Capital Campaigns: Building for Now

A capital campaign raises money that will be spent to acquire or improve a physical asset. The most common use of a capital campaign is for the purchase, construction, or renovation of a building (commonly referred to as “bricks and mortar”). However, an organization can conduct a capital campaign to purchase machinery, equipment, furniture, fixtures, or any physical asset that can be reflected on its balance sheet.

The purpose of a capital campaign differs from that of an endowment campaign in that the money raised will not be used to cover ongoing, operational expenses, or to fund special projects. Capital funds are spent on one-time or seldom recurring expenditures. The primary difference between capital and endowment funds is that capital funds are not retained and invested to yield income. However, capital and endowment campaigns are very similar in their planning and management.

“One-Time Only” Campaigns — Somehow They Keep Coming Back!

Like endowment campaigns, capital campaigns should be rare. The answer to the question of how frequently to conduct a capital campaign should lie within the organization’s strategic plan. If an organization has successfully mapped out its growth, it can anticipate the points at which capital expenses will be incurred. In other words, need and planned strategy will determine when an organization should conduct a capital campaign. Frequent capital campaigns can sap the strength of an organization’s annual fund campaign program. Keep going back to supporters with one special campaign on the heels of another, and sooner or later it will affect giving to the annual campaign. It is usually best if a number of years pass between the execution of two capital campaigns or between an endowment campaign and a capital campaign.

Capital campaigns should always aim to raise a substantial amount of money; the effort required is too great to justify raising money for an expense that, with a little planning and extra work, could be covered by annual operating funds. If the item you need to purchase is relatively low in cost, get the money for it by increasing your annual campaign goal.

Capital Campaigns Must Be Large-Giver Campaigns

Like endowment campaigns, capital campaigns must be large-giver campaigns. The same rule of thumb applies: Plan on raising at least one-third of the goal from 10 to 15 donors, a second third from an additional 75 to 100 donors, and the final third from the rest. All of the arguments against broad-based endowment campaigns are just as potent when it comes to capital campaigns.

Projected Divisional Goals to Reach A $3.6-Million Goal

Trustees & Other Individuals$2,520,0070%
Foundations$720,00020%
Corporations$360,00010%
Total$3,600,000100%

Projected Scale of Capital Gifts Required to Reach $3.6-Million Goal

Number of GiftsIn the Range ofTotal
1$500,000$500,000
2$250,000$500,000
8$100,000$800,000
16$50,000$800,000
20$25,000$500,000
30$10,000$300,000
40less than $10,000$200,000
117$3,600,000

Because they rely heavily on large gifts to raise a substantial amount of money, capital campaigns draw their volunteer leadership and solicitors from the upper end of a community’s business and civic leadership. The high visibility of a capital campaign ups the ante considerably. Few situations are more damaging to the image of an organization than announcing the planned construction of a new facility and then failing to raise the money to build.

Before You Excavate—Rate & Evaluate!

Because of its substantial goal and small number of large donors, rating and evaluating prospects is extremely important in a capital campaign, which leads us to the most common mistake made in capital campaigns: setting a goal that is not reasonable. The motivating force for a capital campaign is the cost of the asset to be acquired. All too often, organizations make that cost figure the goal of the campaign without evaluating their donor base. It does no good to set a goal of $1 million if your donor base can provide, under the best of circumstances, only $500,000. You have to make the decision to commit to a capital expense based on your ability to raise the money to pay for it, not decide how much you need to raise based on the expense. It is vitally important not to let the tail wag the dog.

Heed The Good Word From “The Good Book”

Should my humble words not convince you to be as certain as possible that you will have the money to complete your capital campaign before you begin the project, let the words of The Gospel, according to Luke, say it for me:

Luke 14:
For which of you, intending to build a tower, siteth not down first, and counteth the cost, whether he have sufficient to finish it?

Lest haply (by chance), after he hath laid the foundation, and is not able to finish it, all that behold it begin to mock him, saying, This man began to build, and was not able to finish.

“Mocking” aside, the reality is that few situations are more damaging to the image of an organization, embarrassing to capital campaign leadership, and disillusioning to the campaign team, staff and donors—than announcing the planned construction of a new facility and then failing to raise the money to build.

“Your New Building Is Up And Running,
So Why Do You Still Need Money To Build It?”

Capital campaigns run longer than annual campaigns. Usually they should be wrapped up within a year, eliminating the risk of carrying over into successive annual campaigns. Ideally, the money to pay for a building should be in hand before ground-breaking. On the other hand, a ground-breaking is a wonderful fund-raising event, and taking prospective donors to a construction site or showing them the building to be purchased can be particularly compelling. There is, however, a very real risk in going too far with construction. If the building is completed and occupied, and the organization is trying to raise money to pay off a bridge loan, a campaign will have lost some of its sense of immediacy. It is also likely that by that time prospects will assume the campaign is over. After all, the organization has already moved into the building, hasn’t it?

Ask For Cash To Pay The Bills For Now
But Look As Well To The Future

Since you are raising money that needs to be spent now, you will want to encourage cash gifts over deferred giving. With a deferred gift the organization is either given the promise of money or an asset to come at some predetermined time in the future, or it is given money or an asset now, with the understanding that it remain untouched by the organization so that the asset can earn income or provide some other benefit for the donor until some future date or event, such as the donor’s demise. While the offer of a deferred gift poses no problem other than timing to those seeking to build an organization’s endowment fund, fund-raisers seeking cash for capital projects should be ready with a plan for accepting deferred gifts. Ideally, when a prospect says, “I would love to help, but I really need the income from these assets to live on at this time,” the solicitor needs to be able to say, “We have a deferred giving program. Let me show you how it works.” At the very least the solicitor needs to be able to arrange for a meeting with the organization’s deferred giving expert.

You take what you can get, and in the case of a bricks-and-mortar campaign, there may be a way to turn that deferred gift into endowment funds to help with the future expense of maintaining the building. Building an endowment reduces the pressure on future annual campaigns to raise the additional operating and maintenance money that will be needed to maintain the new facility.

Named Gift Opportunities Abound In Capital Campaigns

Bricks-and-mortar capital campaigns also offer naming opportunities. In fact, naming opportunities are potentially an even stronger draw here than in endowment campaigns. Having your name on a building, a research laboratory, a lecture hall, or a treatment center can be even more gratifying than endowing a professorship or a chair in an orchestra. Again, as in endowment campaigns, a donor need not necessarily cover the entire expense of a new facility in order to be offered a naming opportunity. When a potential donor is considering making a gift that is far and away the largest donation to a bricks-and-mortar campaign and when that gift is truly a substantial portion—probably more than half—of the total expense of construction, then offering naming rights may be both appropriate and persuasive.

In-Kind Gifts As Good As Cash

Another kind of gift that should be solicited during a bricks-and-mortar campaign is in-kind goods and services. If you need paint, why not ask a paint company to donate it? The company is likely to give you more paint than dollars to buy paint. Although organizations would generally rather have cash than any other kind of gift, capital campaigns are one of the few instances where there is no difference between cash and in-kind gifts. Just remember to give public credit for the cash value of an in-kind gift. The IRS won’t let the donor deduct that amount, but you should publicly acknowledge what the gift was worth to the organization—what it would have cost “retail.”

Addendum

Capital Campaign Construction Expense Budget

A suggested capital renovation/building expense budget template is provided below. Perhaps this could be a start for you to develop any such budget. If your organization is in a capital building mode, then the architect, project manager, contractor, and other tradespeople, would give you all you need. You might want to simply seek to identify other organizations which would have such capital construction budgets and learn from their building endeavors.

If you are looking to format the ultimate budget to be in accord with the requirements of funding sources, you will need to know if those potential funders would be wanting each of the budget/construction components to be rendered in a simple, one-line, fashion, or if they want a “narrative” style, enlarged, description. If the latter, you will need to know how much narrative is wanted. Thinking back over many capital campaigns, I recall foundations requiring budgets on their terms as described being “narrative,” or “detailed,” or “comprehensive,” or “complete,” etc. Somewhere, long ago, along the way, we began to submit a “narrative budget” in a fashion we thought to be reasonable, and we continued the practice exclusively without a problem. What was provided in that narrative budget was always accepted (that does not mean we got the money all of the time), and only a few times were we asked to either clarify or amplify a given line item.

Here is an example of what I am talking about and which time after time was accepted: Naturally, the line items were presented in a column with their costs stated in an adjacent column just as any such financial document is rendered.

And, as appropriate, we presented the budget as “tentative,” or “preliminary,” or “official.”

XYZ “Building for the Future” Campaign Budget

  • General Conditions and Contractor’s fee, including surveys, permits, insurance, rubbish removal, testing and inspection, security services, project manager, etc.
  • Site Work, including sewer and water lines, earthwork, caissons, curbs and gutters, paving, fencing and irrigation.
  • Concrete, including slab on grade and footing pre-stressed concrete, etc.
  • Steel and other metals
  • Carpentry, including rough and finish carpentry, millwork, trusses, etc.
  • Doors: frames and hardware, windows and glass
  • Drywall and metal studs
  • Acoustical ceiling
  • Flooring
  • Wall finishes
  • Specialties: appliances, etc.
  • Plumbing, including sprinkler system
  • Heating, ventilating and air conditioning
  • Electrical, including electrical rough and finish, site lighting, security, etc.
  • Furniture and loose equipment
  • Parking lot: paving and landscaping
  • Contingency
  • Professional fees, including architect, legal, civil, mechanical, structural engineering, and landscape architecture; survey, soils engineering, environmental analysis, etc.
  • Fund-raising expenses, including professional counsel, printing of brochure, stationery, pledge cards, etc., cultivation events, donor recognition plaques, meetings, postage, telephone, clerical support, contingency.

Capital Campaign Fund-Raising Expense Budget

In My Article 12 Things You Should Know About Setting A Capital Campaign Goal, I cited a “typical” 5-8% cost of a capital campaign.

From my personal experience with dozens of capital campaigns, and from colleagues who directed and managed other capital campaigns, I want to stress that the percentage number is merely a reference— what it turns out to be—at campaigns’ end—from pre-campaign budgeting based on line items in exacting costs. The percentage reference is more of the ends, not the means. I know this may be confusing, but people almost always ask what campaigns do cost in terms of percentage to goal or money raised. I’ll explain why it is not desirable at all for a consultant or for anyone to project/propose a capital campaign cost at the start using a percentage of expenses to goal or money raised.

Regarding what I believe to be a typical capital campaign budget, here are the line item expenses I have come to know:

$______: Fund-raising counsel
$______: Counsel expenses: travel, phone, fax, etc.
$______: Printing: brochure, support exhibits
$______: Pledge cards, letterhead, etc.
$______: Donor plaques – recognition
$______: Special events – cultivation
$______: Meetings
$______: Postage, telephone, clerical support
$______: Contingency (10% of total expenses)
$______: Total

The total expenses would be the amount estimated to be spent over the duration of the capital campaign—usually from twelve to eighteen months.

Naturally, there will be differences regarding how much one organization from another spends on any one of the above categories. I’ve seen emerging over the past several years huge differences, and significantly higher costs than I had seen years ago, for printing, long-term cultivation, the need for a consultant for a longer period of time, etc.

Thus, the amount of time required from an outside fund-raising consultant, the type of campaign brochure, etc., can result in significantly different costs from one organization to another.

A capital fund-raising campaign (any campaign) is not conducted by employing a professional consultant whose fee is based on a percentage of the goal or actual funds raised. The consultant’s fee should be based only on the time expended—by the hour, by the day, or by the month. Never by the project, and never, never, by a percentage, bonus, or commission.

The overall capital fund-raising expense is as well not arbitrarily set based on a percentage. Real and sensible expenses per line item are determined. (However, it does generally work out that the TOTAL expenses will be in the 5% to 8% range relative to the goal. I’ve seen some lower to about 3% and I have heard of some even higher than my 5 to 8% figure. It depends on the money spent according to the variables cited above.

A trend of sorts has consultants working a pre-campaign “organization building” program—a way to ensure that the resources are in place. A donor cultivation—Building Donor Loyalty—program could very well be a prelude to a capital campaign.

Costs can grow when you engagement of a consultant to early on help perform an assessment of prospect potential. Thus, more and more, pre-campaign activities and programs could actually be phased into the capital campaign budget. My article Campaign Feasibility Studies: Taking The Time To Find Out Whether The Time Is Right
discuss feasibility studies.

Major Duties For the Capital Campaign Chairman

In Consultation With The President Of The Board Of Trustees, Chair Of The Development Committee, Campaign Counsel, And The Executive Director, The General Campaign Chairman Will Serve As The Leader Of The Campaign For Its Duration By:

  • Recruiting Volunteer Solicitors To Raise Funds From The Following Campaign Divisions:
  1. Individuals
  2. Foundations
  3. Corporations
  4. In-Kind
  • Assisting in the process to fine – tune the final major prospect listing
  • Personally soliciting each Trustee to his/her giving potential
  • Presiding over campaign – related meetings
  • Serving as chief spokesman for the campaign
  • Soliciting and guiding the solicitation of major prospects
  • Soliciting and overseeing the solicitation of Campaign Committee members
  • Being the first to make a generous personal pledge
  • Obtaining own company’s gift
  • Participating in select prospect cultivation and entertainment events
  • Providing regular campaign progress reports to the Board of Trustees

Duties For Members Of The Campaign Committee

  • Be responsive to the direction and counsel of the Campaign Chair
  • Attend the campaign kickoff meeting, if at all possible
  • Make a personal leadership gift and solicit your company’s gift, if applicable
  • Support and articulate the case for support of the project and campaign
  • Personally select and personally solicit approximately five major prospects
  • Schedule cultivation meetings, site visits, etc., as desired with your prospects
  • Attend periodic progress report and campaign tracking meetings called by the Chair
  • Complete all solicitations according to the campaign timeline

The Capital Campaign for ABC

(Information & Instructions for the Committee Given at Campaign Kickoff)

Thank you again for agreeing to help the ABC raise $5.0 million to meet our Campaign goal to build a new and dynamic downtown headquarters and treatment center. The following are the steps we have developed to assist you to maximize your efforts to secure contributions from the prospects you will personally select tonight:

  1. This meeting is intended to give you a thorough orientation regarding the project, our campaign organization and the fund-raising plan.
  2. You will shortly select several prospects from a listing to be provided to you. Seek partners from the committee to join you where you can maximize potential giving of particular prospects.
  3. Please study all of the information and instruction materials supplied to you before you make your first call.

During this meeting we will review tools, data, and handouts that you will be receiving in sufficient quantities within the next several days so that you can begin solicitation of your prospects. They include:

  1. Prospect Profiles: Name, address & other contact information for each of your prospects; their link to ABC; amount of contribution to ask for; means to record your contacts, progress, comments, and final result
  2. Campaign brochure for each prospect
  3. Press release for each prospect
  4. Project drawings for your information and for your prospects to examine
  5. Fact sheet for each prospect
  6. Capital budget for each prospect
  7. Suggested letter you can use verbatim, or revise to suit you. If at all possible, use your company’s or your own stationery, as such a personal communication usually is accorded attention over that of a non-profit organization’s mailing. (If this is not possible, use the campaign stationery and envelopes provided)
  8. “Named” gift opportunities for you to use to “sell” donation amounts to your prospects
  9. Pledge card for each prospect

Note: The following articles on this website provide additional capital campaign resources.

Additional resources are available on this website relating to endowment campaigns:

Capital Campaign Plan Outline

Capital Campaign Calendar

Prospect Information And Solicitation Report

Capital And Endowment Campaign Tracking

Capital/Endowment Gift Table & Prospects Required

Capital & Endowment Best-Least-Likely Tracking

Those are my views on the subject. What are yours? I welcome your comments and suggestions.

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Comments

26 responses to “Capital Campaigns: Building for Now”

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  1. Allison Black Cornelius says:

    Tony this is great information. I have a question. When you listed expenses charges to a capital campaign I don’t see accounting. If we have to pay additional services to an accountant for capital campain set up can we charged it to a capital campaign? Thanks for answering.

    • Tony Poderis says:

      Allison,
      Accounting, in the sense of my development office receiving gifts (stock/checks) and pledges, transmitting checks to the finance department, sending acknowledgments to donors, posting the donations to our records, and billing of pledges according to donors’ schedules, were activities which were part of the operation of my department. There was no additional accounting expense.

      Our finance department—any finance department of any of my consulting clients—received, banked and entered into the ledger, all capital donations, just as they handled all other annual fund, memorial, sponsorship, underwriting, etc., funds. There was no additional accounting expense.

      I see no reason why you should need to pay for additional accounting services if all of the capital campaign’s funds are handled internally. And, I see no reason why any outside accounting services should be needed.

      Capital campaigns, by their very nature, are major-giver campaigns. Thus, the number of donors should be relatively small and relatively easy to account for in-house, in every way.

      There were times when it was appropriate to hire a part-time development office secretary for the campaign’s duration to handle the appropriate paper work, but never was there the need to pay for additional accounting services.

  2. ryann says:

    Tony,

    I very much appreciate all of the excellent information you provide on your website. My organization is preparing for our first major campaign (combo of endowment and capital). All of your recommended campaign steps have so far (thankfully) been followed. We are affiliated with an organization who has agreed to match our campaign efforts 1:1 (their contingent match dollars would go to our endowment), but they have suggested they will only match on cash receipts, not pledges. Majority of our expected donors are large foundations and private donors that will offer multi-year pledges (they decide their own payment plans). Given that, it will be some time before any actual payments would be in hand. While we are extremely grateful for their participation in our campaign, I’m wondering if you have any guidance on how to potentially convince them to match on pledges (is it standard practice to do so?)…we are still in discussion phase regarding the specifics on the match and have some time to re-work it. The campaign has not gone public yet, but lead gifts (pledges) are in place. Thanks for any help you can offer!

    • Tony Poderis says:

      Thank you for your welcome and appreciated words for what we love to do here on Raise-Funds.

      In all of my experience with such matching gift challenges, we were given the matching funds only when we provided documentation of the receipt of outright cash and pledge payments.

      Pledges are sometimes not paid. From organization to organization, the rate of unfulfilled pledges would of course vary. Nonetheless, it is the rare organization which would achieve 100% of all money pledged. That is the one main reason why your donor is making cash payments a requirement for receiving their matching funds.

      When I was involved with numerous capital campaigns, those capital campaigns usually followed the desired “80 – 20” rule, where you strive to receive about 80% of the money raised from about 20% of the donors. Whatever level we set as what was considered a “major gift,” had pledges paid to a high level because those donors were close to us. Nonetheless, along the way, business and personal setbacks did occur, and some pledges were necessarily cancelled.

      When those campaigns went out to the general community to those who gave “small,” but pledged to the matching program they heard about, the rate of unfulfilled pledges was far greater. Perhaps even to a 5 to 10 percent loss.

      Another reason for the cash-paid requirement, and one of which I am also familiar, is when matching funds to be paid on the agreement of a pledge, there is a tendency to (without being devious) stretch to elicit and announce pledges which may otherwise not be so clear cut.

      The good news is that you have a generous donor of matching funds. All you need do is to meet their requirements. (The other cash you receive during the campaign will help meet the ongoing costs of the project, with the matching funds nicely coming in with regularity over time, especially for the campaign’s windup, and to help meet possible cost overruns—plus something for future upkeep of the facility.)

      The other good news is that, again from my extensive experience with capital and endowment campaigns, donors making pledges, to a high percentage, pay off their pledges sooner than they were scheduled—at times, much sooner.

  3. Tony—you’ve been a mostly absentee mentor for me ever since I asked you to meet with a board in Wooster, Ohio in 1981 or so to talk to them about fund raising. You dumped a suitcase of brochures on the table and told us to not re-invent the wheel.
    Instead, you told us that real creativity in development is taking previous ideas and improving on them—and most importantly—that the best way to raise money is the old fashioned way—ask for it. Since those early years I’ve been involved in a number of campaigns and your advice then and now has always proven to be correct. This summer (2014) we’ll close out yet another capital campaign and renovate and expand our building once again. Thank you.

    • Tony Poderis says:

      Rick:
      That you have been in your key position for so long, working with your leaders to bring the organization to be such a major community asset, is a tribute to your dedication and tenacity.

      Making workable fund-raising material available is one thing, but using it with diligence while working that slogging fund-raising process, in quite another. And you have done so in the best possible way.

      I know that some folks reading your Blog will take heart and take on their own challenges in the same way.

  4. Tony Poderis says:

    Deb: First—Your existing workload is staggering. The agency’s board of trustees, and your boss, should have realistic expectations regarding the workload any one person can carry, and they must certainly recognize the wide differences in skills required for your various jobs.
    The board should get seriously attending to a new operating expense budget to include additional staff to help. From what I see, they have not business whatever in adding to the workload with a campaign for a new building, especially in the way you described.
    Something is very wrong there in top management. It could be terribly unfair and disappointing to the people in need of support and their families.

    Your agency is going to begin a capital campaign to raise $500,000, and further, you said you received government funding for the “other” $500,000. So, I expect the full cost and campaign number is $1 Million.

    There should be no “launching” of any capital campaign unless, and until, the board knows it chances to succeed are reasonably good. Did the board conduct an assessment, or a more comprehensive feasibility study?

    — Campaign Feasibility Studies:  Taking The Time To Find Out Whether The Time Is Right
    http://www.raise-funds.com/2002/campaign-feasibility-studies-taking-the-time-to-find-out-whether-the-time-is-right/

    Or, in even more simple and concise terms, how does the campaign fare to the following check-list?"

    — 12 Things You Should Know About Setting A Capital Campaign Goal
    http://www.raise-funds.com/1998/12-things-you-should-know-about-setting-a-capital-campaign-goal/

    And more revelations could come with their reading of my article above, the one to which you posted your comment.

    From what I read in your Comments, I strongly urge that no further movement ahead be made until your agency knows its prospects, how much they can give, and be fairly sure you can succeed. “Launching” the campaign before you have your committee in place, a committee which must be committed to fund-raising, and one given all of the tools and resources to do their job, is not the way to go.

    You definitely need a campaign manager on staff, or have the services of an advising consultant. This is nothing you should try to do with your full load of work as it is.
    Discontinuing the annual events in deference to the capital campaign’s needs, is not a good idea either. You surely need those annual operating funds, and even so, once you stop such efforts, even for one year, the habit, practice, and momentum are lost, and maybe the chances to do them again successfully in the future are lost too.

    You should read and make copies of the materials I cited above, and have your leadership read and use them to their fullest to know when, or even if, they are ready for the formidable task of raising that other $500,000.
    Such campaigns need the very best of preparation, and it seems to me that because the government gave the agency money, that should not automatically have the board go on to commit its own raising of that similar amount without exacting preparation.
    All the plans and tools for such an endeavor are in the materials I have provided. It is a tough job for you to see to it that the brakes are applied now to the campaign, at least long enough to know when to accelerate.

  5. Deb says:

    Good Morning,
    I work for an agency that supports people with developmental disabilities, and my role is Community Development.  I am responsible for 5 different fundraisers each year with proceeds going to agency program needs, as well as grant and proposal writing, volunteers, students, and public relations.  Our agency has decided to launch a Capital Campaign to raise $500,000 towards the cost of building an Affordable Housing project which will have 8 separate units for people with disabilities.  We received government funding for the other $500,000 and construction will start before we can even launch the campaign.  I am wondering your view on a couple of things…
    Should we be looking at hiring/recruiting someone to specifically run the campaign other than myself if I am to continue running all the other agency fundraisers…or do you  suggest putting the annual events on hold for a year?
    The house will be completed prior to raising the money.  Do you think our brochures/correspondence should make reference to the fact that donations will be used for paying the advanced financing on the building?
    We are just in the process of head hunting our campaign committee, and developing the brochure and ask information.  Any suggestions?
    Thanks,
    Deb.

  6. Tony Poderis says:

    Judy,
    I know I am telling you what you already know when I say that being the ED in the first place, and doing an ED’s job with the major transition, should be most of what you do, and not what seems to be having you be the one totally, or mainly, doing the fund-raising.

    I just cringe when I see you saying, “I have fallen short,” to the fund-raising goal. Asking how “you” approach donors to ask for “large sums of money” is simply something you should not need to be doing, nor should you be.

    It’s best done by Board members peer-to-peer. Where are your Board of Trustees? What does the Campaign Chairman have to say? Have you or any of your leaders read my article on this issue?

    — Who Should Raise The Money From Within Your Organization?
    http://www.raise-funds.com/2004/who-should-raise-the-money-from-within-your-organization/

    Raising the $75,000 needed by August to make the purchase is one thing, but surely more money will be needed to furnish and maintain the facility. I do hope the Board has worked with you to develop an exacting expense budget for the money needed to complete the campaign, and for beyond. And they must be the ones who are mainly raising the money. They were the ones approving the transition and the purchase in the first place. Since that is the case, they are to be the “the” fund-raisers as well.

    This can only be done with prominent volunteer leadership, and the responsibility must not be with you alone.

  7. Judy Hunt says:

    Tony,  I read your site, and I have to admit, I am very overwhelmed with all the information.  I am the ED of a Pregnancy Care Center, and this last year has been dedicated to transitioning into a "medical" care center, which has taken all my energy and effort.  The year was also supposed to be used for raising the capitl for purchasing this medical unit as well.  Obviously, I have fallen short, because we still need $75,000.00 to complete the purchase.  Our rental contract expires in Aug, at which time we need to buy this unit.  My question is, how do I approach donors about asking for large sums of money?  I do not feel this is in my realm of comfort, and I can feel the panic rise in my throat, when I think about it!!
    Your help would be greatly appreciated.
    Judy Hunt,
    ED. Pregnancy Care Center of Petoskey
     

  8. Tony Poderis says:

    Karen: Yes, it may be too late to fix what should have been done at the start, but your organization must be in position to account for those lapses with painful truth and to assert the sound management steps you are taking to move on to the next level.

    The past, then, is the present you must declare in ways to win confidence for further commitments. And starting a capital campaign in 2008 and still needing time to raise the $1 million balance, is a campaign already running about three years too long.

    Therefore, you know that you must move fast to raise the balance, fast being within the next two to three months or you will surely lose the volunteer enthusiasm and commitment and donor confidence. With the building in operation for about two years already, I believe that you must only seek and raise the balance from just a few major donors.

    Going back to those who already gave $1,000 or under, is not the way to do it—unless any of those lower-level donors can give a minimum of $100,000. Otherwise, the campaign will go on and on. Some may still have open pledges to pay. If most of them are truly only capable of giving $1,000 again, you will need 1,000 of those, and that is no possible nor can the attempt be justified.

    You must first get ready with your sound reply to the remaining donors whom you need, against their very likely assertion, "… but you're already in the building."

    Look less for money from granting foundations of the type having more than one layer of decision-makers. They most likely would be the people not favorable to funding what they see as already up and running.

    Some suggestion follow:

    — Do look to granting foundations which are more of the close family type, where a few make the decisions, and those foundations mainly operated by an attorney, accountant, or bank trust officer. The fewer people you need to convince who control other people's money, the better to win them over emotionally. (Corporations would most likely be as equally reticent to give in this instance, still, with your Trustees' connections, look for any possible support from businesses, corporations, and firms.)

    — As you know, where the money is really to be found, is from individuals. That is where you must concentrate, rather than having even more time elapse and the building getting older, while you are going through what most often is a stretched out granting process.

    — Develop a compelling and convincing Case for Support for needing money to complete a fund-raising campaign when the building is complete with the best and most understandable reasons why you are in the building and still needing money. Think hard for the good reasons why you moved so fast, even though not very well prepared. Those points may over come some protests and questions. Can you say things such as?

    … we ran out of room and desperately needed the new space.

    … we couldn't accept new clients just when the need was growing so rapidly.

    — One of the best ways to help the “asks” along, is to make every ask one connected to a Named Gift opportunity. The building is up and running, so your list of facilities should be long and attractive to pair with suggested asking amounts of donations. Generally, as you know, donors do not give just to get something named, but when you have such a good “hook,” you can ask with more confidence when you can offer the naming. And most donors are pleased to have their money attached to a real "thing."

    — Get someone to offer a challenge/matching donation, and you will find that fund-raising tool is one which works well.

    P.S.
    Do not focus on the problems you have because of the bad economy. Such words are not necessary or helpful to your case

  9. Karen Keane says:

    We attempting to complete our Capital Campaign, which started in 2008.  We moved into our new building in 2009. We have raised $4 million of our $5 million goal. We are now doing a final phase to raise the rest of goal. It's too late now to fix what we didn't do in the beginning (feasibility study and silent phase) The board decided in January to build a new building and construction started in April. So here we are. We will be going back to donors who contributed back in 2009 ($1,000 and under) as well as asking new prospects. What is the best way to approach this and show the need even with our new building in full use?
    Thank you,

  10. Tony Poderis says:

    Andrea: There would be some real and perhaps fatal repercussions.
    First though, the Finance Director should not allow this deception to happen. If that fails, then the outside auditor of the annual final audit will pick up on that improper transfer.

    Were the donor to find out what happened, she or he would be entitled should they ask for their money to be returned.

    Other donors to the capital campaign, should they find out about the transfer of capital donations to operating without the donor's consent, will not give, knowing of the way management improperly and deviously shifts donations from where the donor intended. The capital campaign would be severely jeopardized.
    It's just plain and simple an unethical thing to do.

    Imagine the damage should the practice go public.
     

  11. Andrea says:

    Mr. Poderis,
    Thank you for your online information.  My question is a follow up to that of Judy above.  If a donor has given a donation restricted to a Capital Campaign, and management transfers the funds to a non restricted account for operating purposes without the knowledge or consent of the donor, what would be the repurcusions?

  12. Tony Poderis says:

    Katherine: I do not agree with your advisor. There is no good reason to set a $7,500 donation requirement/objective from each board member. For all other individuals being solicited for their respective donations, you would not have a set and similar amount to be sought from them. So, why a fixed same amount from each board member? Some may not be able to give $7,500 and others may be in position to give more, and even many times more.

    You must know the giving capability of each of your trustees. Each trustee should be rated and evaluated for his or her best giving potential in the same way other non-board individuals are rated and evaluated for their suggested giving to the capital campaign. You always seek a realistically large—hopefully the maximum—potential gift from each of your trustees.

    For capital campaigns, it surely is desirable to count on the board for at least one-third of the campaign goal because such fund-raising campaigns are special and focused on the seeking of only major gifts. With the base of such major donations being relatively small, all you can get from the board is what you should work toward—and setting the same donation asking amount from each, will not do it.

    As you are beginning your capital campaign, it could be that you are starting without the absolutely necessary prerequisites of having all of your major giver prospects rated and evaluated, then to have those numbers of people and their respective donation amounts rendered into a gift table so all can see the numbers and how they relate to meeting or surpassing the goal. This must be done to see if the campaign has a reasonably good chance to succeed before such a campaign is given the green light to go forward.

    It seems a lagging-behind exercise at this time to be deliberating the $7,500 per-board member donation with the campaign already under way. Such an exercise should be completed with commitments of maximum giving from each board member before you go public.

    Identification, rating and evaluation of major, viable, and likely donors must result in your gift table showing that at least 80% of the money you need will come from about 20% of your donors.

    Do read my article about capital campaigns—especially to look over the support exhibits:
    — Capital Campaigns:  Building For Now
    http://www.raise-funds.com/1999/capital-campaigns-building-for-now/
     

  13. Katherine says:

    Hello,
    I work with a medium sized non-profit theatre.  We are currently beginning a capital campaign to acquire our own space.   One of our advisers on our capital campaign said that each of our board members ( especially in order to make us look serious to potential contributors), should be willing to contribute $7500 each to the campaign.  This was someone who absolutely knows what she's talking about.  That means that our board of six people is donating $45,000 out of $150,000, or 30% of the total.  However, she is used to a campaign that raised $15 million, not our more meager $150,000 or so.  I can't imagine that the large campaign's board personally donated 30% of $15 million. 
    Knowing that a board member's contribution should be 'significant,' are there any case studies that support this 30% figure?  Is there a standard figure or an average number for this?
    Thanks!

  14. Tony Poderis says:

    Judy: If a donor makes what is termed a “restricted contribution” to an explicit project or need, then that is how it must be, unless, and until, the donor says otherwise. That is the only time an organization cannot arbitrarily shift a donation from one purpose to another. That is not the case here, however.

    So, in reply to your question in the last paragraph, the donor is certainly allowed to do so. But, if you do not want the donor to make that donation shift from capital to the deficit, you can only work to politely persuade the donor to keep the money for the capital campaign. If the donor insists, then you must comply.

    The question, however, it seems to me, is just where it is best where the money should be allocated.

    How bad is the debt, and what other measures can be taken to fund it?

    What risk is there to the capital campaign with taking some money from it?

    How will that look to other capital campaign donors?

    Should the word get around, do you risk having other capital campaign donors wanting to do the same thing, thinking that the short-term health of the church is at stake, and that the capital campaign for the future can wait?

    So, there is much more to the issue than simply knowing if it is OK for the donor to want to shift some of the donation from one purpose to another.

    By the way, in my opinion, a three-year capital campaign is about one and one-half years too long. Volunteers, staff, and resources do begin to wear thin. Enthusiasm wanes, people quit. The campaign calendar should be much tighter.

    See some typical Campaign Calendars
    http://www.raise-funds.com/worksheets-forms/
    Scroll down to the section, “Planning For Fund-Raising

  15. Judy Hurst says:

    In the case of funds having already been pledged to a capital campaign for a church renovation project, is a donor able to realocate some of those funds to another area of need within the church? That is, we are one year into a three-year capital campaign and the church now finds themselves in a deficit budget sitation. A donor (not church leaders) would like to reallocate a small part of what they have already given to the capital campaign to another area of the church in need? Are they able to do that, or once the money is placed in the captial campaign coffers, is it not to be touched other than for the specific purpose of the building project? Thank you.

  16. Tony Poderis says:

    Linda: Thank you. I am pleased to be of help.

    Stepping back a bit, I read that you are looking “to find funding to renovate or build a new community center.”

    With what would be expected as a significant difference in cost between the renovation, and the building of a new facility, it would be difficult to let your donor prospects know exactly what you need from them.

    Please take a look at my following article and see how it fits with where you are now.

    – Campaign Feasibility Studies: Taking The Time To Find Out Whether The Time Is Right
    http://www.raise-funds.com/2002/campaign-feasibility-studies-taking-the-time-to-find-out-whether-the-time-is-right/

  17. Linda says:

    All of your information was extremely helpful. I wish that I knew about your site a few years ago. We are trying to find funding to renovate or build a new community center. It has been difficult to get detailed information to help us get started. We are in jeapordy of losing our building if we do not get funding to fix them up. I feel that I am in a better position to go to our board and committee made up of community members with information that we all can understand. Thank you so much!

  18. Tony Poderis says:

    Jerry: Your last sentence reads: “Total cost is estimated at around $5-6 mil, separated into 3 phases of similar cost.”

    My comments to that assertion:

    (1) If the total cost of approximately $16 million for the three separate phases simply indicates that an overall fund-raising goal of $16 million will pay for three separate phases of remodeling and new buildings, then that is certainly OK. It is common, and expected, that significant and complex construction projects will need to be scheduled and many times are necessarily sequential to the construction process over time. (Of course, all of this is pending your feasibility study to determine if you have the resources to raise the money in the first place.)

    (2) However, if by three phases, you mean you will conduct three separate fund-raising campaigns (phases) in conjunction to the three construction phases, then I urge strongly that you do not work the campaign in that way.

    All, I repeat, all, of the justified and defensible capital needs for the school, and their total cost, regardless phases of construction, is what sets the one and only capital campaign goal—and that must be in a one, and only, fund-raising “phase.” Here are the reasons why:

    (A) You must have major giving prospects as the ones providing about 80% of the money, as they represent about 20% of your donors. Going to these prospects in phases, will surely have them give proportionally less to the lesser goal of a phase, or phases, rather than the major gift to their full potential they can make proportionally to the total goal. (If I could give you $1 million, you would most likely get me to give it to a $16 million campaign. On the other hand, you could not realistically expect my out-of-proportion $1 million donation to a $5 million goal. I’d want others to do their fair share.)

    (B) Going again and again in phases, will have the school’s campaign encountering most of the previous phase donors still needing to pay off their first pledges. You cannot ask again when they already owe you money. (Even though raising money for a capital campaign has an obvious imminent need for the funds to pay for ongoing costs, nonetheless, you will find a good number of donors wanting to schedule payments, some may even want go out to several years. You cannot tell them to pay up otherwise. You always take the money and run.)

    (C) Leadership, volunteer solicitors, and the school community in general, will soon tire of the campaign effort when the seemingly endless parade of phases go on and on.

    (D) You will likely find, in the first place, that somewhere along the procession of phases, key donors and prospects will ask why you did not mount one major campaign and plan well enough to do the total job, rather than going at it piecemeal.

    I hope that my No. (2) interpretation is incorrect. I hope you are planning in the No. (1) style. If the former, you must review the (A) to (D) reasons why you must not go that route.

  19. Jerry says:

    Tony,

    Thank you so much for the detailed response. It was extremely helpful and really puts my mind at ease. I have read the linked article and it was very helpful as well.

    As a response to some of your notes. The site plan includes both re-model and new buildings on our current site. Total cost is estimated at around $5-6mil, separted into 3 phases of similar cost.

  20. Tony Poderis says:

    Jerry: Going down the page of your comments and final question, here are my views:

    – You have completed a long-term site/facility plan. It was smart (and necessary) that the plan had the input of a number of key stake holders. But, you should not present the results to anyone at this point. You are definitely not ready to conduct a capital campaign, and if proper steps are not taken now, including retracing steps, you will not be ready next year, or ever. Admittedly, this “ho-hum” crasher is no doubt hard to read, but I know how to have you folks head off what looks like sure failure.

    – There is a “beautiful” plan of the sites’ improvement. However, there is no mention as yet from you regarding the estimated cost of the site development, plus the cost of building the facility. Such an estimated expense budget is critically important, as it obviously lets everyone know the fund-raising goal. You must as well allow for furnishings in the building, and even some money for startup maintenance costs. Plus, missing as well, and a must for inclusion in the proposed capital expense budget, would be the fund-raising costs.

    – You should not share the “preliminary results” with the community in a stand-alone way as you now have it. You share the results later, as part of a formal feasibility study conducted to many, most, or all those who gave their input, plus others, on a one-on-one personal interview basis. What you have in the form of your results now, is actually a “Statement Of Intention,” what you intend to do. See the link to my Feasibility Study article below, and see what I mean.

    – Letting people know the results any other way could “generate excitement,” but of the wrong kind; key people who may find fault with the project in some possibly damaging and public way. You don’t want to bring “donors out of the woodwork.” They are later, at the right time, identified, rated for big donations, and solicited as part of a well organized capital fund-raising campaign. Even with what may be thought to be good fortune, having some donors come forward early with promises of donations, always turns out to be donations well under what they could give when asked at the right time, for the right amount, by the right person.

    – Worse, having the caveats you cited with your “disclosure”: “not imminent plans,” “still assessing,” etc., would have anyone receiving such skimpy and patchwork information, not taking it seriously, and surely wondering why they got such tentative and incomplete information in the first place. Not a good way to make a good impression for the future endorsement and support you will need from those people

    – The other “contingent,” and the development director, are absolutely correct. You are not ready for the follow-up capital campaign. I have given you my reasons, and you can learn more from the article cited at the end of this posting.

    – However, if the D of D’s objections are true to your other concerns, then she is wrong. Any experienced D of D knows well how to conduct a special capital campaign, and at the same time, conduct the usual annual fund campaign—both with no undue influence on the other. And “control,” is not a bad thing. A D of D must have control and management of the campaign in order to do the job of effectively serving all who are working on the drive, especially to serve the volunteer campaign chair. The D of D is the coordinator, and must have some form of control—not ownership, of course, but must be very much in charge of carrying out all of the duties connected to the job.

    – Your last sentence dictates what, in fact, should be the beginning of this entire issue. You must have in hand the feasibility, in writing, of raising (or not) the money required for a capital campaign before such a public disclosure/announcement is made. There is no chicken or egg alternative question. A campaign feasibility study is a tool your school must use to determine whether it should go ahead with a capital fund-raising campaign. It is essential for your school’s leadership to assess the likelihood of success for a campaign before entering into it. Not doing so puts the campaign, the project for which the money is to be raised, and even the school itself at risk.

    I urge that you all step back, work the project plan and its results into the “Statement of Intention” of the type described in my article, then to develop the plans and tools to conduct a true Feasibility Study to the key stake holders, as also described in the article.

    Campaign Feasibility Studies: Taking The Time To Find Out Whether The Time Is Right
    http://www.raise-funds.com/2002/campaign-feasibility-studies-taking-the-time-to-find-out-whether-the-time-is-right/

  21. Jerry says:

    I enjoyed reading your material, and if you have time to indulge a question I would appreciate it. I am on the board of two non-profit schools. At one school, a strategic advantage of the school is a tight knit familial atmosphere among the community. A project was undertaken at that school to develop a long-term site/facility plan and many parents, teachers, and members of the school community were involved in the process. Some of them were told when the results would be completed. A beautiful plan was completed to improve the site according to this process. It is clear that the implementation of the plan will require a capital campaign, and that we are probably still a year away from kicking off a capital campaign.

    Myself, the school’s founder and some others are of the opinion that we should share the preliminary results of the plan wiht the community becuase it is consistent with the open / familiar atmosphere of the school, it would generate exitement, might bring some major donors out of the woodwork, and it shows the results of the volunteer efforts many members of the community put into the plans creation. Any disclosure would be caveated with the clear warning that these are not emminent plans or even final plans, and that we are still assessing the feasibility of funding the plan.

    Another contingent, which most vocally includes the paid development director (and head of annual campaign efforts) insists that we cannot hint at the results of site plan until we are fully ready to begin a capital campaign. That such a preliminary disclosure would ruin the effect of a grand announcment in conjunction with the capital campaign.

    I dont want to undermine her professional opinion as development director, but I am also concerned she is overstating the objection for fear of a negative impact on the annual campaign / loss of control. And I feel there is a chicken and egg question in that a little disclosure might help determine the feasibility of the capital campaign.

    What do you think?

  22. Tony Poderis says:

    Jim: It is good that you are retracing some steps on the fund-raising path the church is traveling. I think your leadership is going in the wrong direction. Your church leaders cannot be allowed to think that a capital campaign is some kind of simple process, and that you can follow others that have launched such capital campaigns. There can be no such comparisons.

    Perhaps you will agree that you all should step back and consider that you may not be ready to take on the capital campaign effort—or certainly not in its present form.

    It is urgent, that right up front, I must let you know of the mistaken impression there that, “… the term “Capital Campaign” appears to be what churches do to solicit funds from sources outside of the church for a major building project(s).

    That is not the case. All of the money must come from the people whom you serve—your congregation, present and past. The only way you will possibly raise “outside” money is when exacting facilities are devoted to the secular community, such as a foodbank, counseling, day care, etc., and even then, you cannot be sure funders will see their contributions separated in that way.

    You said you wanted to establish a strategic plan. You did not conduct a feasibility study. You want to conduct a capital campaign.

    I submit that for the best chance of success, you should produce those programs in that order. The strategic plan will, or will not, declare capital needs in keeping with the mission and vision of the church. The feasibility study will tell you just that—if a capital campaign is indeed feasible. To leapfrog those two key programs, and go directly to capital campaign mode, sets up the almost certain risk of failure.

    The sound and sequential planning which I encourage, is as well prompted by what I see as potential danger to the major building project when the leadership is talking in terms of the campaign being in three or even four “phases.”

    All of the justified and defensible capital needs, and their total cost, is what sets the capital campaign goal—and that must be in a one, and only, “phase.” Here are the reasons why:

    (1) You must have major giving prospects as the ones providing about 80% of the money, as they represent about 20% of your donors. Going to these prospects in phases, will surely have them give proportionally less to the lesser goal of a phase, rather than the major gift to their full potential they can make proportionally to the total goal.

    (2) Going again and again in phases, will have you as well encountering most of the previous phase donors still needing to pay off their pledges. You cannot ask again when they already owe you money.

    (3) Leadership, volunteer solicitors, and the church community in general, will soon tire of the campaign effort when the seemingly endless parade of phases go on and on.

    (4) You will likely find, in the first place, that somewhere along the procession of phases, key donors and prospects will ask why you did not mount one major campaign and plan well enough to do the total job, rather than going at it piecemeal.

    A suggestion for the best way to seek and secure the services (at least for an initial assessment), of an experienced and capable non-profit consultant, is to contact the nearest chapter of the Association of Fundraising Professionals. The AFP geographic search page is:
    http://www.afpnet.org/audiences/chapters.cfm

  23. James C Robertson Jr says:

    Mr. Pederis,
    Your website on Capital Campaign was referred to me via an email reply from Carter McNamara, Authenticity Consulting,LLC,to my questions to him about chairing a capital campaign and establishing a strategic plan for my church. I’ve read your article on Campaign Feasibility Studies and found it very helpful, which as a church we did not do before electing a capital campaign committee. I believe that some of my church leaders think this is some kind of simple process and we can follow others that have launched such capital campaigns.

    My church has decided to implement this committee for a major building project, which right now would be phase one of possibly three or four phases. I was asked to be one of the members and chairperson. However, I nor my church has any prior experience in the areas of fundraising, and the term “Capital Campaign” appears to be what churches do to solicit funds from sources outside of the church for a major building project(s).

    My personal impression is to hire a consultant in the field of capital campaign as a facilitator to walk us throught the project for the first time so that we gain a positive experience from this endeavor. Secondly, from the guidance of a consultant, the church becomes experienced in the process of conducting a capital campaign.

    I would greatly appreciate your guidance and any recommendations, especially about hiring a consultant.
    V/r

    James (Jim) C Robertson Jr
    jasrob49@frontiernet.net
    Assoicate Minister/Civil Servant – State of California
    Faith Landmark Missionary Baptist Church