September 2010: Fundraising Plays an Important Role at Charter Schools

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Fundraising Plays an Important Role at Charter Schools

Charter schools are publically funded, but private fundraising commonly is used to acquire school buildings and augment operating budgets. Todd Ziebarth, the National Alliance for Public Charter Schools’ Vice President for State Advocacy and Support, has indicated that a report from Ball State University, Charter School Funding: Inequity Persists, helps put charter schools’ need for fundraising in context. The May 2010 report noted that charter schools are trying to make up for per-pupil allocations that are lower than allocations for district schools, in part by doing their own fundraising. According to the report, the "average state disparity was 19.2 percent, $2,247 per pupil" for charter schools overall (p. 1). The study, an update and expansion of earlier work, covered 24 states and Washington, D.C., and examined 2006-07 data. The current weak economy has made the search for resources even more difficult.

"It shows again the substantial gap between the charters and the traditional public schools," Ziebarth said in an interview with the Resource Center. "To me, that is the primary reason that charters have to do as much fundraising as they need to, to kind of make up for that gap. The policy fix is to provide equitable funding for charters," Ziebarth said. "My guess is you would see the need for fundraising decrease. People would still do it because it would be helpful to their bottom line. But the pressure for doing it, particularly in such vast amounts for some groups, would probably go down."

The degree to which fundraising contributes to operations varies as does the level and extent of data that are available. According to the California Charter Schools Association (CCSA), levels of fundraising vary in California. For example, more than 10 percent private funding is the upper range for operating budgets with Charter Management Organizations, whereas start-ups and single schools fall into the lower end of about 5 percent, according to CCSA. Different ways of classifying funds can make comparison and analysis difficult.

According to Myrna Castrejon, Senior Vice President at CCSA, charter schools operate on "very thin margins" in California. Regarding oversight of fundraising, Castrejon said charters, as 501 (c)(3) organizations, must abide by the Internal Revenue Service (IRS) code for not-for-profits.

Charter schools have the same freedoms and restrictions related to fundraising as any other 501(c)(3) organization, according to the IRS. States may have their own restrictions and registration requirements for soliciting.

Charter schools can still face special circumstances when it comes to fundraising. "To be sure, authorizers will get nervous if a school that’s requesting first authorization is embedding unrealistic expectations for their fundraising," Castrejon said.

CCSA advises charter schools against budget estimations of fundraising at more than 3 percent of their state revenues unless their historical performance justifies the amount.

David Hruby is the Associate Vice President for Finance for the State University of New York (SUNY) Charter Schools Institute, which authorizes many charter schools in New York. In a recent interview with the Resource Center, he said that the institute tracks the amount of fundraising by charter schools but does not provide fundraising policy guidance. The SUNY Charter Schools Institute maintains an extensive database of financial information about its charter schools, including breakouts of funding by type. The Charter School Fiscal Dashboard provides detailed information about the "fiscal health of any SUNY-authorized charter school in the state," taking charter school "transparency to a new level," according to the institute’s May 2010 announcement of the tool. It contains data from 2004 to 2009 and draws on figures from schools’ annual audited financial statements.

Hruby echoed Castrejon’s concern about unrealistic fundraising expectations contained in applications for charters. He said that the SUNY Charter Schools Institute wants to make sure applicants are not "just putting a number out there so that the budget balances." "What if they don’t raise the $500,000 and they go into the red? It can cause a lot of problems."

If a charter applicant indicates that it has major donors lined up, there should be letters of commitment from those donors presented as part of the application, Hruby said. "Those are letters that we want to see."

Ziebarth said that start-up grants can provide a false sense of security and that charter school developers should plan for sustaining their school. "Sometimes they just cross their fingers and hope they will be able to raise additional money elsewhere, but there isn’t a great plan B," Ziebarth said.

Reference

Batdorff, M., Maloney, L., & May, J. (with Doyle, D., & Hassel, B.). (2010). Charter school funding: Inequity persists. Muncie, IN: Ball State University. Retrieved September 14, 2010, from http://www.bsu.edu/teachers/media/pdf/charterschfunding051710.pdf

A Cleveland Charter School’s Fundraising Method

Lyman Millard, Director of Development and Communications for Citizens’ Academy in Cleveland, Ohio, talked about his school’s fundraising efforts in a recent interview with the Resource Center. He described key elements of how the academy raises funds to support the inner-city K–5 school, which enrolls about 400 students. The academy was founded in 1999, and the Ohio Department of Education rates the school excellent. The academy raised $470,000 last year, and this year’s goal is $500,000, or about 10 percent of the operating budget, according to Millard.

He said results capture attention. "Our students, from some of the poorest neighborhoods in Cleveland, are outperforming some of the wealthiest suburbs."

Sixty percent of the school’s fundraising proceeds come from foundations and corporations, with foundations providing the bulk, and 40 percent of the proceeds come from individuals.

The school’s board is "actively engaged" in fundraising, Millard said. "We recruited a number of our members with that specific goal," tapping their connection to people of means or in the foundation world.

"It’s very easy when I invite them to the school for them to say, nah, I’m not so interested," Millard said. "But if a friend of theirs is inviting them, then it becomes more difficult."

According to Millard, an important part of the fundraiser’s job is to "figure out who we know that person is going to have the hardest time saying no to and then getting that person to make the ask."

The approach is implemented on a case-by-case basis, and fundraisers must understand the habits of the people they approach, Millard said. It is a task that does not necessarily come naturally.

"Asking people for money makes most people feel uncomfortable, and something I’ve had to learn as a professional is you’ve got to suck it up," Millard said. "Our kids are worth your having an uncomfortable conversation."

"Our most successful fundraisers, from a board perspective, are people who hear ‘no’ all the time. So if they hear ‘no’ from a friend, big deal, they just move on. Most people aren’t like that."

Millard said novice fundraisers err in chasing big name foundations without having any connections. He advised working with local groups with which relationships can be fostered more easily.

"A common mistake is to just write a proposal and send it to a foundation without building a relationship first with a board member or a staff member," Millard said. "It’s something you have to build over time."

"It’s been our experience that our most successful fundraising relationships are just that--they are relationships," Millard said. "You have to have a person who is focusing on that."

One way to build relationships is to give prospective donors school tours. "It’s one thing to read about it. It’s quite another thing to experience it firsthand," he said, recommending keeping visits to an hour and letting people see the school the way it is, unstaged.

Fundraising comes from a variety of sources. "We’re trying to squeeze every nickel and dime," Millard said.

The school has focused its fundraising on supplementing the operating budget but is now talking about building its endowment, which is now about $10,000.

"We haven’t worked hard on growing it because our perspective was we were still pretty new," Millard said. "We didn’t have the track record yet."

For an endowment, he said, "I think what we would need to do is a full-blown separate campaign, but we haven’t tackled that yet."

Millard said that the Association of Fundraising Professionals provides valuable resources and guidance for his work and that he has the organization’s donor bill of rights posted in his office. To ensure public trust and donors’ confidence in potential recipients, the donor bill of rights, for example, includes the "right to have access to the organization’s most recent financial statements" and to be informed whether those soliciting are "volunteers, employees of the organization, or hired solicitors." The association represents more than 30,000 members in chapters worldwide and provides a variety of professional development programs.

Donations Are Available to Aid Education

Jim Collogan, Executive Director of the National School Foundation Association of Des Moines, Iowa, said in a recent interview with the Resource Center that he regularly receives calls from charter schools interested in developing their fundraising capacity. "They’re a new kind of cat," Collogan said of charter schools. Charter schools are newcomers to the fundraising field and must overcome their youth and the lack of history that prospective donors might view as a risk.

"A foundation or a corporation is about one thing when they hand out a grant--enhancing their brand," Collogan said. "So you’re going to give them an opportunity. But you’re new, a bit of a risk."

The money is out there to be had, especially for top education programs. Behind donations to religious organizations, which amounts to about 30 percent of all giving, education is second, making up about 16 percent, according to Collogan.

"If you ever get discouraged, you can always come back to that statistic and say, look, people are interested," Collogan said.

News

Events

September 27-28: Supported by a grant from the Bill & Melinda Gates Foundation through the Ohio Grantmakers Forum, the Ohio Alliance for Public Charter Schools and the Denver Public Schools are hosting a national conference in Columbus, Ohio, to showcase best cooperative practices between charter and traditional public schools. The conference will collect, exhibit, and publish 50 cooperative and innovative practices from across the country that demonstrate how traditional districts and charter schools work together to leverage their strengths in the areas of curriculum and instruction, performance management, dropout prevention, operations, career and college readiness, facilities, transportation, extracurricular activities, and conditions for learning.

October 18-21: The National Association of Charter School Authorizers Leadership Conference in Scottsdale, Arizona, will bring together public officials, education leaders, entrepreneurs, and philanthropists to share innovative ideas and best practices on how to strengthen the quality of the charter school sector. Web registration is open, and a listing of travel and accommodations discounts is available.

Resources