Fund Raising and Public Relations

A Critical Analysis

Kathleen S. Kelly

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000149067
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Öffentlichkeitsarbeit

This is the first scholarly work to place the function of fund raising within the field of public relations, redefining it as a specialization responsible for the management of communication between a charitable organization and its donor publics. Combining her academic interest in communication with her experience as a fund raiser, the author has produced one of the few critical studies on fund raising, challenging current perspectives and employing systems theory and the concept of organizational autonomy to lead to a new and different approach. Until now, fund raising has been an anomaly, without an academic home and with few general theories to guide practitioner behavior. This book theoretically grounds fund raising and develops a theory that provides a fuller understanding of one of the fastest growing occupations in the nonprofit sector.

Chapter 1

A Critical Analysis of Fund Raising:
An Overview of the Book¹

In 1988, tax-deductible gifts to American charitable organizations exceeded $100 billion for the first time (American Association of Fund-Raising Council [AAFRC] Trust for Philanthropy, 1989c). In 1987, these nonprofit organizations received $93.7 billion, which was more than the combined profits of all Fortune 500 companies ($91 billion) and if computed as sales, would have placed charitable organizations second on the Fortune 500 list, ranked only behind General Motors and more than $17 billion ahead of the Exxon Corporation (AAFRC Trust for Philanthropy, 1988a).

Whether viewed as sales or begging for alms, the “getting” of tax-deductible gifts has reached new heights in recent years. To offset reductions in federal funding during the 1980s and to maximize their share of philanthropic giving, the estimated 800,000 organizations that are categorized by the Internal Revenue Service (IRS) as charities are increasingly hiring fund-raising practitioners and charging them to raise increasingly higher totals of gift revenue (“Reagan years,” 1988). Although no reliable statistics are available, it can be estimated that tens of thousands of men and women today carry out fund-raising duties as paid employees of charitable organizations. One indicator of this growth is that membership in the National Society of Fund Raising Executives (NSFRE) has grown from fewer than 2,000 in 1979 to more than 10,000 in 1989 (NSFRE, 1989).

¹There is no consensus on the correct style for the terms fund raising and fund raiser. Scholars and practitioners use the verb and the noun as a single word, as two words, or as a hyphenated word, depending on their preference. This lack of agreement is indicative of the little progress that has been made in advancing the field beyond a vocation. For the purpose of this book, fund raising and fund raiser are expressed as two words, and fund raising is hyphenated when used as an adjective.

These fund-raising practitioners conduct prospect research to identify potential donors, plan special events to cultivate donors, solicit gifts by direct mail, phonathons, proposals, and face-to-face meetings; and write and edit publications to report fund-raising results and recognize donors. To help them carry out these duties, practitioners rely on fund-raising principles that have evolved through anecdotal material and studies that have primarily been administrative in purpose. Collectively, these principles form a dominant perspective of the fundraising function that focuses on how to raise more money without questioning the rationale for the function or its effect on recipient organizations and society. For example, the following four important questions rarely are raised about fund raising:

1. Are the underlying assumptions of current fund-raising principles valid, or are some of the more important ones misconceptions and “myths?”
2. Is the relationship between a charitable organization and its donors one of benevolence, business, or pseudo-relations?
3. How does fund raising contribute to organizational effectiveness?
4. How and why do charitable organizations practice fund raising in different ways?

Although varying opinions may be offered in response, fund-raising research has made little progress in answering these important questions. Without a theoretical base grounded in the literature of academic disciplines, fund raising traditionally has been ignored by educators as a subject worthy of scholarly study (Simon, 1987). Part-time practitioner—scholars generally have produced research on fund raising that “has been sporadic, scatter-gun, and often pedestrian” (Carbone, 1986, pp. 22-23). Although there has been a dramatic increase of scholarly activity in the domain of philanthropy, fund raising as an organizational function has not been identified as one of the agreed upon problems that define that domain of study (e.g., Powell, 1987). This lack of scholarly interest in fund raising is illustrated by the fact that only 80, or 3%, of the 2,717 research projects on philanthropy and nonprofit organizations identified by Independent Sector over the last 5 years have focused on the fund-raising function (Independent Sector, 1988). In short, the questions just cited can be viewed as major problems of fund raising that have remained unresolved by previous research.

These unresolved problems are, or should be, of great concern to practitioners who are charged to raise billions of dollars with little substantive theory to guide them. Concerned with the growing number of capital campaigns and their skyrocketing goals, some fund-raising practitioners are beginning to question the unrealistic demands being placed on them by their organizations (e.g., Alexander, 1990; Carbone, 1989b). The big-dollar results of fund raising have thrust the function into the public spotlight more so than ever in the past, prompting questions about the “greediness” of charitable organizations (“Carnegie’s ‘gospel,’” 1989). Frustration and cynicism on the part of donors and public officials are raising questions about professional and ethical conduct that already have resulted in investigations and increased regulations, which one state charity regulator described as an “‘unheard of flurry of activity” (“States modify laws,” 1989, p. 1).

Clearly, the time is right for stepping back from the current perspective of the practice and study of fund raising to ask a fifth and critical question:

5. How can fund raising be explained in a different way that would help us more fully understand the current fund-raising behavior of charitable organizations?

This book is designed to answer that critical question, as well as those important questions raised earlier. It can be argued that the answers to these questions are crucial to the future of fund raising. Indeed, a reexamination of the dominant perspective and a reinterpretation of the fund-raising function may be critical to the well-being—and perhaps even to the survival—of the nonprofit, or third sector, in our democratic society.

In a departure from previous research, this book takes a critical approach to fund raising. According to S. Hall (1980), critical studies are valuable in advancing knowledge because they focus on “significant breaks—where old lines of thought are disrupted, older constellations displaced, and elements, old and new, are regrouped around a different set of premises and themes” (p. 57). Using critical methodology, this book first provides evidence that the dominant perspective of fund raising is inadequate for a full understanding of the function. Drawing from the literature in communication, public relations, management, organizational psychology and sociology, economics, political science, and higher education, the critical analysis brings to light serious flaws in some of the major assumptions on which current principles of fund raising are based.

As a result of these misconceptions and myths, generally accepted explanations of fund raising are rejected as incomplete, misleading, and lacking in explanatory power. Proceeding from that basis, the book’s purpose is to shift the public relations paradigm to encompass fund raising. To justify such a shift, fund raising is reoriented to the body of knowledge of public relations, which provides a reinterpretation and a fuller understanding of the function. To support this reorientation, systems theory and the concept of organizational autonomy are employed, and a case is made by systematic, step-by-step processes that lead to a new and different perspective of fund raising. The result is a theory that defines fund raising as a specialization of public relations (i.e., donor relations). Essentially, this immanent critique demonstrates how themes extant in the fundraising literature can be reinterpreted and reconstructed and how the public relations paradigm can be shifted to develop a theory of fund raising that is, perhaps, radical in comparison to current theories within the dominant perspectives of both fields.

The theory of donor relations developed in this book answers the critical fifth question about how fund raising can be explained in a different way. It also provides tentative answers to the important questions posed at the beginning of this chapter—answers that, in the form of hypotheses, will need to be tested systematically in the field. As presented here, the new theory can only claim to represent an interpretation of what theory and research from diverse fields tell us about the nature of fund raising and its effect on organizations and society. Future testing of its hypotheses will shape, revise, and improve the theory to make it more useful for directing the behavior of fund-raising practitioners and for solving the problems they face. Be that as it may, this book represents a significant first step toward a theoretically grounded and fuller understanding of fund raising.

Building Theory Through step-by-step Processes

This book is organized into two preliminary chapters and five major sections. Each section contains chapters, some of which are further divided by subchapters. The book’s organization is intended to provide a structure for drawing from diverse fields, such as organizational sociology, higher education, and public relations, while demonstrating a logical interrelationship in the theoretical blocks that support a new theory of fund raising.

This chapter is the first of the preliminary chapters. It conceptualizes the theory of donor relations developed in this book and shows how each of the other chapters builds up to that theory. Chapter 1 concludes by discussing the critical methodology used in this book. Chapter 2 sets the stage for a critical analysis of fund raising by first stating the problem that prompted the book and then by examining the background of the problem as it relates to the fundraising behavior of American colleges and universities.

The chapters in Part I analyze current perspectives of fund raising by examining definitions, research, and some major assumptions on which principles have been based.

Answering the first question posed at the beginning of this chapter on the validity of fund-raising assumptions, critical statements are made about definitional confusion, sporadic research, and misconceptions and myths inherent in the dominant perspective, which lead to its rejection. The chapters in Parts II through IV then describe the building blocks that develop a new and different theory of fund raising.

First, fund raising is approached in Part II from a macrolevel by examining charitable organizations and their environments. In response to the second question on the relationship between donors and recipient organizations, this section argues that—contrary to conventional wisdom—such relationships are best understood not as benevolent, business, or pseudo-relations, but as an interdependency of groups and organizations within an environment. These fund-raising interdependencies constitute an ongoing exchange process that requires management and negotiation by the charitable organization, especially by those practitioners who manage its fund-raising programs. The concept of autonomy is a central issue in the exchange process in that the power of an organization to determine and pursue its own goals is affected by how successful an organization is at managing its interdependencies. Charitable organizations face a double-edged sword: In order to enhance their autonomy, they must seek external funding to support their institutional goals, but in so doing, they risk losing autonomy by accepting gifts that limit their power to determine goals and the means of pursuing those goals.

Part II then focuses on higher education for an in-depth analysis of the concept of institutional autonomy and the effect of fund raising on American colleges and universities, which, because of their inherent value to society, are generally thought to enjoy a higher level of autonomy than other organizations. Historical and current evidence is presented that demonstrates how institutions of higher education have been and are being shaped and changed by the three sources of private support: foundations, corporations, and individuals. The findings of this analysis are generalized to other types of charitable organizations through the use of selected case studies on how dependencies on donors have changed the missions and goals of social services organizations for the blind, a social welfare agency concerned with juvenile delinquency, and an educational institution for the arts.

As current perspectives of fund raising do not take into consideration the concept of autonomy and its potential loss through the exchange process of fund raising, it is appropriate to answer the fifth question on how fund raising can be explained in a different way by looking to other theoretical frameworks for answers. In Part III, the function of fund raising is approached from a public relations perspective, specifically the public relations theory developed by Grunig (e.g., 1976, 1984, 1989a, in preparation), which is based on the central premise that autonomy is a primary goal of organizations and that the purpose of public relations is to enhance and protect autonomy by effectively managing communication between an organization and the various publics in its environment. Redefining fund raising as the management of communication between a charitable organization and its donor publics, the book shifts the public relations paradigm to encompass the fund-raising function as donor relations.

Approaching fund raising from the microlevel, the generally accepted, four-step process of fund raising (i.e., research, cultivation, solicitation, and stewardship) is reinterpreted as communication programs and activities that are designed to achieve the five communication objectives, or effects, used in the public relations process (i.e., awareness, understanding, belief, favorable attitude, and desired behavior). For example, the solicitation step, which accounts for only about 5% of the fund-raising process (Wood, 1989), is reinterpreted as a communication activity that is designed to achieve a giving behavior from donor prospects through mass media channels, such as direct mail, for lower level gifts and through interpersonal communications, such as face-to-face meetings, for major gifts.

After theoretically grounding fund raising within the paradigm of public relations, Part IV uses current theories from that paradigm as analytical tools to provide a new way of explaining the fund-raising behavior of charitable organizations. Of particular importance, Grunig’s (1984; Grunig & Hunt, 1984) theory of public relations models is used to answer the first half of the fourth question raised at the beginning of this chapter on how charitable organizations practice fund raising in different ways. Four historical models of fund raising are identified, and evidence from the fund-raising and philanthropy literature is presented to demonstrate their continued use today by different organizations. The concept of strategic public relations management is used to critique the current principles and practices of measuring fund-raising effectiveness by dollars raised, providing a partial answ...