Stonington Free Library
20 High Street
P.O. Box 232
Stonington, CT 06378

Phone - 860.535.0658
FAX - 860.535.3945
E-mail -
stonlib@stoningtonfreelibrary.org

 

Reading Room

Giving Clarity to Campaigns;
Capital versus Annual Giving
Written by Charles Clark

Charles ClarkOver the course of the recent Campaign for the Stonington Free Library, which raised almost $800,000, some contributors expressed confusion regarding the roles of the Annual Fund and the Capital Campaign. Since the Stonington Free Library has not had a long record of seeking multiple gifts from its supporters in any given year, concern stemming from a request for two gifts in one year (what is often termed the “double ask”) seems inevitable. It can be clarified by a brief review of the nature of annual and capital fund raising.

Annual Funds: helping meet everyday needs

Annual Funds are vital sources of unrestricted dollars that supplement earned and endowment income to cover the basic costs of running any non-profit organization. Graduates of private schools, colleges, and universities, as well as members of museums, performing arts organizations, and other non profit entities have come to expect an annual request for unrestricted support. Even institutions with enormous financial resources like Harvard University (whose endowment stood at $29.2 billion at the end of June, 2006) rely on annual gifts from alumni, parents, and friends, to sustain a physical plant and an array of programs.

An Annual Fund has the advantage of being able to pay for facilities maintenance and utility costs, fundamental expenses that aren’t likely to be entirely covered by income from endowments and are rarely attributable to corporate or foundation grants. At the Stonington Free Library, Annual Fund dollars cover these needs as well as staff salaries and benefits, educational programs, and services to its thousands of patrons.

Unlike a museum or an educational institution, the Library has a limited capacity to earn income (for example, through tuition, admissions, or gift shop sales.) The Library’s Board of Trustees in the late 1 990s took a comprehensive look at the institution’s financial condition and in light of growing expenses and demand for programs, charted a new course. They recognized that in light of a modest return on its small endowment, the Annual Fund needed to provide more income, and that the responsibility for the financial health of the institution needed to be shared by a greater number of people. Underlying this decision was the understanding that members of the community for years had demonstrated a commitment to the Library’s future through their support of the Annual Fund. The Board voted to increase the Annual Funds goal, to reach out to many more residents, and to increase their own commitments to the effort. As a result, the Annual Fund’s performance jumped from $60,705 in 2000-2001 to $110,000 in 2005-2006.The 2006-2007 Annual Appeal is currently underway and ahead of schedule as it moves toward a goal of $110,000. The list of donors to the 2006-2007 Appeal will be published in the late spring of 2007.

And yet despite this success, the Annual Fund wasn’t designed to raise the kind of dollars needed to restore the aging Library building or to increase the endowment to a size commensurate with the scope of the Library’s services. That was the role of a Capital Campaign.

Capital Campaigns: upgrading facilities and building a stronger financial footing

Institutions with modest endowments and budgets the size of Stonington Free Library’s (under $300,000) have long turned to their constituents for support of major capital needs. Although the Library has in the past successfully completed Capital Campaigns to pay for much needed expansion, records suggest that none of those efforts engaged the entire community. Rather, these drives relied largely on a handful of patrons to reach the goal. As a consequence, the Library’s real financial needs were articulated to only a handful of donors.

Unlike Annual Funds, Capital Campaigns generally exist within a set period, for example three to five years (although alumni from some larger universities recognize that Capital Campaigns are quickly becoming permanent features on the philanthropic landscape.) During the course of the recent Campaign for the Stonington Free Library, all past supporters of the Annual Fund, and non-supporters who used the Library services, were asked to consider a capital gift.

Gifts to the Library’s Campaign have been directed to its two most pressing needs: restoring and improving the historic building, and growing the endowment.

Mr. Clark was former a Senior Development Officer at Yale University, and Director of Major Gifts at Connecticut College. He is now an independent consultant.

 
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