when conducting personal solicitation. In addition, members of the col-
lege’s govemlng board, the president, and other senior level administrators are
vital to successful personal solicitation. While the significance of the fundrais-
mg role of trustees is indisputable, their activities should not be done haphaz-
ardly or without regard to the overall institutional revenue-building objectives.
Like the importance of the selection of volunteers, all institutional officials’
efforts and activities should be integrated and coordinated in order to avoid
duplication of effort, soliciting w t h o u t appropnate information, and even
soliciting for too small a gift.
What future events and economic, political, or social circumstances out-
side the institution wl1 affect the personal solicitation efforts of the institution?
The answer to this question may be crucial for determining which modes of
direct and indirect solicitation to use for improving fundraising success.
Direct-Mail Solicitation. Direct mail, as a method of solicitation, is the
least expensive way to communicate with donor prospects. An additional
advantage of soliciting by mail is that mailing lists can be updated by request-
ing an address correction from the U S . Postal Service (Kotler and Fox, 1995,
p. 445). Direct mail can focus on indimduals or specific groups of individuals,
just as face-to-face and telephone solicitation.
The basic components of a direct-mail communique include a letter from
the most appropriate and well known institutional official (targeted to what-
ever group), a brochure or separate leaflet that descnbes and presents the case
for supporting the specific cause, a response card that suggests immediate par-
ticipation, and an envelope for ease and promptness in contributing.
Knowledge, experience, and skill are needed in designing and producing
effective mail-solicitation letters, brochures, case statements, and event flyers.
Fundraising officials also know that, whereas such activities are umeconsuming
and often expensive, the sipficance of their impact cannot be understated. The
goal is to develop materials that are attractive, thought provoking, and per-
 ROLE OF SCANNING IN EFFECnVE FUNDRAEING 61
ENVIRONMENTAL

suasive so that the receiver will want to contribute and become involved in
future activities of the institution.
Phone-a-thons. Phone-a-thons allow the college or university to reach
large numbers of prospects and communicate personally designed messages.
They are used also for follow-ups to direct mail solicitation. A definite advan-
tage of a two-to-four week calling period is that the institution will know
immediately the amount of funds to be available. Disadvantages, of course,
center on the problems of reaching potential donors' answering machines and
the fact that some donors dislike telephone solicitation,
'
particularly during the
evening hours when they may be at family dinner.
Although phoning programs take considerable time to organize, select and
uain volunteers, and determine whch prospective donors to call, they can pro-
duce significant revenues. Because of this, more and more colleges are elect-
ing to retain commercial firms to make their solicitation calls. Such firms
employ professionals year-round and make the calls from their premises, at a
cost to the institution that is typically a mere percentage of the pledged con-
tribu tions.
Corporate and Foundation Support. Competition for corporate and
foundation dollars has risen dramatically during the past decade, not only
among colleges and universities, but also among community groups and orga-
nizations that support philanthropic causes. Higher education institutions,
therefore, are seeking new ways to promote relationshps with foundations and
corporations that are beneficial to the respective college or university A pro-
ductive relationship depends on three elements: mutual concerns; a percep-
tion that each organization helps the other; and the trust that comes from
understanding and respecting each other's integrity, culture, and goals (Gooch,
1995, p. 126).
Experienced college fundraisers, when developing these organizational
relationships with corporations, find it advantageous to follow specific steps,
which include

Developing a case: what is the reason for the gft, why should the corporation
be involved, what good will result, and so forth.
Making the connection between the college and corporation: numbers of alumni
employed, employees taking college courses, business done with the corpo-
ration, and so forth.
Strengthening the affiliation: how can each help the other, share mutual con-
cerns, develop partnerships with college placement center, and so forth.
Soliciting the gft: plan, write, and submit the proposal.
Confemng recognition: stewardship for the current g f t and for a continuous,
mutually beneficial relationship.

Corporate giving is in the form of cash gfts or noncash gifts. such as com-
pany products, equipment, and buildings, or perhaps company employees "on
loan" and assigned to a college for a specific time. Trends in corporate giving,
62 STRATEGIESFOR A TIME RESOURCPS
OF SCARCE

however, are changmg, and an institution's specific plan for solicitation may
need to be altered even during the scanning stage or when developing the pre-
liminary proposal. For example, many corporations are shifting from sup-
porting higher education to p i n g to elementary and secondary education and
to community organizations located where the corporations operate.
Foundations, like corporations, respond to formal proposals from colleges
and universities in making glfts. They do have, however, different motives for
p i n g . They exist solely as phlanthropic organizations and are required by law
to pay out each year an amount "equal to five percent of their net investment
assets" (Edie, 1987. p. 14). Their glfts, or grants, generally are awarded to ben-
efit health and human services, education, the arts, public service projects, and
the environment. Colleges and universities, over time, often are able to develop
relationships with particular foundations whose grants provide sigruficant cur-
riculum enhancement, cultural preservation and programming, and community-
service learning opportunities for students.
Fundraisers. to be successful, need a broad knowledge of foundations and
their grantmaking processes. Researching foundations is not difficult. thanks
to the numerous guides and directories that are published by commercial ven-
dors and the foundations themselves. Furthermore, all foundations are
required by the Internal Revenue Service to file a tax information form each
year. This 990-PF document lists the names of each foundation, its location,
the names of its officers, and how much the foundation contributed each fis-
cal year to not-for-profit organizations.
By researching the pertinent information on a foundation's purposes, pro-
grams, and personnel, institutional fundraisers can acquire an impression of
the foundation as a prospect (Smith, 1993, p. 197). Appropriate planning,
including scanning for potential changes and their impacts, can then proceed
for pursuing a particular foundation. This step would be followed with pre-
liminary contact by telephone, letter, and perhaps an informal visit.
When informal contacts are successful, the college's officials may initiate
formal cultivation of the foundation in order to explore its interest in the col-
lege's proposed project. A pre-proposal letter or discussion might take place
before a comprehensive formal proposal submission. Just as when soliciting
corporate gifts, colleges should work at making the connection between their
prospective foundation and themselves. Finally, they will want to strengthen
the affiliation and continue contact with the foundation personnel after the
proposal submission. Proposals often are not funded on the first submission,
and experienced fundraising officials know that there will be other times for
perhaps the same proposal, and there will be other proposals for still other pro-
jects.
Small-Business Solicitation. Small businesses often are overlooked as
prospects for charitable giving to higher education institutions, perhaps
because of their perceived insignificance compared to corporate gvers. Their
growing numbers, however, document their increasing importance in the
American economy and workplace. They pose excellent cultivation opportu-
 ROLE OF ENVIRONMENTALSCANNING IN EFFECTIVE FUNDRAISING 63

nities for small four-year colleges and community colleges. in particular, when
the institution and the small business are located within the same or nearby
communities. These businesses make gfts to educational institutions because
they desire to be pan of the local community and to create good will among
the citizenry. It is in their public-relations benefit to be viewed as supporters
of the local college.
Gifts-in-land are the most common type of small-business giving although
they frequently make donations to support student scholarships. Their primary
gifts, however, include their products such as equipment, food for major col-
lege events, or the loan of employees to teach classes or seminars ranging from
architectural drawing to automotive mechanics.
Unlike corporation and foundation giving, where staffs and boards make
gving decisions, the small-business owner is the sole decision maker and thus
is the only individual with whom the college need work in cultivation, pan-
nership building, and solicitation. Moreover, small liberal arts colleges located
in a rural community far from corporate firms and with little research activity
among their faculty might find it wise to minimize their efforts to raise funds
from national corporations and foundations (Worth, 1993, p. 16). Gifts from
small businesses, of course, are smaller than those from corporations and foun-
dations, but the time and research required for actual solicitation are less cum-
bersome.
Capital Campaigns. The capital campaign is the vehicle used to raise
funds necessary to meet the capital or asset-building needs of the college or
university. Most campaigns are organized to solicit a specific sum of money
within a specific period of time, typically five years.
Most campaigns proceed through at least five successive phases. These
phases may have different names and different time periods, but the overall
approach or sequence is rarely disputed among successful fundraising officers.
A precampaign feasibility study constitutes the first phase and scans the envi-
ronment for readiness for pving among institutional constituencies. Are there
sufficient numbers of donors available to raise X dollars? What are the envi-
ronmental impacts for which the institution should prepare? This is the phase
when the institution's overall plan is developed, the needs and priorities are
defined, the parameters of the campaign and its priorities are established, and
research on prospective donors is begun. The monetary goal of the campaign
must be determined, and the selection and training of staff and volunteers
should be completed.
Phase 2 can be done in three or four months when Phase 1 has been
implemented successfully. Thls is the actual campaign planning and includes
developing a broad base of support among alumni, faculty, staff, and students;
writing and publishing the institution's case statement (campaign rationale);
refining the needs and priorities resulting from the feasibility study; complet-
ing the specific campaign plan; and planning the nucleus fund.
The nucleus fund, or Phase 3, involves acquiring large pfts at the begin-
ning of the campaign, but prior to the public announcement. These large gifts,
64 STRATEGIES
FOR A TIMEOF SCARCERESOURCES

solicited from the institution’sprevious prominent donors, provide credibility

to the campaign. This “silent” phase may require a year or more before the
campaign is officially announced. The primary purpose of this phase is not
only to acquire significant and large gifts, but to use such visible showings of
support to convince future donors to also contribute at hgh levels. These first
leadership donors can set the stage for future solicitation and giving patterns.
Near the end of this phase, the institution may decide to adjust its cam-
paign planning monetary goal by evaluating the success of the nucleus fund
and scanning the remaining donor base for information about gving abilities,
interests, and potential. The final goal can then be publicly announced, and
the institutional capital campaign has begun.
An official announcement of the campaign is usually in conjunction with
a festive kickoff that celebrates the importance of the activity in the life of the
institution. The kckoff might be a gala dinner, a weekend activity, or whatever
form that is appropriate to the culture and identity of the college. Honoring
the nucleus donors and cultivating prospective donors is part of the celebrated
kckoff. This is also the phase where the previous planning goes public by dis-
tributing the case statement, announcing the institutional leadership and vis-
ible role of the president, and introducing the volunteer leadership. The focus
is on the cultivation and solicitation of those who were determined earlier to
be potential donors.
Phase 5, the plateau of fatigue, amves after the initial excitement has worn
off and donors and volunteers do not respond as quickly or as generously as
at the beginning of the campaign (McGoldrick, 1993, p. 151). Now it is time
to evaluate all solicitation activities, reemphasize cultivation and stewardshp,
and do something extra to revitalize volunteer interest and productivity
The conclusion phase attempts to acquire gfts from people who may have
considered giving but have not actually done so.As the campaign reaches var-
ious goals and objectives that are recognized and celebrated, many nongvers
will come forth. People gve to people, and people want to be winners. These
human traits have allowed many knowledgeable campaign leaders to push for-
ward and persuade donors to come forward.
T h is the phase where the institution must take special care to recognize
and thank all donors. Perhaps nothing is more important than stewardship of
those who give monetary gifts and those who volunteer their time, abilities,
and skills for a successful campaign conclusion. Finally, postcampaign plan-
ning beg~nsfor debriefing the completed campaign program and for develop-
ing goals for ensuring the institution’s future capital assets.

Major Gifts
All giving programs are important to colleges and universities, and major gifts,
by definition, hold a particular significance because they can determine
whether the institution’s mission and goals are realized. Major gifts may be
$1,000; $10,000; $100,000; or $1million, depending on the college’s history
 R O E OF ENVIRONMENTAL FUNDRAISING 65
SCANNING IN EFFECTIVE

of fundraising, previous success in securing major gifts, and its ability to

develop an effective major-gfts program. The specific definition of a major gft
is not important; it is the gift’s value in terms of what it can help the institu-
tion accomplish that is important. Some college presidents refer to these big
gifts as special gifts because donors usually gve them for specific projects
rather than general institutional support.
What motivates donors to make generous gfts? Numerous studies have
been devoted to the subject, and although answers are not definitive or con-
sistent, several themes emerge. Some of the basic reasons people give are

institutional loyalty: Numerous donors have a strong allegance to the institu-

tion. They have gven before, and they have served in other volunteer or
leadership positions in college-related activities.
Gratitude: Donors gwe because the college has helped them in some meaning-
ful way and they are grateful.
Spiritual beliefs: People give to provide support to colleges that are affiliated
with a particular religious denomination, and giving is part of supporting
that belief.
Responsibility: Donors give because they feel a sense of responsibility for the
welfare of particular organizations.
Project orientation: Some donors want to do something specific and see the
results of that gving, such as improving the teaching of mathematics.
Desire to memorialize or honor: These donors want to honor someone or per-
petuate a person’s memory by giving a named chair, lectureship, or building
(Davis, 1992, p. 66).

People give to organizations for many other reasons, of course. Some individ-
uals give to minimize the amount of taxes they pay, and others gve to be pub-
licly recognized for their contributions. Whatever the reasons, college
fundraisers need to become knowledgeable about the giving needs of their
donors as well as prospective donors and develop appropriate cultivation and
solicitation programs.

Planned Giving
Planned giving, as a method of fundraising, allows a donor to give an asset to
the college or university that will provide a benefit to both the school and the
donor. Many people plan to give to charitable organizations while they are
alive, but more and more individuals are malung provisions for charitable giv-
ing through wills, trusts, annuities, insurance policies, or contracts. They are
concerned about what might happen to their assets upon their death, and most
do not want those assets to proceed from their estate to the government in the
form of taxes. Money that goes to government is viewed as taken away, while
money donated to philanthropy is viewed as money given away (Ostrower,
1995, p. 101).
 The institution'splanned giving program can provide income to the donor
as well as tax advantages. The income might be for a stated period of time, a
lifetime, or directed to other persons designated by the donoT. The college
would receive the gift's charitable remainder at its maturity. The Tax Reform
Acts of 1986 and 1993 provide specific benefits to donors in four areas:
income tax, capital-gains tax, g f t tax, and estate tax.
The planned-gving component of the institution's total fundraising pro-
gram obviously differs from the other components discussed above. In phnned
gving, moreover, the donork objectives come first, in contrast to most other
methods of fundraising, where the institution's priorities come first. For exam-
ple, if a donor's desire is to protect acquired assets whde providing for a spouse
or child, and at the same time to make a charitable gift, this priority eclipses
whatever objective the college might have. It is in situations like these that the
institutional planned-giving officer with the donor, including perhaps the
donor's accountant or lawyer, can develop the appropriate means for benefit-
ing the donor (and the donor's heirs) for whatever designated period of time,
and benefiting the institution at the specified time in the future.
The knowledge and skills of planned-giving officers range from a basic
understanding of tax law (including the Internal Revenue Code and Regula-
tions) and property law to the ability to help donors fulfill their own phlan-
thropic needs while providing benefit to the institution at some designated
time in the future.
The environment may be the fastest-changingelement in the institutional
planning process. Economic, political, social, and technological forces outside
the college or university, although important for all organizational planning,
are paramount considerations in designing and implementing effective
fundraising programs. Scanning can provide the data and information needed
to balance internal needs and external forces.

References
Campbell,J. R. Reclaiming a Lost Heritage. Ames: Iowa State University hess, 1995.
Davis, B. C. "Major Individual Gifts."In M. K. Murphy (ed.), Building Bridges: Fund Raising
for Deans, Faculty, and Development Ofiers. Washington, D.C.: Council for Advancement
and Support of Education, 1992.
Edie, J. E. First Steps in Starting a Foundation. Washington, D.C.: Council on Foundations.
1987.
Gitlow. A. L. Reflections on Higher Education. New York: University Press of America, 1995.
a h , J. M.'Corporations and Foundations." In D. Elliott (ed.), The wlics ofhking: Dilem-
mas in Higher Education Fund Raising. Baltimore: Johns Hopkins University Press, 1995.
Johnson. S. L., and Rush, S. C. (eds.). Reinventing the University. New York Wiley, 1995.
Kotler, P., and Fox, K. Strategic Marketingfor Educational Imtitutions. Englewood Cliffs, N.J.:
Prentice Hall, 1995.
Louden, A. G. "The Annual Giving Program." In M. J. Worth (ed.). Educational Fund Rais-
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McGoldrick, W. P. "Campaigning in the Nmeties." In M.J. Worth (ed.), Educational Fund
Raising: Principles and Practice. Phoenix, Ariz.: Oryx Press, 1993.
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ENVIRONMENTAL

Osuower, F. Why The Wealthy Give. Pnnceton, N J . : Princeton University Press, 1995.
R o w . H. A.. and Associates. Achieving Excellence in Fund Rasing. San Francisco:Jossey-Bass.
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Smith, M .J . 'Obtaining Foundation Suppon."In M.J . Worth (ed.). Educational Fund Raw
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Stoffels.J . D. 'Environmental Scanning for Future Success."Management Planning, 1982,
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Worth, M .J. (ed.).Educational Fund Raising: Principles and Practice. Phoenix. Ariz.: Oryx
Press. 1993.

ANNETTE CIBBS is proJessor of education and director ofthe CenterJor the Study of
Higher Education at the University of Virginia's Curry School of Education.