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 | $2,520,00 | 70% |
| Foundations | $720,000 | 20% |
| Corporations | $360,000 | 10% |
| Total | $3,600,000 | 100% |
Projected Scale of Capital Gifts Required to Reach $3.6-Million Goal
| Number of Gifts | In the Range of | Total |
|---|---|---|
| 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 |
| 40 | less 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:
- Individuals
- Foundations
- Corporations
- 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:
- This meeting is intended to give you a thorough orientation regarding the project, our campaign organization and the fund-raising plan.
- 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.
- 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:
- 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
- Campaign brochure for each prospect
- Press release for each prospect
- Project drawings for your information and for your prospects to examine
- Fact sheet for each prospect
- Capital budget for each prospect
- 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)
- “Named” gift opportunities for you to use to “sell” donation amounts to your prospects
- Pledge card for each prospect
Note: The following articles on this website provide additional capital campaign resources.
- Fitting Annual, Endowment, Capital, & Sponsorship & Underwriting Campaigns into Your Organization’s Plans & Making Them “Sing”
- The Name Is the Game: Memberships and Named Gift Opportunities
- 12 Things You Should Know About Setting A Capital Campaign Goal
Additional resources are available on this website relating to endowment campaigns:
Prospect Information And Solicitation Report
Capital And Endowment Campaign Tracking
We are considering doing a Capital Campaign to purchase a facility for our small, private school. Is there a rule of thumb about how much we can raise based on our normal giving?
2X, 3X, 4X?
Any help would be appreciated.
Jay,
No rule of thumb. It’s all a question of the strength 0f relationship you have with current donors, and your ability to qualify them and new donors by rating and evaluating their ability and willingness to give and at what level. And finally the strength of your board, volunteer leadership, CEO, and development professionals as fundraisers. Determining how much to raise needs to be based on need and capability.
Mr. Pederis,
We are planning a capital campaign to purchase a building we are leasing. There are no renovations involved. We have two years left on our lease and the landlord is very amenable to the purchase.
What I see we may face is the fact that we will not actually make the purchase for a two year period. I can imagine foundations may not look upon this situation as ideal. How do I approach this with foundation grant applications? Also, are the funds typically placed in escrow with a trustee while we are engaged in our capital campaign? Thank you.
Jeanette,
I know you addressed this question to Tony Poderis. Unfortunately Tony died in October. I’ll try to give you some guidance.
First off, I have never placed funds in escrow unless that is a request from the donor. It’s more likely that the donor would pledge the funds and not make the transfer until a predetermined milestone has been reached. Secondly, in my experience foundations–and I worked for one–are not eager to make grants for the purchase of facilities.
Before applying for a grant for any purpose from any foundation, I would try to get a meeting with the appropriate program or grants officer at each foundation. At those meetings I would talk to them about what we wanted to do and ask for their advice.
Yes, I’m there to hopefully interest their foundations in making a grant, but program officers are often well versed in what other foundations, corporations, and individual donors are likely to support. Anyway, I would never submit a grant without first trying to establish relationship. Foundations will often have specific areas of interest. Dialog with program officers can help you understand how best to slant your grant request so that it can be considered as within an area of interest. Do that and you are much more likely to be awarded the grant.
Program officers of foundations need to be courted in the same way as individual donors. Also try to get access to a foundation’s board of directors or trustees. Foundations are made up of people, and with people its all about relationship.
Greetings,
My name is Mr. Thong Do and I’m currently a Peace Corps Volunteer serving in Armenia. I’m assigned to a local NGO in the city of Gyumri that helps young women with special needs. Most of the NGOs around here only focus on children with special needs but my NGO is the only one in the region that addresses this specific community. The center is located in an actual house because that’s all they are able to afford to rent. As a center that addresses and assists people with special needs needs its ironic that we can’t properly have a facility that accommodates people in wheelchairs.
My goal during my Peace Corps service is to raise money for an actual building, rather than a house, for my NGO so they can provide better care for our beneficiaries as well as serve as an example to the community how a public building with wheel chair ramps, sliding doors, and wheel chair accessible elevators should be. Armenia does not have a good history with making buildings and public facilities accessible for people with disabilities and a new center could be a great showcase to the community.
The only thing is that I have very little experience in fundraising on a scale like this. Any suggestions are greatly appreciated.
Thank you.
I am the Artistic/Managing Director of Spotlighters Theatre, a 54 year old non-profit community theatre. We are losing our current facility (or only facility since we opened in 1962) in Dec 2019. We want to be able to operate a larger theatre, with additional space for theatre rental, as well as education and support facilities. We believe we need approximately 16K – 20K sf for our new property. We have identified a city owned property that we are submitting a proposal to develop as part of the city re-development. We expect the development and renovation of the property to run between $3.5M and $5M. We have never had a major capital campaign before. We raised about $20K to renovate our backstage and dressing room areas. It largely came from one family foundation. Our largest individual donor is $5k. We have a couple of foundations that support our educational programs at about $10K each. Our new facility would allow us to expand theatre performances, and options for local organizations, as well as broaden our educational programs and offer more opportunities for community involvement. Our new facility would be a community arts center.
Our current annual contributions total about $50K — so, is it even possible that we could raise $3.5M for a new building? And how do I go about creating a campaign that can raise this kind of money. Should we spend the money ($35K) for a professional feasibility study and then a professional campaign manager?
James,
To my way of thinking, you must conduct a feasibility study before you make any other move to meet your capital needs.
As you know,a campaign feasibility study is a tool you should use to determine whether you should go ahead with your capital fund-raising campaign.
It is essential that you assess the likelihood of success for a campaign before entering into it. Ant non-profit that does not do so puts the campaign, the project for which the money is to be raised, and even the organization itself at risk.
An assessment of the feasibility of a campaign can be conducted by your organization itself or by outside professional counsel.
However, from what you described as your fund-raising base, it is rather unlikely that your organization has the resources to make an internal assessment of feasibility.
However, if a full-blown feasibility study is needed, then that study is best conducted by outside counsel having no ties to your organization. The reasons for this, and much more, will be delineated in my 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/
Following the results of such a study, then and only then, can you determine what type of campaign leadership structure will work best.
Dear Sir,
we are raising funds for “Buying a place for Church and repairing” and need your support.Now we have 15 days left to buy the place otherwise the owner slae this place to another person.
Please visit http://goo.gl/r8Otyi to make a secure online contribution now. Please also share this, as together we can help.
BEST REGARDS,
Imran Anthony,
Joint Secretary Of His Grace Church.
Ref.my requested on that need financial help to build a Mosque in my native village Paturia,PS; kalukhali, Dist: Rajbari Bangladesh. Please help for make it. Contract me by mail . My mail : mwahidzaman@gmail.com or czll me +1912428120
Dear Sir,
I am the chairman of a Tamil Literary Association, Malaysia operating since 1975.The committee has decided to buy a 2 storeys building which has been identified for the use of the association and its activities.
We wish to raise fund from the public of Indian origin to buy the above building.Kindly advise me the ways and means to go about raising the required fund. Thank you.
R. Perumal,
Ipoh
Malaysia
Tony,
Our clinic will soon begin its capital campaign, and we had an idea to quickly raise funds using social media. We want to create a site/use an app where individual or teams of donors can purchase square feet of the building plan and share the image with their square and name on social media. We aren’t sure how to create an online system to carry this out. Do you know of any platforms that could support this?
Breanna,
I’m not sure what you are asking. If your question is about setting up a crowdfunding campaign, then I suggest you search the Web for nonprofit crowdfunding sites and then explore the ones you might want to consider. However, crowdfunding requires a great deal of work on the part of an organization. Just like any fundraising effort you have to lay the groundwork, and that takes time, effort, and expertise.
If you are asking about apps you would use on your website, then many fundraising technology consulting practices can help you. I can recommend the people who provide hosting support for this site: Zuri Group. I have worked with the CEO (John Murphy) when he was with Kintera (now Blackbaud) on my online fundraising when I was with Heifer International. We raised as much as $35 million a year over the Web a decade or so ago. Zuri has a number of apps that are specialized or can be adapted for specific fundraising needs, and they are good people.
I do not know of an off-the-shelf app that can be acquired at little or no cost to perform what you seem to want to do. Nor do I think that such an app would be likely to deliver what you want unless someone in your organization is a very savvy online fundraiser.
With my history, I would be considered a very savvy online fundraiser, but I still would seek counsel for what sounds like a major effort on your part. Online fundraising and social-media fundraising can’t simply be turned on unless you have proven prospects likely to give online. I suggest you read my article Micro Gifts and Impulse Giving Online.
Tony:
Thank you for the information it was an interesting and intriguing read. I am new to the business world and was wondering if you could assist me in answering a few questions. I work for a Parks and Recreation company in the State of Kansas, which is a government agency. I also work in a Division of this company that works closely the public. My Division was approved money for a new building by both of our Boards (a District Board and a County Commissioners Board) but they did not look at the funds that we needed for our new building and just went to the bank and asked for a loan. By doing this it is actually causing us to reduce our square footage, they are wanting us to outsource storage, is hurting my office staffs moral really good, and is not allowing us for future expansion (which has already been approved), and so on. I am wondering if there is any way for us as a Division that is a government agency in the public service field if we can raise money? Could we use a capitol campaign or is there anything else we can do?
Thanks again,
Missy
Missy,
(1) A Project Description, in exacting terms, should be determined. That would be your Statement of Need. Not only cataloging the additional facility descriptions, but stating their worth to what your organization does, and how the community will benefit.
(2) Such a Statement of Need, with cost estimates obtained from an architect and a contractor/builder, will then allow you to determine how much additional money you will need.
(3) Have someone who possesses influence to present the Statement of Need and the expense budget to the District and Commissioners boards to seek those additional funds—or at the very least so they know of your situation.
However, it is critically important that you right up-front express your deep and sincere thanks for the funds those Board have already appropriated to your organization. Never mind the way and the how those funds came to you. It will take the best of diplomacy on your part to have them know that what they gave is very much appreciated, but then you present your case for why you need more money.
Instead of talking about the obvious-to-you negatives, cite instead what those expansions of space and other resources will do in terms of your organization doing good things in better and more ways for the community. (No donor ever wants to hear that what they gave was not enough. It will take great tact to have them understand.)
(4) If no success there, you must find out if your organization has tax-exempt status, and if not, could any such fund-raising be channeled through another governmental agency. You must find a means to have donors legally obtain tax-deductions for their contributions.
Be sure to be clear of any hurdles possible from your state government when it comes to the raising of capital funds for a governmental institution. Quite often, there are restrictions regarding such capital campaign ventures.
(5) Should you have all of your plans in place, and be in position to go out to the community to raise those additional funds, you will require the very best and creative means to convince the public that an organization—to which their tax dollars are given—needs to raise even more money from those tax payers. That is going to be a very tough sell.
I urge that before you take any of the steps I have outlined above, you should read, study, and adapt any or all of the elements to the development of a Capital Campaign as it grows from a Feasibility Study. I am confident that your reading of the following article will go far in the presentation of your case for the additional support you need.
— 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/
What about contributions to Capital Campaigns that never materialize–whether by lack of monetary support or that the plan was simply too big to undertake and the fund raisers were in over their heads? I contributed $10K to a church campaign several years ago..the campaign did not succeed and I would like to recoup those dollars, ironically, for a campaign in my current parish!
Help
Candace
Candace,
You cannot force the church to return something you gave to them. Taking legal action would be out the question for many reasons–in my opinion.
On the other hand, there’s nothing wrong with asking them to return the money.
However, you would need to seek advice from a tax specialist about how to record the receipt of the possible donation return to offset the original tax deduction I expect you received several years ago.
That could be quite complicated and maybe not worth the trouble.
Tony,
I have a general question that may be too nuanced for a simple answer, but I’d like to get your perspective. We are about 70% of the way through a 3yr 5million renovation campaign. About 78% of the funds are in, and we moved into the finished building last month. We are considering a phase 2 for sitework and renovating another building. We would begin the Quiet Phase in March (about 5 months before the end of the first phase giving), with the public phase to launch in Oct (the 3yr end of the first campaign). Our feasibility study seems to be right on, and our donor base remains fairly stable. Given that people are excited about the results of this campaign and we would be approaching roughly the same pool of contributors. Is there a general percentage of the first amount that we can expect in the second phase?
In other words, coming out of a 3 year $5M campaign and rolling into another 3 year phase 2 for other campus buildings and site work, what percentage of diminishing returns should we expect?
Thanks for your insight!
Tony
Tony,
First, congratulations for the outstanding success you have achieved thus far. The numbers are quite impressive, and the positive spirit of the Campaign is noteworthy.
But, you are correct that your general question regarding Phase 2 does indeed have many shadings, as I see it, and there is no simple answer to clearly settle the issue.
The “percentage of diminishing returns” (to be expected), apparently is being sought from estimations of what Phase 1 donors may give to Phase 2.
From my literal and figurative distance from the atmosphere and realities of the current campaign and the next steps, I find it necessary to coarse tune our discussion with a number of assertions and questions of my own.
Forgive the seeming terse tone. It’s not prompted by harsh criticism, as much as simply wanting to get straight to the point before you commit to a Phase 2.
Most of my concerns stem from the fact that you are “considering” a Phase 2 campaign, mostly to those donors who gave to the Phase 1 effort. How that may, or may not, work on the heels of the successes of the Phase 1 fund-raising, could negatively impact the satisfaction, enthusiasm and sense of accomplishment stemming from the $5 Million initial campaign which renovated your building and has it in working operation.
Knowing the building is in operation and seeing people active in it, gives the clear perception that the job is done. Hard to start up yet another campaign under those circumstances. From personal experience, it is hard enough to finish off an initial building/renovating campaign when there is the appearance of project completion.
— Those donors who accounted for 78% of what was raised to goal, must be closely examined for the percent of what they have actually paid thus far to their pledges. You cannot/should not expect new pledges to be made on top of pledges yet to be paid.
— Asking Phase 1 donors for more money to Phase 2 seems to me to open the door for justified criticism regarding why both efforts were not originally combined into one main campaign. This could engender misunderstanding and second-guessing about your project and campaign planning.
— Since you are “considering” a Phase 2, it seems to me that your Phase 1-inspired Feasibility Study would have no bearing on forecasting for Phase 2. Thus, a major risk going after potential funding with no reasonable assurance from a pre-campaign assessment study.
— Even though you feel that the Feasibility Study was “right on,” I have the impression it was not, regarding the rating of potential giving from your major donor prospects. If the prospect evaluations were correct, then you would have asked for the maximum rated amounts, negating any chance to go back for secondary gifts. It appears that low-ball suggested asking were made.
Tony,
With all due respect, maybe you should quit while you are ahead, and save the Phase 2 for a time a few years hence when it can be another Phase 1.
From what I sense, the percentage of diminishing returns figure you are seeking may is more of a self-fulfilling prophecy, resulting in failure and damage to the reputation of the organization.
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.
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.
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!
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.
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.
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.
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.
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.
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.
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
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
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,
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.
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?
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/
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!
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
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.
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/
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!
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.
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.
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/
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?
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
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