The Case for an Episcopal Church Development Office -- Now

1. 6/20/12 Rev. 1 The Case for an Episcopal Church Development Office -- Now Ted Mollegen Lay Deputy from CT Senior Deputy No longer embargoed -------------- Feel free to forward anywhere

2. Caveats This presentation contains the opinions of the author. He is speaking only for himself, not for any organization, whether TEC-related or other. This presentation is in slide format, but it is expected to be read rather than to be seen on a screen during a stand-up presentation.

3. Outline • What is a Development Office? • Qualities needed in the Director of Development and Relationship Managers (Major Gifts Officers) • Why now? • Recommended actions from GC2012 to Jan 1, 2013 • Recommended priorities & strategies after next Jan 1, 2013 • Some Criticisms & Answers

4. What is a Development Office? • A Development Office builds long-term cooperative relationships with people of means who seek to do some good with their wealth. • Many such people have established patterns of giving, and are quite open about their areas of philanthropic interest. • Many are interested in being involved in the use of their gifts. • Many are Episcopalians. • “Very wealthy” is defined here as “capable of giving million-dollar gifts every year.” This equates to having a net worth from about $50-million up to about $1-billion or more. • The opportunity is thus very, very large.

5. More About the Prospects • Typical prospects are experienced givers. Giving for certain purposes may even be a multi-generational family tradition. • Prospects generally view their own giving the way you or I might view using an endowment fund. This often means that their draw on their resources will not fluctuate with the ups and downs of the financial markets, but will be based on a running average of the value of their assets. Thus their giving is more stable than the giving from the rest of us, and -- depending on the giver’s response to increased needs -- may even be somewhat counter-cyclical.

6. Still More About the Prospects The rich are different from you and me. F. Scott Fitzgerald inThe Great Gatsby

7. Rules-of -Thumb/Metrics from the Presbyterian Church USA* • 10-15 regional Gifts Officers, each expected to raise $1-2 million a year • “Average” major prospect cultivation/solicitation effort is “measured in years” • * From The Episcopal Church Website, Development Office, PPT, page 7 • ======================== ===== • In Average Sunday Attendance (ASA), the PCUSA is about 1.5 times the size of TEC, according to Dr. Kirk Hadaway, TEC’s Director of Research.

8. Rules-of -Thumb/Metrics from the ELCA* • 16 Gift Officers (when fully staffed) • Centralizing donor databases and marketing efforts in Chicago headquarters • Annual income from mission-directed funds ranges from $200,000 (new fund) to $28 million • Mission Advancement Office funded at $5MM per year • *See page 6 of Development Office PPT on Episcopal Church website – note different structures and functions of ELCA fundraising • =========================== • In Average Sunday Attendance (ASA), the ELCA is about twice the size of TEC, per Dr. Kirk Hadaway, TEC’s Director of Research.

9. What Will our Development Office Do? • For the next two or three years the primary focus should be on developing relationships that will lead to major gifts. About 15-20% of the effort should have other aims. (See below.) • When relationship-building activities are proceeding well, the next priority should be to help major TEC entities such as dioceses and possibly provinces to build their own development operations. • Continue to work in a collegial, coordinated manner with: • Episcopal Relief & Development • Episcopal Church Foundation (provides training and assistance in TEC-related fund-raising projects)

10. Qualities needed in Director of Development and Relationship Managers • Director of Development: Highly experienced in the best practices of development work • Good alliance builder • Views others as potential allies and/or supporters; effective in gaining trust & cooperation • Good mentor/teacher • Relationship Managers: Friendly and transparently (and strictly) honest • Able to quickly and accurately read prospects’ non-verbals • Able to handle rejection maturely and gracefully • Know when to bring in the PB, COO or Development Director to close the deal

11. Additional Activities - especially in the 2016-2018 triennium & thereafter • Propagate to other TEC entities the idea of having a Development Office. • In coordination with the Episcopal Church Foundation, assist Dioceses/Provinces in setting up their own development offices. • Provide info on prospects to various TEC activities (already happening to some extent) • Examine other top-down and bottom-up approaches to add to TEC’s portfolio of approaches for gaining of funds from outside TEC.

12. Additional Activities -- Part 2 • Study the advisability of a churchwide campaign like Venture In Mission (VIM), a TEC fundraising effort in the late 1970s and early 1980s: • VIM took about six years instead of a planned four. (Some dioceses didn’t participate until they saw VIM succeeding in other dioceses.) • VIM raised $170 million instead of the planned $100 million goal (in 1980s $$) • VIM funds were solicited from parishioners in parishes. Some funds were used in the parishes for new mission activities meeting VIM criteria and most was sent on to the Dioceses. Dioceses allocated some of these funds according to VIM criteria to projects in their dioceses and sent some to the TEC Executive Council to be allocated from there. • Most of VIM’s funds came from parishioners, showing that significantly more parishioner $$ were available in response to a Major Asking. The present unsettled state of the economy may cause the results to be somewhat less than VIM’s if a Major Asking is tried now. • VIM criteria included (a) an emphasis on projects that carried out the Great Commission and (b an emphasis on new projects that would grow to become self-supporting . Today, the Dio of CT has a mission revolving loan fund that was started about 30 years ago with VIM funds. • Study Dio of San Diego experience with kickstarter.com as a way of raising mission money from local non-TEC sources.

13. Why Now? • TEC’s membership, attendance and financial income have been declining since the mid-1960s • Demographic analysis of TEC says that the downward trends can get even worse in the future due to the low birthrate of Church members. The longer we wait to start a turnaround, the weaker we will be when we begin. Based on the ages of our members, our death rate means that we are losing the equivalent of about one average-sized diocese per year. • This is doable now. • This is necessary now.

14. Why Doable Now • We now have the needed expertise to re-start effectively • We have the commitment of, an increased understanding by, and the support of: • - the PB • - the COO • - the Executive Council* • - an increasing number of bishops and deputies • =================================================================== • * The Development Office is funded in the Draft Budget that the Exec Council sent to PB&F.

15. Why Necessary Now? • We need to start our turnaround now, because we are projected to be smaller and weaker in the future. • It is easier to use outside funds for innovative new turn-around initiatives because many GC voters in both Houses have their favorite programs that they’re trying to protect. Since there is no clear Grand Strategy, these voters have no basis for objectively weighing the importance of their favorite programs against others, especially new others. Therefore, they tend to support the familiar ones that they know and like.------------- • Note that a draft Grand Strategy exists. See Links page.

16. How Will (a) the Subject Areas for Search Focus and (b) the Criteria for Gift Acceptance Be Selected? The Canons already provide that the business of the DFMS be conducted in accordance with the Constitution and Canons and in accordance with the direction of GC and (subordinate to the GC) the Executive Council. However in order to ensure clarity, I will be submitting a resolution in support of the Development Office with stipulation that the Search Criteria and Gift Acceptance criteria and decisions be in accordance with the preceding as interpreted by the Executive Council or a committee thereof to which Executive Council has delegated such decisions. If Executive Council has not specified otherwise, decisions for the Council needed between meetings thereof will be made by the Executive Council’s Executive Committee.

17. Next Steps Following GC Approval • Hire a new full-time Director of Development – with Development Office experience an absolute necessity. Use members of the Visioning Committee to help attract/review/assess candidates. • Hire experienced Relationship Managers (RMs) – Development Office experience a necessity. The new Director of Development should be involved in the final hiring decisions, but the search process for RMs can be started well before the Director is aboard. • Assess the present Development Office staff: training needed and long-term potential.

18. Should We Fund the Churchwide Development Office Directly from “Endowment”? • Why YES? – The Development Office will produce significant income, whereas most other expense line-items don’t produce income for DFMS. • Why NO? – Most of what we call “endowment” isn’t really endowment – it’s just accumulated surpluses, not the result of gifts intended to endow TEC operations in perpetuity. So, calling it endowment as stated in the Executive Council Draft Budget raises a lot of emotional and baseless arguments about not invading principal. • Whichever way GC decides to fund it, we need the Development Office NOW. 18

19. Criticism – The effort shouldn’t start until TEC has a Strategic Plan that is well-accepted by GC, the Executive Council, and the Diocesan Bishops. Answer – A generally-agreed-upon Strategic Plan that meets the above-stated criteria may happen by GC2015 -- or GC2018 -- or GC2021 -- or maybe never. It is true that a good Strategic Plan can be a really good sales tool for fund-raising, but there are many things that are critical to turning around TEC that can be confidently started without waiting for a completed, fully-accepted Strategic Plan. Examples include: campus ministries on the campuses of all US private colleges and universities, campus ministries serving the students at public educational institutions from universities on down to two-year community colleges that primarily serve commuters who have day jobs, new models for church buildings that allow for profit-making applications (such as nursery schools, religious or not) that don’t conflict with Sunday morning worship and weeknight educational use, church planting in dioceses that have valid opportunities for healthy church plants but don’t have the money to start them or the knowledge to coach them.. Criticism -- People won’t give to [fill in the blank] Answer – what is your factual evidence supporting that opinion? The experience of other denominations supports this idea. Answers to Some Criticisms

20. 3. Criticism – We shouldn’t let our church be unduly influenced by the rich. Answer #1 – A few years ago, Yale accepted a $25 million gift from some Texas oil-billionaires. However, Yale and the donors couldn’t agree on the detailed terms of the gift, and Yale ended up returning the money to the donors. Would TEC do less? Answer #2 – Almost all of TEC’s pre-WWII church buildings were financed by the very rich. The initial real estate of General Seminary in NYC was given in 1819 by a rich Episcopalian. The initial real estate of Virginia Seminary was given in 1823 by a handful of rich Episcopalians, including F. S. Key, a wealthy Maryland plantation owner (and a song-writer of some note). F. S. Key was also one of the organizers of the DFMS, Inc. Answer #3 – NYC banker J. P. Morgan was the driving force in in establishing the Church Pension Fund. He also gave $100,000 (in 1880s dollars) for countrywide and worldwide distribution of copies of the Chicago Quadrilateral. Answers to Some Criticisms

21. Closing Summary • Re-starting the Development Office is well within our reach. Further delay will further weaken TEC. While there is always some risk involved in something new, there is a lot of experience out there in nonprofit land, including church non-profit land, on how to do Development work well, and the D.O. and the Episcopal Church Center now have a very positive attitude toward drawing upon that experience, and have begun doing so. • If other Protestant denominations are doing this successfully, and are willing to advise us as we (re-)start up, then why can’t we do it successfully? Let’s Make It Happen.

22. My late father was a Prof at Virginia Seminary for 38 years (1935-1974), so I grew up in a campus house. I remember when the Seminary’s Development Office was started in about 1949 or 1950 by a man called the Rev. Bill Kirk. At that time, I was about 12 or 13, socially awkward, and pimply. I remember all this because Bill+ had a daughter about my age. She had lovely long red hair. I thought she was just wonderful, but I wouldn’t dare tell anyone that I thought that, not even my own Mother. (I now suspect that Mother and my younger sister pretty quickly figured it out on their own, but that’s another story.) Anyway, other seminaries didn’t follow Virginia’s lead, with the result that Virginia today is the strongest seminary in the Anglican Communion, and one of the few TEC-associated seminaries that is not significantly financially stressed. About a year and a half ago, Virginia Seminary’s Immanuel Chapel burned down. A few months ago, the Seminary announced a capital campaign to build a new “Chapel for the Ages” with a goal of some $13-million. This was quite recently followed by the announcement that the Seminary has already received over $12-million in cash and pledges. While any potential giver can readily recognize the importance of a chapel to a seminary, this is still a spectacular fund-raising achievement for a TEC-related entity. I strongly suspect that Virginia’s D.O. had something to do with it. The lesson from these stories is obvious. Let anyone who has eyes: read , reflect, and inwardly digest. Some Personal Closing Comments from Ted

23. The author’s email address is tmollegen@alliedr.com Your comments on this document are invited. While earlier drafts of this document were embargoed re further distribution, this document is be openly available on the web at http://tinyurl.com/6wyp7rc A companion document having the same caveats as on the second page of this one is entitled Building a TEC Grand Strategy and may be found on the web at http://tinyurl.com/7e4p5e9 From time to time, revised versions of these documents may be found at these same web addresses. I will post notification on the HoBD listserv when these revisions occur. Please keep in mind the caveats on the second slide. Links