Guest Post: But How Does it COUNT?
by Christian Shuck
Pre-Exit Philanthropy (PEP) is still in its infancy, as a concept. In my own work, it’s easy to recognize how new it is. After joining Dee Dee at a conference in San Diego, I remembered it’s not just new for me, it’s new for all of higher education. When I shared my story in our presentation, I could see questions formulating on the faces of attendees. Since then, I’ve had multiple conversations with development professionals across the country, intrigued by the concept of PEP but wrestling with finding a place to start.
There are many questions I’ve encountered. While a few are unique, most of them are the same. It’s understandable, given that as development professionals we’re trained to operate in a system that feels like it has seen little change in, what, one hundred years? PEP doesn’t fit into that traditional system. And, because we all have metrics that include goals for dollars raised, one of the very first questions I get is, how does a pledge of equity count? Is it included in your metrics, fundraising totals, or both?
→ Read more on the operational aspects of Recording Pre-Exit Philanthropy Commitments
We tend to overthink these things, because of the design of the Higher Ed philanthropic tradition. Standards of practice require that we document giving in such a way to show growth, track projected income, and measure individual fundraiser performance.
Don’t let your need to quantify dictate program design
Equity pledges are a different animal. Some programs have chosen to require an equity pledge to be of a specific amount or percentage. This presses PEP into an existing mold, making it easier to fit into our usual metrics and systems. Regular operations, in terms of stewardship, fall into place and the equity pledge isn’t treated much differently than a planned gift.
Shaping a PEP program to fit what we know is a natural tendency. However, programs that establish a minimum requirement for an equity pledge demonstrate the same tendencies. They grow slowly, if at all; they scare entrepreneurs away because committing to a pledge changes the conversation; enthusiasm for the effort is lost. If anything, putting restrictions on PEP doesn’t serve the true potential of the concept.
Book it like you would a legacy gift
The argument for leaving the equity pledge open-ended is simple - it’s a true, donor-centric approach that focuses on the relationship between entrepreneur and institution. The solution to counting the pledge is just as simple. Say you receive a reply card, included with an annual gift from a donor. On the card, they’ve checked a box to indicate they’ve included your institution in their estate plan. Do you immediately begin paperwork to document the gift, specify amounts and intent? Probably not. If your organization is like any other, the notice from the donor is likely entered as a $0 pledge and their account is assigned to a gift officer, or they are flagged for follow-up. Depending on the donor, it can take anywhere from one to two years before the specifics of that gift are officially documented and tracked. Why, then, should an equity pledge be any different?
How follow-up with an equity pledge is managed, depends on your ecosystem. In the next few posts, I’ll address working that through with your internal team, and how to incorporate your PEP program into existing practices.