Fitting
Annual, Endowment, Capital, and Sponsorship & Underwriting Campaigns
Into Your Organization's Plans and Then Making Them "Sing"
 Remember
those great old movies with Mickey Rooney and Judy Garland? The ones in
which the "kids" had a money-raising dilemma that perplexed
and perplexed them. All of a sudden Mickey would light up with youthful
exuberance and optimism. He'd turn to Judy, and say, "I know, let's
put on a show! We can do it!" An hour and a half later, after a
liberal dose of movie magic, they've put on a production worthy of
Broadway, the problem is solved, everybody has had a good time, and
Mickey and Judy are in love.
There
are non-profit organizations that operate in much the same way. Faced
with the dilemma of growing financial need outstripping static
resources, officials of those organizations will turn to one another and
say, "I know, let's put on a fund-raising campaign!"
Unfortunately there is little movie magic in the nonprofit world. Too
often the campaign fails, the problem is still there, nobody has a good
time, and love isn't exactly what the campaign managers are feeling for
one another.
It's
not that fund-raising campaigns aren't the answer to financial need. In
the end, where else is a nonprofit organization to turn than to generous
givers? The problem is that, unlike Mickey's and Judy's show, the
current campaign isn't the first or the only one the organization will
put on. It has to fit into the context of an overall development plan.
Today's campaign, follows yesterday's, and precedes tomorrow's. The
trick is to make sure that each and every one of an organization's
campaigns is successful. That's the job of a general development plan.
A
Fund-Raising Campaign Must Be A Plan Within A Plan
The
general development plan identifies how and from what sources an
organization will acquire and maximize contributed income. It
communicates that information to the organization's staff, volunteers
and supporters. Specific fund-raising campaigns are then planned and
carried out in accord with the general development plan.
The
paid head of the organization, the board chairperson, key staff members,
trustees, volunteers and advisory group members prioritize financial
needs and agree to common fund-raising goals. Within the context of the
general development plan, they create an environment for achieving those
goals and for planning, initiating, and producing annual, endowment,
capital, sponsorship, and underwriting campaigns. Each type of campaign
has key issues and components that an organization must understand when
it considers installing any one of them as a contributed income program.
The
Annual Fund Campaign:
Once A Year Every Year
The
annual fund campaign is a 365-day-a-year process conducted each and
every year to raise money to assist in paying regular and ongoing
expenses. It should be an organization's primary source of contributed
income, and it:
- Stimulates the giving of unrestricted funds to allow an
organization wide latitude in how funds are applied to meet
expenses.
- Increases public awareness and acceptance of the
organization, the fact that the organization must raise money to
fulfill its mission, and that it is in the process of raising money
now.
- Develops a base of knowledgeable and committed volunteers.
- Builds a predictable base of support and provides a pool of
proven donors capable of making major gifts.
- Is the campaign to which individual donors usually make their
first gifts to the organization.
- Consists principally of individual donors.
- Must never be canceled or deferred for any reason because a
campaign deferred is a campaign defeated.
- Must take precedence if the organization does not have the
resources to mount other campaigns.
- Is a broad-based appeal for funds directed at a large number
of prospective donors.
- Requires that solicitations be made for predetermined
specific asking amounts or provides "benchmark" amounts to
prospects when it is not possible to rate their giving ability.
- Seeks to increase a donor's contribution each year to meet
the organization's increasing expenses.
- Can be conducted simultaneously with any other type of
fund-raising campaign.
- Features donor memberships, clubs, and societies at various
giving levels offering donor benefits, privileges and/or explicit
examples of what the donation "buys" for the organization
and for the users of its programs and services.
Endowment
And Capital Campaigns:
Providing For The Future And Building For
Now
Endowment
campaigns raise money to invest rather than spend, and the income from
those investments is used in many ways. Capital campaigns raise money
that is spent to acquire or improve a physical asset.
Both endowment and
capital campaigns:
- Require that an organization perform a feasibility study
before it commits to carrying out the campaign.
- Are not conducted if the expenses they would raise funds for,
can in the short term be covered by annual funds and other gifts and
grants.
- Are undertaken when an organization has the resources to do
so without diminishing the effort directed toward the annual fund
campaign.
- Run no longer than about 16 months from start to finish.
There is a point when resources begin to diminish and when
leadership's enthusiasm and energy begin to fade.
- Are usually not announced to the public until at least
one-quarter of the goal has already been raised.
- Use challenge and matching grants to stimulate giving,
increase the size of gifts, and bolster the energy and commitment of
solicitors.
- Are more often successful when major "inside"
support from the board of trustees totals at least one-third of the
goal.
- Keep costs in line by holding total fund-raising expenses to
no more than about 5% of the money raised.
- Have formal, line-item budgets that include all fund-raising
expenses and provide a liberal contingency expense amount.
- Are spaced widely enough apart to avoid soliciting prospects
who are still making payments of pledges from a prior endowment or
capital campaign, to avoid giving the appearance of poor long-range
planning, and to avoid negatively affecting annual fund campaigns.
- Have convincing cases for support to explain the need for
this "special" fund-raising effort.
- Must be large giver campaigns with one-third of the money
coming from about 15 donors and the second third from about 75
additional donors.
- Should avoid broad-based approaches such as soliciting only
$1,000 gifts for a $1-million campaign. In that case an organization
would need to solicit successfully 1,000 donors from approximately
3,000 prospects --a daunting set of numbers.
- Must rate and then solicit prospects at their maximum giving
potential, keeping in mind that some donors will surely give
substantially beneath their capability and the organization's
expectations.
- Should offer many "named" gift opportunities as "sales
tools" for solicitors.
Endowment
Campaigns:
Providing For The Future
An
endowment campaign raises money that the organization invests in income
producing assets. Endowment is a wonderful thing for a nonprofit
organization. Every dollar earned by an endowment is one less dollar
that needs to be raised in an annual fund campaign. Endowment funds
provide money for daily operations and extraordinary expenses, including
capital expenditures.
An
endowment campaign:
- Is most feasible when an organization has been around long
enough to have a past that reassures prospective donors of its
potential for a future. After all, an endowment gift is one that is
made in perpetuity.
- Presents a more credible case for support of the future when
there is current financial stability.
- Is produced only when the effort put into it is justified by
the ability of endowment funds to earn substantial income.
- Is one in which achievement of the goal is difficult to
validate. Future income rates are uncertain and payment schedules
cannot be guaranteed.
- Should have a goal which has a realistic chance of being
raised.
- Should solicit and encourage deferred gifts, especially when
prospects are not able or willing to give up current income.
- Can be slowed, even suspended, when problems in the
production of material such as the campaign brochure occur.
- Can be seriously impeded when named gift opportunities are
interpreted so literally that the gift must actually cover the cost
of the naming opportunity. They should be symbolic or commemorative
in nature with the naming amount based upon the availability of
prospective donors able to give at leadership levels.
Capital
Campaigns:
Building For Now
A capital campaign raises
money to cover the cost of capital assets that cannot and should not be
part of a nonprofit organization's annual operating budget. Probably the
best known form of capital campaign is one that raises money for a new
building or improvements to an existing one. However, capital campaigns
are not limited to bricks-and-mortar fund-raising efforts. Capital
campaigns are commonly used to raise money for equipment or any other
depreciable good.
A
capital campaign:
- Should, if possible, be yoked to an associated, but
substantially smaller, endowment campaign that raises money to help
defray operating costs for the asset that will be purchased with
funds raised by the capital campaign.
- Has a goal that is not based simply upon the actual capital
expense. The potential that can be raised is the most important
governing factor in goal setting.
- Should have intermediary goals for cash-in-hand at scheduled
points when a payment must be made on the capital asset being
acquired. The most obvious example is when a building is being
constructed.
- Does not, in a campaign for a building in which the building
has been completed and occupied before the campaign closes, allow
prospective donors to think that because the building is in use that
their money is any less needed.
- Does not actively solicit deferred gifts since cash is needed
for the current acquisition expenses, but accepts them, often
applying them to an associated endowment campaign. The income they
provide in the future will help offset operating expense of the new
capital acquisition.
- Seeks in-kind gifts and always publicizes the donations with "market
value" credits to the donors.
Sponsorship
and Underwriting Campaigns:
Would You Please Fund Our ________?
Sponsorship
and underwriting campaigns raise funds to pay for projects, programs,
events, initiatives, and activities. Like capital campaigns, the money
they raise is used for a specific purpose, but it is for a purpose other
than acquisition of a capital asset.
Sponsorship and
underwriting campaigns:
- Can be aimed at corporations, foundations, and individuals.
- Are a way of obtaining additional funds from annual donors
above and beyond their gifts to the annual campaign.
- Should also solicit prospective donors who have not given to
the annual campaign.
- Can include a package of benefits for donors that include
real out-of-pocket-expense for the organization, but the
organization must resist a sponsor's desire for an excessively
expensive benefit.
- Can be used to guarantee funding for proposed and new
initiatives before the organization enters into the new venture.
- Offer great networking opportunities to a sponsor's customers
and executives and their spouses.
- Require that the same specific project not be offered to more
than one prospect at a time.
- Must not compromise or tarnish an organization's image by
being overly commercial or inappropriate.
- Must not embarrass a sponsor or underwriter because of the
content it funds.
- Should be positioned so that corporations see their support
in a philanthropic sense rather than as a quid pro quo value
received relationship.
Curtain
Call
The
different types of fund-raising campaigns each have their own key
elements, but they share two important objectives. They are there to
raise money and make friends for an organization. Just like those old
Mickey Rooney and Judy Garland movies fund-raising campaigns need to
leave everybody whistling a happy tune and feeling good about
themselves. After all we want them to come back for the next show . . .
I mean campaign.
Those
are my views on the subject. What are yours? I welcome your comments and
suggestions. tony@raise-funds.com
Note:
Additional resources are available on my website to help you understand
how and when your fund-raising campaigns will work better for your
organization. You may access them by using .pdf and/or .html methods as
follows:
- Planning Is Everything
- Typical General Development Plan
- Campaign Expense Budgets
- Funding Sources To Applications
- Development Steering Committee
- Funding Methods/Vehicles To Resources
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Click
Here