25 Aug Fundraising for the True Costs of Conservation
25 August 2020
By David Allen, Development for Conservation
I think we make a mistake when we focus our attention, and that of our donors, on the purchase price.
For what it’s worth, it’s probably based on a misguided sense that we need to show ourselves to be good negotiators, and therefore good stewards of donated funding. Unfortunately as a result, we too often find ourselves trying to raise money for closing costs or stewardship endowment separately.
I would like to suggest an alternative: Conservation Costs.
The costs of conserving a piece of land would include five distinct components.
- The VALUE OF THE LAND Not the purchase price, but the actual value. When the deed for the land is actually transferred to the land trust, by how much has the land trust increased its net worth? This number should be justified by an appraisal, of course. I don’t even mind using the largest of several appraisals. Easements are a bit trickier, but find a defensible number and run with it.
- CLOSING and DUE DILIGENCE COSTS. Title work, biological inventories, legal, toxics screens – all of it. And don’t forget carrying costs if bridge financing is used. All of these actual expenses should be included even if the actual services are being provided pro-bono. (See also In-Kind Contributions Need Systems, Too)
- The STEWARDSHIP ENDOWMENT. The amount of money the land trust is obligated to set aside in an endowment to permanently underwrite appropriate stewardship and monitoring of the property. There are formulas for estimating this figure available from the Alliance, but a best-foot-forward guess should be made early and used to inform the fundraisers of the need.
- FIRST DAY STEWARDSHIP. There are often things that need to be done right away once the property has been conveyed. These might include removal of structures or trash, placement of signage, and even some planned restoration activities. These may or may not represent long-term stewardship concerns, but they still need to get done. And they need funding to get them done.
- FIRST YEAR STEWARDSHIP. Because even a completely funded endowment doesn’t result in dividends until a year later.
Raising money against conservation costs instead of the purchase price has many advantages. Start with the benefits of everyone on the Board and staff simply becoming more aware of the true costs of conservation in the first place. I’m always amazed to learn how few Board members are fully aware of how the business side of conservation works. Thinking through the complete picture of what it takes to conserve land could help. To some extent, it allows us to replace a fascination with “the deal” (which we all understand) with a focus on the full weight of what we’re doing (of our mission). BIG hint: We need to help donors understand how the business of conservation works as well.
It allows us to fully recognize donations the landowners make. If the land is donated, it quantifies the donor’s gift. The same concept applies for a bargain sale. If the landowner contributes $5,000 in cash to help with closing, it gets recognized. Legal expenses can be estimated and included, and if those expenses are provided pro bono, it allows us to recognize the in-kind donors as well.
It allows us to start fundraising before the deal is closed. Many deals are sensitive in that fundraising against a specific anticipated purchase price too early can affect the negotiation or even squirrel the deal. As a result, negotiators have often held negotiation details very close, effectively preventing fundraisers from lining up funding until an option has been signed. Estimating conservation costs can help work around that by creating opportunities for “call fundraising.” “The conservation costs are expected to be on the order of $250,000. If we put this deal together, can we come to you for a gift of $50,000?”
It relaxes restrictions on gifts. Instead of raising money for “closing costs,” “stewardship endowment,” “parking lots,” and “fencing,” as if they were separate siloed expenses, we are able to raise money for the larger vision – the acquisition and permanent stewardship of the property in the public interest. In effect we raise money for aspects which are less sexy by combining them with aspects that are more interesting. Fundraisers have always done this to some extent. We just haven’t applied the idea so overtly to land conservation.
It allows us to talk about leverage. When the value of the land is nearly completely donated, or covered by available federal, state, or local funding, understanding the conservation costs allows us to talk to donors about how their gift is effectively magnified by these grants, without having to raise money separately for what’s left.
The Nature Conservancy has a national “Land Preservation Fund” (LPF) that was created to provide bridge funding for individual chapters much like the Conservation Fund operates now. The rule was, and probably still is, that when a Chapter borrowed money from the LPF, they had to borrow an amount that included the stewardship endowment. In this way, TNC fundraisers were raising money to repay the loan that not only covered the purchase price, but also the costs of perpetual management. It seemed onerous to me at the time, but it was a very sound business practice.
Many land trusts have established “Opportunity Funds” that serve similar purposes. We should learn from TNC’s example.
How does your land trust raise money for projects?
Stay safe and stay well. And have a great week!
Photo by MrGajowy3 courtesy Pixabay
Mark MittelstadtPosted at 09:55h, 27 August
And wouldn’t it be nice if funding agencies (Stewardship and others) would use the Conservation Cost. Once we buy a property and all the funding goes to purchase, and the agency restricts ways of making any money from the land, we have to start from scratch to find restoration funds.
Renee CareyPosted at 16:51h, 25 August
“Conservation Cost,” I like it. So much of what we do isn’t about the actual purchase price or value. We’ve had to settle boundary disputes, do land exchanges because of a previous bad survey, and remove structures. All of it had to be done to conserve the property, none of it had to do with purchase price.
JayPosted at 08:34h, 25 August
Great points David, thank you for your insight.