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Fundraising Under Pressure: Are big gifts getting riskier?

by Susie Hills | Jul 22, 2021 | Fundraising

I must have read the Sunday Times Rich List every year for the past 15-20 years, and this year I noticed something quite different. The editorial tone has changed. The opening paragraph tells of an “unsettling” wealth boom for the super-rich: “Over the past year, tens of thousands of us have buried loved ones, and millions of us have feared for our livelihoods. But at the very same time, more people have become billionaires than at any point in British history.”

The Sunday Times reports that there are a record number of billionaires – the biggest jump in the 33 years it has been tracking the wealthiest in our country. They question both the ethics and the sustainability and reality of this wealth ‘boom’:“It is not just the timing of this gilded epoch for the super-rich that feels disturbing. This is also a boom that often appears detached from the laws of economic gravity. How can businesses set up less than two years ago, that have never turned a profit, be worth more than $1bn?”.

This leads me to wonder, is big gift fundraising getting riskier?

Clearly, there is an opportunity to seek big gifts from the names on the pages of the Rich List, and many institutions have done so. For example, Sheffield University secured the largest gift in its history from Andrew Law, an alumnus who appears at number 10 on the Sunday Times Giving List. 182 Rich Listers have given £1m plus – more than ever before – and the total given by Rich Listers is up 34% to £4.3bn. For those institutions with a connection to one of the names on the list, careful consideration should be being given as to how to build that relationship and seek a big gift.

However as you plan your approach you should also should be carefully considering the financial and reputational risks of big gifts – both the ones you have already received, as well as the ones you may ask for.

Never before has there been the same scrutiny in terms of the ethics of donors. Whether it’s the ethical track record of the company/ies from which they get their wealth (think Sackler family) or their track record in paying (or not paying) their taxes, you can be sure that if you don’t do your due diligence and research fully the sources of their wealth, someone else will do it for you.

Being clear as to what types of money your institution will and will not accept is a governance decision that must be explored at board level. As a fundraising leader it is vital that you know whether your leadership are comfortable taking different types of money and have a clear stance on the obvious areas of risk. Are you clear as to whether it it ok to accept money from mining companies, tobacco companies, alcohol makers, gambling companies? Does the good the money do ‘wash it clean’, or is the ethical cost too high for your institution?

And as all fundraising leaders know, the ethical due diligence doesn’t stop when you accept the gift – it must continue thereafter and you will need the resources to regularly review and risk assess your donor list. The reputation of your donor may change and you may need to reconsider their name on your building (or anything else). You need to know that there is a process in place to regularly review and bring issues of concern to the Board.

And it’s not just the ethical and reputational risks that come with big gifts from the super-rich – there are financial risks too. Most multimillion-pound gifts are not given in total upfront. Most are phased payments, sometimes over several years. It’s important that you consider the sustainability of the donor’s wealth. What if their particular bubble bursts and they do not fulfil their pledged payments?

Now is the time for fundraising leaders to revisit their gift acceptance policy and due diligence process and to ensure that the Board has had appropriate oversight and ownership of it. Halpin can provide expert services to review policies, assess risks and facilitate Board discussions. We can also provide research services if your team does not have in-house capacity.

Halpin is the home of experts in higher education governance, fundraising and strategy.