The process through which a firm solicits financial commitments from limited partners for a private equity fund. Firms typically set a target when they begin raising the fund, and ultimately announce that the fund has closed at such-and-such amount, meaning that no additional capital will be accepted. Sometimes, however, the firms distinguish between interim closings (first closings, second closings, etc.) and final closings. The term “cap” is used to describe the maximum amount of capital a firm is willing to accept into its fund.
Fund raising is financed through donations and contributions made by private citizens to foundations, associations and other non-profit cooperatives with non-profit making objectives. Fund raising has mainly developed in Anglo-Saxon countries, in particular, in the United States, where it is estimated that more than 40 billion dollars is raised each year by charity organisations alone. This activity is encouraged by the tax system that allows contributions to be deducted from taxes. In Italy, however, fund raising campaigns have not developed to the same extent. Only recently, with Decree 460/97 "Law establishing the non-commercial bodies and non-profit organisations for social benefit", a limited tax deduction was outlined, allowing the potential development of this sector. Structuring a fund raising campaign, however, requires firm preparation and communication investments: statistically, in fact, these contacts can transform themselves into donations that vary between 1% and 5%. This means that without a careful planning phase there is a risk of suffering heavy financial loses.