What is an annual giving program or annual fund?

The annual fund, annual giving program, unrestricted giving program, or sometimes called “The [school name] fund,” is a program that raises funds for, in most schools, anywhere from 10 to 30 percent of the school’s yearly operating budget.  Annual giving refers to gifts that are renewed by the donor each year, or which are made yearly as part of a multi-year pledge arranged between the donor and the school.

The CASE Voluntary Support of Education survey found in 2020 that the annual fund in U.S. independent schools covers approximately 26 percent of the school’s operating expenses yearly, a figure similar to that of private liberal arts colleges in the U.S.

Why does an annual giving or unrestricted giving program exist?

Tuition and fees do not cover the full cost of education, particularly in the United States and Canada. Annual giving exists to close that gap. It is exceedingly rare for U.S. to charge exactly what it costs to educate an individual student, and annual giving programs exist in part to help keep tuition lower than it might otherwise be. The practice of closing the budget gap with an annual giving fund is over 100 years old in U.S. educational institutions.

How is the annual fund used in schools?

Annual funds are used differently depending on the school, but in general cover operational expenses including, but not limited to, faculty professional development, academic resources and supplies, yearly facilities improvements, equipment and technology purchases, and co-curricular expenses. In many if not most cases, the annual fund also provides financial aid and scholarships for families.

What is “restricted” giving vs. “unrestricted” giving?

As the name implies, unrestricted gifts are given by donors with no direction as to how they should be used.  Unrestricted gifts under a certain level will generally go to the annual fund. Larger unrestricted gifts will often be reviewed and advised by the board of trustees and allocated to an area of strategic focus within the school.

Restricted gifts are those with specific direction from a donor. For example, a donor may designate that a gift be used for a building project, or exclusively for scholarships. The school cannot legally redirect restricted funds from one purpose to another. The same is true for gifts given to endowments. Endowment gifts typically are invested, with the interest proceeds being used as the donor requested. For more information on endowments, please see CASE’s Endowment FAQs page.

In short, restricted gifts and endowments, no matter how large, cannot legally be used for a purpose other than what the donor intended.

What is a capital campaign?

A capital campaign is a multi-year strategic fundraising initiative that raises funds for a specific purpose. Capital campaigns typically have goals that exceed that of an annual fund and seek restricted funding for a specific project or series of related projects. Capital campaigns often fund building projects and scholarships, and grow endowments for long-term sustainability.

Capital campaigns often begin in a “silent phase” where support from key donors is secured before launching the public phase. The purpose of having a “silent phase” or “quiet phase” is to build momentum for the campaign prior to its public launch and to convey to prospective new donors that there is already philanthropic support and enthusiasm for the project.

How are capital campaign donations used?

Capital campaign donations are usually restricted donations, and must therefore be used for the purpose for which they were originally intended.

How can I find out more about my school’s fundraising program?

For more information about your school’s specific fundraising program and financial model, speak with your Director of Advancement (Director of Development). You can also seek out a copy of your school’s annual report or donor impact report. Such reports exist at most schools and convey to the school’s wider constituency how both annual and capital gifts are allocated and used.