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Welcome to the Mortar Board Podcast, summer edition. Actually, the only difference between the summer edition and the rest is that we publish during the summer every three weeks, instead of every two weeks. I’ll be spending part of the summer working on a book-length manuscript to be published in the fall and a when that’s available, I hope to share it with my listeners. It’s on many of the same subjects that you’ll hear about on this podcast. I got a really good response to my last podcast about donor retention, and it generated a fair number of questions from listeners about other fundraising issues, particularly in response to a recent blog post that I published on the site of the National Association for Community College Entrepreneurship, NACCE. That’s nacce.com. Great organization, great site, good resources there. Check it out. That article was about fundraising from entrepreneurs themselves, creating solicitations that resonate with entrepreneurs, which is a very special class of donor.
Listeners to this podcast know that at Independence Community College we have adopted and applied the Ice House Entrepreneurship Program, which was created by Gary Schoeniger’s organization, the Entrepreneurial Learning Initiative. You can learn about that organization at elimindset.com. Essentially, we define entrepreneurship quite broadly here, not necessarily related to the business department or a specific curriculum. Instead we see an entrepreneur as one who solves the problems of others, primarily in a way that should be self-sustaining, that should be profitable. And because we define it so broadly, we reach a fairly wide range of people in the community and elsewhere who have the same mindset and want to support what we do here. In addition, an entrepreneurial mindset, in which entrepreneurship is seen as a desire to solve the problems of others and is then institutionalized, is one of the most effective ways for creating strong bonds with the community.
The entrepreneurship program is housed at a place you’ve heard me talk about before, our Fab Lab here at Independence Community College. It’s an amazing place. I’m proud of the programming there. I’m proud that nearly every piece of equipment in the building and much of the building itself was paid for with external funds, much of that coming from entrepreneurs who support the lab. Presidents spend a great deal of time fundraising, and luckily, soliciting support from entrepreneurs is one of the most enjoyable aspects of the fundraising role. I truly enjoy fundraising. I find spending time with donors to be a way of getting a glimpse into the interesting lives of other people who have often done very, very interesting things. I feel very lucky that my job involves spending time with those folks, and entrepreneurs are among the most interesting and fun to be around and to work with. They tend to be very independent thinkers. They have a natural curiosity. They have a desire to help. Who wouldn’t want to be around people like that? In about 15 years of working with entrepreneurs, I found that there are specific approaches for specific types of philanthropic support that can be very, very effective and tend to resonate with entrepreneurs.
First, remember that philanthropic support can be categorized in three ways. There’s certainly overlap between them. There’s certainly plenty of ways to categorize philanthropic support, but I tend to think of them as annual gifts, which of course are typically modest, but as I mentioned in my last podcast, if the relationship is properly maintained, those gifts can be expected to recur. Then there’s major gifts, which of course as the name would imply are larger, but they are also likely to be more sporadic. And then, finally, there are a category of major gifts, endowed gifts. Those are actually much more rare, and that’s because they have to be quite large to be impactful on an annual basis. So if you receive a single major gift that’s mot endowed for, say, a $100,000, and it’s for a specific purpose, you’re going to spend it on that purpose and then that money’s gone. But of course, an endowed gift is going to go into a special type of account and endowed account in which the principal is going to remain untouched and the account is going to generate some sort of return. Most of that is going to be used to support the purpose of the gift. Since the return is obviously much smaller than the original gift, an endowed gift generates a smaller amount annually. However, since the principal remains untouched, the lifetime of the gift is essentially infinite. And so the total amount of the gift is dramatically higher than the original gift itself.
In this podcast, I’m not going to talk about annual gifts from entrepreneurs, so I’ll just say that when the president and the entrepreneurship program’s employees fully engage interested local entrepreneurs, annual support is a natural consequence of that. Engagement is something that tends to naturally produce support from people that have the resources to offer it, and very often those annual gifts are simply just one natural consequence of the ongoing relationship. But in the case of major gifts, whether endowed or not, the timing of major gifts from entrepreneurs, often reflects the sporadic nature of discretionary income for entrepreneurs. You have to remember that entrepreneurs who are business people tend to have much greater fluctuations in their income, and therefore in their discretionary income, than someone who simply receives a regular salary. Because many entrepreneurs, their businesses will wax and wane. So will their ability to support your programs.
Gifts can be made in the form of cash or gifts in kind, which are goods, services, time, that sort of thing. And gifts in kind are generally most desirable when they enable the donor to provide support in a way that he or she just couldn’t do otherwise. Let me give you an example of a gift-in-kind (that that also ended up being a recurring gift) that meets that sort of definition and comes from a surprising source. The Drug Enforcement Administration, the DEA, was not in a position to provide cash support for the forensics program at Alfred State College, but they were willing to give us fully usable equipment that was five or more years old. My research uncovered that policies require that the DEA’s lab testing equipment be less than five years old to maintain the integrity of the testing and the credibility of the subsequent testimony in criminal cases. And so the DEA was getting rid of equipment and getting rid of it was actually fairly costly. We went to them (we already had a relationship with the lab’s director) and we basically explained our needs and explained that we could help them reduce their costs because we could take this equipment. Although the equipment was five or more years old, it was well-maintained. It looked brand new and it was perfectly good for our forensics program. That resulted in the forensics program receiving millions of dollars’ worth of equipment that the program could never have afforded on our own. And the donor. In this case, the Drug Enforcement Administration could not have provided that cash to buy that equipment, but they could provide us with the equipment itself.
When seeking support for your entrepreneurship program, there are two likely types of donors. There’s going to be individual entrepreneurs and there’s going to be corporations, because although we don’t necessarily associate corporations with entrepreneurship programs, the fact is that corporations are often very, very willing to support entrepreneurship programs, for the simple fact that corporations actually want entrepreneurial thinkers in their ranks. Corporations do not want people who just do the same task over and over. They’re actually interested in people who can work in teams and find solutions to problems.
Individual entrepreneurs and corporations require two quite different approaches and that’s important, because you also have to identify which entrepreneurs behave as if they were corporations. There are some like that, and it’s important to be able to spot which approach is going to match the type of entrepreneur that you are talking with. In my experience, entrepreneurs tend to share some common characteristics. By the way, anytime you generalize like this, you’ve got to point out that there are certainly exceptions, but at the risk of generalizing (and actually these characteristics are all quite complimentary!), I have found that entrepreneurs demonstrate the following:
First, they are either self-employed or they’re employed by a company that they founded with other like-minded people. Second, they tend to be more risk-tolerant than average. Third, they do tend to be more emotional and passionate about what they do, and this is a very distinctive feature of entrepreneurs. They do tend to be extremely passionate about what they’re doing. Fourth, they really want to make a difference when they give. Now all donors who are giving anything significant want to make a difference, but I do find that entrepreneurs tend to be very focused on that that aspect of giving. And finally, as I mentioned before, they do earn income at a more variable rate from year to year. Compared to salaried employees, individual entrepreneurs also approach philanthropy itself differently first, because they are typically self-employed. They also tend of course to be the decision makers. Second, because they’re fairly risk tolerant. You can bring untested first time ideas to them. They’re willing to hear things that may be more out there. You can come to them, not with a half-baked idea, but with an idea that just isn’t the norm. And they’re more willing to hear that idea out and even to attempt to modify that idea, maybe to make it more successful and more realistic, more fundable, something like that. Fourth, because they desire to make a difference and have an extraordinary passion for their work, they actually have a strong inclination to be philanthropic. You’ll find that there’s a strong overlap between passionate people and philanthropic people. And finally, because they tend to have variable income, you have to be prepared for a “not this year, but come back next year” answer. So in other words, very often with entrepreneurs. It’s not necessarily a “no,” it’s a “not right now.” And you have to understand why that happens. You have to be prepared for it. You have to graciously accept that answer and explain that you’ll be back again with that idea.
I should mention that occasionally entrepreneurs may have partners who may not share an interest in your project. As unusual as it sounds, I recommend that you approach business partners as if they are spouses because they have much of the same role in decision-making. If you’re going to an entrepreneur who operates as a company, you engage the partner fully. If ultimately the project doesn’t resonate with that partner, the original entrepreneur, he or she still has the opportunity of being personally involved distinct from the company. This outcome is actually common. For instance, if the entrepreneur is an alumnus and thus has a personal stake in the college, wants to be involved personally but their partner has no such relationship with the college.
Dealing with entrepreneurs, is I said earlier, is not like dealing with full-fledged corporations. Corporations are typically very different. Corporations can be very supportive of philanthropic projects, but more often they require a solid business case for that support. The corporation receives something, maybe it’s exposure, maybe it’s a tax advantage, etc., in exchange for its support. Generally speaking, the process is simply more transactional than working with an individual. An individual may receive some benefit from their support, but one of those benefits is going to be some sort of emotional connection or satisfaction, and corporations are going to feel that a lot less than, say, an alumnus of your school who just wants to give back to the school that gave so much to them. So the relationship with a corporation can be going to be very, very different. I’ll talk about that in a later podcast.
If you’re not engaging the entrepreneurs in your community or your alumni base, you are simply in for a treat. They are inquisitive and smart. They have an independent mindset that can be incredibly refreshing. This independent mindset often leads them to be prescriptive and sometimes maybe you’re not ready to listen to what the donor says should be done, rather than what you’ve set out to do. I recommend that you pause and listen, because entrepreneurs, although they tend to be prescriptive, see solutions that the rest of us do not always see. That’s why they’re entrepreneurs. That’s why they’re successful. When you’re seeking philanthropic support and you have the ability to sit down with someone that can see solutions to problems that you may not be able to see, that’s a great combination. Embrace it, treasure it, enjoy it.