Careers in Finance: Professional Fundraiser
Fundraising has come a long way since the PTO bake sale; it’s now a billion-dollar industry. In fact, $3.3 billion is raised annually, $1.4 billion of which goes to schools, churches and other organizations on average.1 And with American infrastructure drastically in need of an overhaul, the demand for a professional fundraiser isn’t likely to let up.
To service these challenges, there are over 2,000 for-profit fundraising companies in the U.S. and Canada according to PTO Today.2
Maybe the biggest need comes from our school system, with many districts facing strapped fiscal conditions. For schools, fundraising companies can come in and organize everything from golf outings and merchandise sales to festivals and fun runs (but it’s the product sales comprise the majority of earnings).
They can often do the job more effectively than a school employee or volunteer tasked with the project. It also allows the employee to get back to doing what they know best-teaching or directly helping students.
Of course, there are those who disapprove of the for-profit nature of such a benevolent endeavor like childhood education. Some parents choose to donate to the schools by sending them a small check, knowing this way the school will keep 100% of the money instead of just half, the typical profit split between professional fundraiser and client.
Others are more accepting of using these companies when they realize the shortfall must be made up somewhere else if the schools can’t raise the money. The burden often falls on local taxpayers, whether they like it or not.
In Chicago, there are already tax hikes on the schedule for 2017 to help fund the Chicago Public School system and pensions. Property owners will see higher property taxes according to an article by the Chicago Tribune.3 They will also see a 7.7% increase in water bills.4 That’s quite a rise considering overall inflation is next to nil. There are a number of other city taxes planned as well.
And if you live in the Chicago suburbs, you’ll also see a sweetened beverage tax affecting energy drink and lemonade consumers.5 These are attempts by Chicago Mayor Rahm Emanuel to stabilize the pensions for not only school employees, but police and fire personnel as well.6
Emanuel presumably has the background to handle these type of financing situations, being a former managing director at the boutique investment bank, Wasserstein Perella & Co.7 The company specializes in mergers and acquisition (M&A) deals.
In response, some for-profit companies have adopted an interesting business model part fundraiser, part merchant. Chicago-based, World’s Finest Chocolate partners with the Chicago public school system to help raise money for school operations.
The company manufactures and provides chocolate bars, then the school and its students sell them. The profit gets split 50/50 between the school and company.8 In these arrangements, the school essentially handles all the distribution and sales for the company.
In 2014 alone, the chocolate maker raised over $320,000 total for 80 Chicago public schools.9
The family owned business began way back in 1939 and actually works with 20,000 schools across the country today. As you can imagine, amassing a client list that long takes time and effort. The company employees about 250 salespeople who drive the sales growth of the business.
Since the company began this partnering model in 1949, the company has raised an astounding $3.8 billion for schools and other organizations.10
This was accomplished by selling over 6 billion candy bars over the nearly seventy-year period!11
Becoming a Professional Fundraiser
A Professional Fundraiser is well-compensated. According to a survey of members of the Association of Fundraising Professionals, the average salary for U.S. professionals was $70,880 in 2015.12 We must point out that while three out of every four members of the AFP are women, the pay is skewed in favor of men.13 According to a survey done by the AFP, male fundraising professionals enjoy an average salary of $88,169 while women average $69,134.14 We expect this gap to narrow.
If you have a passion for fundraising and philanthropy in general, consider a position as a professional fundraiser.
You’ll enjoy a nice salary while helping your community in the process. Fundraisers typically enjoy a higher status in the community and are also tapped for future leadership roles. Here are a few positions in the fundraising space:
Outside Sales Representative
Today, for-profit companies rely on a sales force to solicit schools, church groups, foundations and other organizations. Schools are a reliable prospect as childhood education tugs at many heartstrings. There is a common goal between the schools and the companies so sales representative’s commissions are tied to the school’s success.
The more product the school sells, the more both the school and the company (and sales rep) makes. A good sales representative strives to create a long-term partnership with the school so it’s unlikely that a school will get taken for a ride by a fundraising company.
These salespeople, often women, can get a “foot in the door” with Parent-Teacher Organizations (PTOs), eventually gaining access to school administrators. They then work with the schools on setting up projects in the realm of fundraising. These range from direct sales of candies and snacks like popcorn to gift wrapping and merchandise. Merchandise includes a wide variety of items including tumblers with school logos, school-branded athletic wear, and the must-have car magnet.
Profit shares vary, but a general rule of thumb is a 50/50 split. The fundraising industry is highly competitive and many companies are being set up online to lower overhead. This may give them a competitive advantage by offering the school a higher cut of the profits.
There is some seasonality to this position, as the dominant fundraising months are around the beginning of school (August, September, and October) so they have the budget to meet the expenses for the remainder of the school year.
Without the funds, ancillary programs such as athletics, special needs and the arts can see their budgets slashed or programs eliminated entirely.
This is one of the more entry-level positions but allows the professional to get experience in the industry so they can later advance. Sales can definitely be considered a finance job since for-profit fundraising companies hire salespeople, just like a brokerage firm would. Their job is to raise money for a customer, just as a capital markets department does. And they earn commissions on the sales like any stock broker would.
Non-Profit Development Director
If you are looking for a position in non-profit fundraising, the industry term is typically ‘development director’. They oversee the entire development (money-raising) program for a non-profit, write grants and manage all fundraising campaigns. And of course, maintaining donor relations is a major part of the job. As such, there is also a sales component and new relationship building is essential. You’ll notice this skill set translates well to business development manager in private sector companies.
This position typically comes after some years of experience and may require a Master’s degree. 44% of respondents on Salary.com had either a Master’s degree or doctorate.15 An MBA is a great option as it encompasses a broad array of business and finance skills and often emphasizes working in teams, similar to a fundraising environment. It’s also helpful for moving up in the organization. Executive Director is typically the next step after Development Director.16
The demand is likely to increase for this position as spots are hard to fill.
According to a study entitled ‘UnderDeveloped’, industry consulting firm CompassPoint notes the challenges facing many non-profits include ‘high turnover and long vacancies in the development director position.’17 They also note that ‘organizations aren’t finding enough qualified candidates for development director jobs.’18
Those findings are surprising, considering these fundraising professionals are well-compensated. This is because the position is crucial to an organization’s ability to access the funding needed to survive.
According to Salary.com, these fundraising professionals enjoy a median annual income of $107,484.19
Major non-profit employers include the YMCA, YWCA, Habitat for Humanity, Boy Scouts of America, Special Olympics, and the Salvation Army. The Salvation Army pays the most, with an average salary for Development Directors of $85,000.20
There are also job opportunities at for-profit strategic fundraising firms and fundraising consulting firms. These firms support the financing needs for a wide variety of industries from health care and education to religious organizations and the arts.
Some of the larger names in the space include CCS Fundraising, Social Velocity and Great American Opportunities. Here, fundraising professionals may be referred to as ‘consultants’ and the salaries are higher. For example, salaries at Great American Opportunities range from $87,000 to $115,000, according to Glassdoor.21
These consultants can be thought of more as financing professionals, not a professional fundraiser. Often, they can provide a wider array of options for non-profit clients than traditional fundraisers. These options include alternative investments such as ‘growth and capacity capital’, two forms of “philanthropic equity.”22
There are also alternative debt financing options available including low-interest rate (and potentially forgivable) debt known as program-related investments and social impact bonds.23 For example, we have seen charter school bonds grow as viable investments over the last few years as their appeal has grown nationwide.
On a per hour basis, fundraising consultants are likely to be in the $100 to $125 range for sought after names.24 This might seem expensive but these experienced, capital-raising professionals can provide organizations with a wider variety of financing options by leveraging their connections to investors, often in the private equity space.
You should always ask for referrals when looking for fundraising consultants.
Obvious skill sets for all the above positions include excellent communication and organization skills. Fundraising professionals spend a good portion of their time maintaining relationships with clients, crucial for long-term success.
Today’s professional fundraiser must also be tech savvy, especially with social media. If you are looking to get into fundraising, also consider getting certified by the AFP. Most importantly, if you have a passion for helping others, this is a great field for you.