Shrouded in Mystery: The Annual Fund Uncovered

Shrouded in Mystery: The Annual Fund Uncovered

By Lauren Marquis, Director of Institutional Advancement (
My career in Advancement began when I was a freshman phone-a-thon caller raising money for my College’s Annual Fund. Now, as a development professional and volunteer with a couple of decades under my belt, I am never surprised when constituents have questions about the mysterious “Annual Fund.” It can be difficult to define, even for a practitioner like myself, because the Annual Fund is interpreted differently by each institution and can support a host of initiatives. Yet, I have found that one truth remains, it provides the foundation of philanthropic support, and is often vitally important to its parent institution. In fact, it is typically one of the most important areas of an organization’s fundraising efforts. For this reason, it’s imperative that donors and friends of your institution not only understand the Annual Fund’s value and purpose but also consider themselves to be key contributors to its growth. 

What is the Annual Fund? 

An Annual Fund is a general term used to describe money that a nonprofit raises in a year to cover operational expenses. (You might think of it as a checking account.) It is raised, then used, then raised again, hence the term annual.   

Why is it important? 

In addition to covering expenses that are not covered by revenue (such as tuition), an Annual Fund gives institutions the flexibility to address pressing priorities right away. For example, many Annual Funds provide unrestricted income, which means that nonprofits can use it where and when it is most needed. Aside from the financial benefits, it has many relational benefits for institutions and their constituents. It helps build bonds with prospects, identifies donors and/or volunteers and spreads the institution’s message.  

What does it support? 

While the canned response may be general operations, many institutions choose to put some meaningful parameters around their Annual Fund so it is more appealing for donors. One educational institution that I worked for raised Annual Fund dollars solely to support the financial aid budget. Other schools highlight regular needs such as faculty development, updates to physical plant and technology upgrades. 

Who gives to an Annual Fund? 

Anyone and everyone! The beauty of the Annual Fund is that it is meant to be an accessible philanthropic vehicle. For example, not every donor can make a $50,000 contribution to create an endowed scholarship. Yet, most people can spare an annual donation of $10, $50, or $100 to an institution that they feel is doing valuable work. Most of my work has been in educational institutions, so our largest base of support was always alumni and parents, but we spent a lot of time working with students, faculty, staff, and friends of the institution.  

What are the barriers for Annual Giving? 

There are a number of personal factors that play into philanthropy, but I’ve found that the most significant barrier for giving seems to be a lack of disposable income. People often feel that the small donation they can spare won’t make a difference. The Annual Fund is intended to dispel that notion. It is all about the number of contributions not the dollar value of the contribution. Your gift, in conjunction with the donations from many other donors, does have an impact. 

Why does participation matter? 

In addition to the idea that the Annual Fund brings people together for a common purpose, participation actually plays a vital role in the success of many institutions. People (and organizations) want to give to vibrant organizations that others are supporting. Participation rates can be used as a factor in funding decisions made by charitable organizations and corporate partners. It is also a topic that comes up when recruiting leadership. For this reason, many educational institutions aim for 100% participation from key constituents, such as board members, faculty/staff, and parents.    

What’s in it for you?

Studies have shown that donors do not give merely to get a tax deduction. (Though you will get a tax deduction!) Time and time again, donors have indicated that they give for more altruistic reasons. They believe in the mission of the institution they support, or they feel that they can make a real difference. Oftentimes, it is tied to their own religious beliefs or feeling of obligation to give back to their community. At the end of the day, giving of your time or resources should make you feel good! If you respect and trust the institution that you’ve chosen to support, you should rest assured that your gift will have an impact and that they will do the best they can to thank you, report back to you, and maintain your special relationship.     

Here at the Academy 

The Academy of Notre Dame Annual Fund represents nearly eight percent of the school's operating budget, and underwrites all the things that make NDA extraordinary: an innovative curriculum, inspiring performing and visual arts, 10 varsity athletic teams, 23 clubs and organizations, generous scholarship aid, new technology, faculty development, and all the other components of a student's experience.

Tuition and endowment income alone don't meet the full cost of an NDA education, so gifts from community members ensure that the school has what it needs to thrive. Every gift of every size has an impact, and the collective generosity of alumnae/i, parents, faculty/staff, volunteers, and friends is what makes the Academy of Notre Dame experience possible.

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