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Schools in the UK raise around pound;500 million a year over and above funding they get from the state or fee-paying parents. That's an awful lot of raffle tickets. But while old-fashioned fetes still play a big part in raising funds, most schools have broadened their horizons. Leasing and trading, grant-making trusts, tax-efficient giving and corporate sponsorship mean some schools raise up to pound;1 million a year. Others barely raise enough for a new computer. Why do some schools have all the luck? How can you make sure you join the haves rather than the have-nots? And how do you keep your integrity while going cap in hand to parents or chasing the corporate pound?

A winning ticket ?

Raffles, jumble sales, the summer fete - this is fundraising the traditional way. However tiresome or bizarre you find the world of welly-throwing, guess-the-weight games and cake stalls, the fact is, it's tried and trusted and, for many primaries in particular, it's still the biggest source of extra income. But it has its limits. If you want some new cricket bats, it's fine. If you want a new sports hall, it's not.

"The first thing we do is steer schools away from this kind of thing," says Sue Marsden of fundraising consultancy PFC (see resources). "It's not serious fundraising. In the big scheme of things, the amounts involved are peanuts."

But before you pull the plug on your sponsored swim, remember that school events do more than just raise money. They provide an outlet for pupil energy, and a chance to involve parents and foster community spirit. And if your parent teacher association takes charge, there's little extra burden on the staff.

The rich get richer. . .

The amount schools raise varies enormously. Figures from the Directory of Social Change (DSC) show that 80 per cent of primary schools raise less than pound;5,000 a year, with 1 per cent raising more than pound;25,000.

Secondary schools bring in more cash than primaries, largely thanks to business sponsorship. Thirty per cent of secondaries raise more than pound;25,000, and one in 10 nets more than pound;100,000. But a third still fail to break the pound;5,000 barrier.

For schools in deprived areas, fundraising can be an uphill struggle. The amounts raised in those where more than half the pupils are on free school meals are well below the national averages. "A few companies try to support inner-city schools because they think it boosts their image," says Margaret Morrissey of the National Confederation of Parent Teacher Associations.

"But most just give the money in areas where they are active - where, for instance, the parents are employees and the children potential employees."

And the very rich get very richer. . .

Independent schools raise more money than those in the maintained sector.

The DSC research suggests 39 per cent of independent schools each raise more than pound;250,000 a year, compared to 3 per cent of maintained schools. And one leading public school recently launched a development appeal with a target of pound;50 million.

Fee-paying schools are wary of asking parents to put their hands in their pockets twice. So where does the money come from? The answer is the old-boy (and girl) network, and grant-making trusts. Many trusts have clauses in their constitution preventing them from funding what the state has a duty to provide. In effect, that means they can't give to maintained schools but they can give to independents. Independent schools also demonstrate more know-how when it comes to raising money - they are more likely to encourage tax-free giving, more likely to have long-term development appeals, and more likely to benefit from legacies.

But even in the independent sector, it's the richer schools that raise the most extra income. While Harrow and Eton can bank on wealthy alumni, day schools, girls' schools and recently established independents can all struggle. In fact, if the schools that raise more than pound;250,000 are excluded from the statistics, the remaining independents raise, on average, the same amount as a typical secondary. "Maintained schools have latched on to the traditional independent approach, namely long-term appeals and covenanting," says Sue Marsden. "But independent schools have yet to embrace more modern ideas, such as company sponsorship."

Corporate courting rituals

Attracting business sponsorship isn't easy - most schools have the rejection slips to prove it. Even a successful request may not bring the rewards you were hoping for. One head trying to find pound;50,000 for specialist status approached the world's leading soft drink manufacturer.

He was sent a bicycle.

But there are plenty of success stories out there, and you can improve your chances by approaching companies in the right way. Don't go in for mass mailings. Instead, draw up a shortlist of carefully selected companies and use personal contacts. Don't approach companies that do business with the school - they rarely agree to sponsorship - but do target businesses with a local connection. If you're looking for a donation of thousands rather than hundreds, you'll need to approach those with a turnover of more than pound;2 million.

Above all, remember you'll be competing for sponsorship against other schools and charities, and that companies will ask themselves one key question: "What's in it for us?" The answer should be "good publicity".

Don't be vague. Spell out exactly what you can offer in terms of profile: named buildings, plaques, logos on stationery, mentions in the local press.

Even if you follow the rules, there is still an element of chance, and constant rejection can be dispiriting. Jan Palmer-Sayer, deputy head at Sandringham school in St Albans, Hertfordshire, spent a year trying to raise the money needed for specialist status. "We wined and dined, we threw champagne receptions, gave PowerPoint presentations and followed them up," she explains. "We got refusal after refusal, with the occasional small donation. I came to think it was a ridiculous use of my time."

Which is why, when you find the right company, you need to try for a long-term relationship, not a corporate one-night stand.

Speculate to accumulate

If you want to raise substantial sums, the first step may be to get out your own cheque book and call in a consultant to determine strategy, or even a development officer to oversee the fundraising itself. A good rule is that your outgoings - including professional fees, mailing costs and so on - should total around 10 per cent of the amount you are looking to raise. More, and you're being profligate. Much less, and you're probably cutting corners.

But does hiring a consultant guarantee success? "There are two client groups we can't do anything for," admits Sue Marsden. "Schools that are struggling and don't have community links; and schools that have tried to do their own fundraising and messed up. They've usually alienated too many people."

If you do decide to hire professional help, try to find a company that has experience of working with schools. It should be paid a flat fee - be wary of anyone demanding a commission on the money raised. And remember there will still be work for the school to do. Potential sponsors almost always insist on dealing with the head.

Schools Ltd

Getting money from businesses is one way of raising funds. An alternative is to turn yourself into a business. "Money from companies or trusts is a one-off windfall," says David Triggs, principal of the 1,400-pupil Greensward college in Essex. "You spend it and it's gone. But commercial interests bring regular and sustainable income." (See case study.) The tuck shop and vending machines in a large secondary can bring in more than pound;10,000 a year. Expand the tuck shop into a general store and you could be looking at an annual turnover of pound;100,000. Once you get started, it's easy to catch the entrepreneurial spirit. What facilities can you hire out? The ICT suite? The car park? Is that a sports hall you have there or a health and fitness club with pound;20 a month membership fees? Greensward College runs an extensive range of adult education classes, acts as a school-to-school broker for ICT businesses, receives a management fee for seconded staff, and is establishing itself as a video conferencing centre. The school makes pound;70,000 a year from lettings.

"I read the FT every day," says David Triggs. "I see what companies are doing, then ask myself, 'Would it work in a school?' I'm not a business genius, nor am I some kind of second-hand car dealer, though we do market a scheme where teachers can lease a new Ford Ka for just pound;50 a month."

Trusts and lottery funds

Charitable trusts exist to give money away. But most have strict rules about who they can give to and what they can give for. Eighty per cent of applications to charitable trusts fail because they don't match the funding criteria. Only 8 per cent fail because there is "a better project" on the table from someone else. Only 2 per cent succeed.

Handbooks and directories are available that outline the priorities for each charitable trust (see resources), but it's always best to phone ahead and make sure you're eligible. The best applications are concise, but give exact details concerning the nature of the project, the benefits it will bring and the costs involved. Many trusts refuse to support schools unless the money will also benefit the local community, so make your case carefully. The same guidelines hold true when applying for lottery funding.

Make sure your project fits the criteria as closely as possible. The New Opportunities Fund is the main lottery source for schools, though other funds can be tapped if you're working in partnership with the community.

Sweet charity

Charitable status entitles you to a range of tax exemptions. Most importantly, it allows you to benefit from tax-effective giving schemes such as Gift Aid, donation of shares and payroll giving. "The tax man is our biggest donor," says Tim Dingle, headteacher of The Royal grammar school in High Wycombe, Buckinghamshire. "We've raised more than pound;1 million in the past year - pound;400,000 of it in reclaimed tax."

Having charitable status is also an advantage when applying for grants as many trusts give money only to other charities. Nearly all independent schools are charities, and the governing bodies of voluntary or foundation schools also enjoy charitable status.

Community schools are not charities, but their PTA can register as one, or the school can establish a separate charitable trust. It's usually only a matter of an application to the Charity Commission in which you have to demonstrate that you exist to promote "the advancement of education". All PTAs are obliged to register as a charity when their income exceeds pound;1,000, and if it exceeds pound;10,000, they have to submit annual accounts to the commission.

Shopping for schools

A growing number of companies will return a percentage of the money you spend to a school of your choice when you shop online. For example, Amazon makes a 5 per cent donation if you enter its website through a link off a school website, while has signed up 160 companies that donate up to 7.5 per cent of whatever you spend when you enter the website.

Supermarket shelves are also stacked with products carrying promotional tokens to convert into books or computers - although it can be difficult for small primaries to collect enough. School-linked credit cards also make a contribution. Some loyalty cards can benefit your school, and the Schoolsplus voucher scheme sends schools discount vouchers worth up to pound;500 for use in participating stores. Schools sell the books of vouchers for pound;10 each, of which they get to keep pound;6 (see resources).

The psychology of fundraising

Always say exactly what you want the money for. People are more likely to give to a specific cause than to a general fund. Then make sure you use it for the purpose for which it was given. Although there are no restrictions on how schools spend money they raise, if people thought they were giving money for a minibus and you spend it on a new building, technically, you are breaking the law.

Regular fundraising works better than one big appeal every five years.

Success breeds success. If you set achievable aims, you can publicise the fact that you met your target, which makes people more likely to give next time. Create a culture of giving - the schools that raise most money for themselves tend also to be the schools that raise most money for other charities. Be aware that parents are more likely to contribute towards computers, sports equipment or library books than running costs or teachers' salaries. And keep in touch with former pupils. It's not just private schools that can benefit from wealthy alumni - Mick Jagger recently gave his old school, Dartford grammar, pound;100,000, Robbie Williams gave his, St Margaret Ward RChigh school in Stoke-on-Trent, pound;50,000.

How low will you go?

Fundraising can throw up awkward questions. Is it right to take money from a sweet manufacturer in return for putting vending machines in every corridor? Does a donation from a bank allow it to take over a lesson and market itself to your sixth form? Should parents have to shop in a particular supermarket so you can have a new computer?

And it's not just corporate cash that can come with ethical strings attached. Schools that boost their budgets by asking parents to make a monthly donation to running costs have also been criticised. "It could be interpreted as fees by the back door," says Margaret Morrissey. But at The Royal grammar school, where 60 per cent of parents pay around pound;20 a month, Tim Dingle insists the scheme works. "There's no compulsion to give - we're not an independent school. But we don't get enough money from the LEA and we're not prepared to sit back and let our standards decline."

The Campaign for State Education (Case) says the Government should offer strict guidelines on what conditions can and cannot be attached to corporate funding - currently it's left to the conscience of headteachers to draw the line between bribery and benevolence. At least the pressure to keep sponsors happy is less severe than it is in the United States - where deals with food companies net schools pound;536 million a year. In Georgia, a student was recently excluded from school for wearing a Pepsi T-shirt on "Coke in Education Day".

Did you know?

* Eighty per cent of primary schools raise less than pound;5,000 a year; one in 10 secondaries raises more than pound;100,000

* Almost 40 per cent of independent schools raise more than pound;250,000 each year, compared with 3 per cent of maintained schools

* One head trying to find pound;50,000 for specialist status approached the world's leading soft drink manufacturer. He was sent a bicycle

* Only 2 per cent of applications to charitable trusts are successful * Parent-teacher associations must register as a charity if their income exceeds pound;1,000. If it goes over pound;10,000, they have to submit annual accounts to the Charity Commission

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