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News story publihsed on 07/24/2006
By Katie Burns
Published in Economic Development Now
When it comes to fundraising for economic development organizations, Howard Benson has a recommendation:“Make no small plans,” he says.
Thinking big from the start is key, according to Benson, CEO of fundraising consultants National Community Development Services (NCDS) in Atlanta. Over three decades, his company has conducted fundraising campaigns for about 500 economic development organizations. (What? You thought all that money came from the public sector? Surely you jest.)
Benson also recommends having specific plans for that money. You need to be able to tell your constituents that, say, you’re trying to double the number of jobs in the community.“It’s not dues, it’s not grants, it’s program-driven,” he notes.
That’s why Benson and his colleagues usually start with a feasibility analysis – they want to be sure the support for the proposed project (or projects) is there. In about 10 percent of the cases for which they’re contacted, it turns out the support actually isn’t there, not at the levels the EDOs are hoping to see. In such cases, Benson says, NCDS either turns the client down or suggests altering the goals. “When you go to raise money, there’s so much more going on than just the checkwriting,” Benson explained.
Obstacles to obtaining the money
Among the common obstacles to successful fundraising are lack of credibility on the part of the EDO; overlap with other organizations in terms of work; or so much prosperity that the public doesn’t feel a sense of urgency for fundraising. In one recent case, Benson’s organization turned down a proposal from a fairly wealthy community that wanted to raise money to convert its newsletter into a magazine. Interviews with local business owners indicated the interest just wasn’t there.
Another big mistake, he says, is failure to engage the people who are writing the checks about what they want to see accomplished.“Our belief is that what they help write, they’ll help underwrite,” Benson comments. He has seen cases in which the economic development staff charges out on a project without letting local leaders know what’s up, leaving said leaders surprised in the end – and not too happy – because they weren’t consulted.
In addition, NCDS has a full-time economist on staff who computes the potential outcomes of each project for which funds are being raised. If the client wants to know “what’s in it for them,” NCDS has an answer.
Mark Bergethon, president and chief operating officer of Stellar Fundraising Executives in Jacksonville, Fla., echoed much of Benson’s advice. Stellar helps its clients with intensive, multi-year campaigns.
Stellar’s most challenging project may have been one that involved drawing in organizations from across a 13-county area to establish a regional economic development marketing entity in northeast Indiana. Bergethon says it took more than a year to get the organization up and running.
But starting slow actually is fine with Bergethon. The biggest mistake he sees in fundraising is when an organization insists on rushing out of the gate and grabbing for the “low-hanging fruit” – that sets the bar low. Fundraising requires aiming high and going through a step-by-step process. Sometimes Stellar’s clients balk, but once the firm lays out the process, the clients tend to see the wisdom behind it.
Among his most successful endeavors, Benson cites helping Tacoma, Wash., with a $4 million project to recruit an engineering school for the University of Washington, in order to gain more “knowledge” jobs; and helping Sioux Falls seek funding for more workforce housing through an initiative that has been renewed five times over the past 25 years.
Bergethon had difficulty choosing the firm’s most successful project, but he thinks the one Stellar did for Albany, Ga.,worked particularly well. The effort involved raising $9.2 million for a fouryear strategic action plan with four components: one for regional identity and community investment; one for political impact; one for workforce development; and one for investor relations.
No small plans in Omaha
You can’t chide the folks in Omaha, Neb., for thinking small.Their current campaign, titled “GO!” for “Greater Omaha” Economic Development Partnership, aims to raise $20 million in five years for marketing efforts. The project began in 2004, and so far has pledges for over $17 million.The goal is to recruit at least 400 investors, and so far they’ve got 233 on board.
Patti McAtee, a senior director with the chamber, heads up the GO! campaign. She says it grew out of a predecessor effort called “Target Omaha,” after the city lost a rather hot prospect (BMW, to be exact) to a competitor community.The chamber began holding quarterly meetings for its investors, with speakers, jobs and investment progress reports, marketing updates and other information relevant to investment decisions. In addition, McAtee said, the chamber is looking for other funding sources such as grants from foundations.
Besides the fundraising efforts that the chamber is taking to bring jobs and investment into the community, additional public-private partnerships have been developed to catalyze other community projects, such as Omaha’s nearly $300 million public arena and convention center, the Qwest Center, and the $100 million Holland Performing Arts Center. Also on Omaha’s agenda:“Destination North Downtown,” the planned redevelopment of an 80-block area north of downtown, and “Destination Midtown,” which encompasses an older neighborhood containing the University of Nebraska Medical School and the corporate headquarters for Mutual of Omaha.
For all the good news,McAtee realizes that there are limits. “At some point in time, you wonder if we’re going to tap out our resources,” she notes – certainly a concern with so many major projects going on. Nonetheless, she feels the city has been very supportive of the GO! program.“When I talk to people, they get it,” McAtee pointed out.“It’s not a hard sell.”
Perspectives from Richmond and Raleigh
Greg Wingfield, president and CEO of the Greater Richmond (Va.) Partnership, says that to save staff time, his organization has always hired an international ecomonic development council outside consultant. The money raised is used to support the organization, boost certain business clusters, fund various outreach programs, coordinate workforce training efforts, and coordinate a small business assistance program with the chamber of commerce.
To avoid burning out potential investors, Richmond always packages its fundraising efforts as one “ask,”Wingfield explains. Another challenge is combating complacency among investors. “We want the private sector to equally carry the load with the public sector,” he says.
Kenneth Atkins, executive director of Wake County Economic Development, a division of the Raleigh (N.C.) Chamber of Commerce, notes that a good consultant will come in and help an organization think through its needs, strategies and available resources.The consultant also will talk to a wide array of potential investors and get a feel for what can be achieved.
Atkins cited an instance from a previous fundraising campaign in which the consultants spoke with more than 60 stakeholders in the Raleigh area and determined that they supported the chamber’s goals, but they weren’t wild about the $10 million fundraising aim. So the chamber adjusted its aim down to $8.5 million.The goal was reached.
A consulting firm has spearheaded every fundraising effort that Atkins has been involved with. His conversations with organizations that tried to raise funds on their own indicate that they felt they could have raked in more money had they used a consultant.
The trouble with self-administered campaigns is that they are often run by volunteers, who don’t really know how much a business will be willing to pay.“They’ll take the lesser amount just to get the call done,”Atkins says. But professional consultants have done a lot of work and learned just how much they can ask for. Consultants also know that pride matters: If you have three law firms, and two give a substantial amount, you can probably prod the third firm into matching it.
Forward Sioux Falls
Dan Scott, president of the Sioux Falls (S.D.) Development Foundation, said his organization first began raising money in 1987. It raised about $14 million for various goals, including economic expansion,business retention and improving of the quality of life in the town.
Currently, the foundation is in the midst of raising another $8.5 million over five years, from 2006-2011. The previous five-year fund drive helped build the South Dakota Business Center, a technology business incubator. Other campaigns have raised money for workforce development, to help create a “knowledge business” community, and helped fund a $140 million Arts & Sciences Pavilion and a convention center.
The foundation, which typically turns to an outside consulting firm for help with such projects, calls its campaigns “Forward Sioux Falls.” The first campaign was a bit challenging, because the town had no organizations set up to handle it. But after that project, he says, the rest were easy.
“Through the Forward Sioux Falls program and through the increased investments, virtually everyone involved has learned to think bigger and better,” Scott says.
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