Elk Grove playing loose and fast in zoo financing communication

Elk Grove is planning its most significant public works project in the city's 25-year history. That project is the relocation of the Sacramento Zoo to Elk Grove.

The project's first stage, which is being constructed in three phases, is budgeted at over $3000 million. Mayor Bobbie Singh-Allen and the city council have committed taxpayers to issue about $115 million in bonds, and the Sacramento Zoological Society has promised to raise $50 million toward construction.

The SZS portion of this commitment is what the city of Elk Grove is playing shell games with.

As seen in the above image, the city has said and continues to say the SZS has raised  $17.5 million. Based on the information presented during a public meeting, the SZS has pledges, some of them as far as 10 years in the future, for the $17.5 million.

A pledge is not the same as raised, much less cash in hand. In fact the city has received only $1.9 million, or 3.8 percent of their $50 million.

 Furthermore, Councilmember Kevin Spease got city manager Jason Behrmann on record, saying construction would only start when Elk Grove has $50 million cash in hand from the SZS. See Berhmann's commitment in the video below. 

Just for kicks, we decided to ask ChatGPT the following question: 

Ask a professional fundraiser what the difference is between a pledge and money actually acquired and the risk of pledges not following through in a $300 million project. 

It is important to remember that this information is not verified but based on a thorough search and analysis of information available from multiple sources with cutting-edge technology. 

Before reading the results, while the SZS may raise the $50 million, it is worth remembering that the city is not being honest in its communication, which could foretell future behavior. 

Here is the complete response:

Evaluating project risk

I'm working through the differences between a pledge and actual funds in a $300 million project. There's a concern about the risk of pledges failing to materialize.

Understanding financial dynamics

A pledge is a future donation promise, contingent on conditions, whereas actual acquired funds are ready for immediate use, enhancing project flexibility.

Assessing risk impact

In a $300 million project, the 10-16% attrition risk from unfulfilled pledges could result in a shortfall of tens of millions, highlighting the need for solid cash or collection strategies.

Navigating pledge reliability

In a $300 million project, a 10-16% pledge fulfillment risk could lead to a multimillion-dollar shortfall, emphasizing the need for secure cash or effective collection systems.

Crafting citations

I’m pulling together details from Givebutter, Idealist Consulting, Paybee, and Neon One to underline the importance of pledges and secure cash in large fundraising projects.

Navigating fundraising dynamics

Pledges can boost engagement and forecasting, but their reliability is uncertain due to potential attrition. Binding agreements or milestone-based disbursements are strategies to address this risk.

A professional fundraiser would explain that a pledge is essentially a promise to give money at a future date rather than an immediate infusion of cash. In contrast, money actually acquired—cash in hand or already deposited—can be deployed immediately to fund the project. Here are some key points a fundraiser might make:

Pledges Versus Actual Funds

• Pledges as Promises:
  A pledge represents a donor’s commitment to contribute a specific amount in the future. It’s an “IOU” that, while it helps with revenue forecasting and demonstrates donor support, does not provide immediate liquidity. Pledges may be unconditional (counted as revenue on the promise date) or conditional (only counted as revenue once certain conditions are met).
  w.paybee.io
• Cash in Hand:
  Money that has actually been acquired—such as immediate donations, grants, or funds transferred into your account—is fully available for use. This cash flow is crucial for meeting current expenses and ensuring the project’s timely progress. Unlike pledges, these funds have no follow-up risk; they are ready to spend.

Risks of Pledges, Especially in a $300 Million Project

• Attrition (Non-fulfillment) Risk:
  Not every donor will ultimately fulfill their pledge. Industry averages sometimes show fulfillment rates around 84–90%, meaning that 10–16% of pledged dollars may never materialize. For a project with a $300 million target, even a 10% shortfall translates into a potential gap of $30 million or more, which is significant for planning and budgeting.
  fundraisingcoach.com
  givebutter.com
• Timing and Conditions:
  Pledges might be tied to certain conditions or milestones (e.g., matching funds or project progress benchmarks). This means that if those conditions aren’t met, the pledged funds might not be released. In a high-stakes project, this adds an extra layer of uncertainty compared to funds that are available immediately.
• Follow-Up and Administration:
  Managing and tracking pledges requires robust systems and persistent follow-up efforts. There’s an administrative cost associated with ensuring donors remember and follow through on their commitments. For a $300 million project, where donor relations and cash flow management are critical, this can add complexity and risk if not handled efficiently.
  idealistconsulting.com

Strategic Implications for Large-Scale Projects

• Financial Modeling:
  In planning a massive $300 million project, fundraisers build conservative models that factor in the likelihood of pledge attrition. They might discount the total pledged amount by a certain percentage (for example, expecting only 85–90% of pledges to convert into cash) to avoid overshooting the project’s available funds.
• Risk Mitigation:
  To mitigate these risks, a campaign might require binding agreements with donors, use milestone-based disbursements, or combine pledges with a strong base of immediate contributions. This balanced approach helps ensure that while pledges are useful for signaling long-term support, the project isn’t solely dependent on them for critical cash flow.
• Donor Engagement and Relationship Management:
  Effective stewardship (regular reminders, clear communication, and flexible payment options) is essential to improve pledge fulfillment. A professional fundraiser would emphasize setting up automated systems to track pledge payments and sending timely reminders as key tactics in minimizing risk.

Summary

In essence, while pledges are valuable for gauging long-term donor commitment and helping forecast revenue, they are inherently less reliable than cash that’s already been received. For a $300 million project, even a small percentage of unfulfilled pledges can result in a substantial shortfall. Consequently, professional fundraisers stress the importance of balancing pledges with immediate contributions and implementing rigorous follow-up and accounting practices to mitigate the risk of attrition.

This careful balancing act ensures that the project’s financial planning remains realistic and that there’s enough liquidity to meet both immediate and long-term needs.