In my hands is a slick, well done brochure for a capital campaign. The nonprofit organization that has produced it wants to build a new $6.5 million facility. Dates are given for ground breaking, commencement of construction, building completion, and dedication of the new facility. It tells of several encouraging, pacesetting donations that have already been received. An impressive campaign leadership group is identified. Attractive naming opportunities are listed. Everything in the brochure speaks to a well thought out project.
It’s a great brochure touting a well planned project and campaign. All looks good, except for one thing—one sentence: “Pledged donations may be paid over three years.” Eight words, such a small thing, but those eight words are the seeds for potential disappointment, even failure.
Let’s suppose I’m a prospective donor, a supporter able and quite likely willing to make a gift of $100,000. But, for a variety of reasons I will want to pay my pledge over five years not three. I’ve got taxes, personal obligations, and commitments to other worthwhile organizations to think about and plan around. Think about how being put on notice that I cannot make my gift according to my timetable is likely to impact my receptivity to solicitation by the organization.
But the Money Is Needed Now
Organizations raise money because they need it to meet expenses. Annual-fund campaigns designed to cover operational shortfalls are the best example of the need for explicit payment schedules. The money they raise is needed to cover anticipated expenses in the coming year. In many ways the same holds true for capital campaigns such as the building campaign outlined in the brochure. The organization will need cash according to a schedule that will allow it to keep current with its ongoing construction expenses. Failure to do so will endanger completion of the project. Timing pledge payments to meet expenses as they come due looks like good project management, but is it?
Good project management assures that a project will be completed on time, on budget, and meet quality standards. A capital campaign to support the cost of construction of a new building should be thought of as just as much a part of the project as the bricks and mortar. The campaign needs to be given the same respect as designing the building, constructing it, and fitting it out. Fundraising needs to be part of the overall project management. You wouldn’t ask the plumbing contractor to design the electrical layout and wire the building. You shouldn’t ask anyone other than your fundraising team to design and manage the capital campaign.
I’ve designed, managed, and consulted on more campaigns than I want to remember, and I can’t even begin to tell you how many times I’ve been asked, “How long should we give capital campaign donors to fulfill fundraising pledges?” My answer always has been, “As long as the donor wants.” To do otherwise is to possibly lose donors altogether or to risk some donor’s reducing their gifts in order to meet the organization’s payment schedule.
A campaign can almost certainly raise more money when tight constraints are not placed on the time donors have to fulfill fundraising pledges. My experience has been more time to pay equals more money pledged. If you ask me to give and pay today and I’ve got two $10 bills in my pocket, you’ll probably get one of them at best. But give me till tomorrow after I’ve been to the bank, and I’ll be more inclined to give you $20. I’ve always been ready to work with donors when it comes to scheduling payment of pledges. That’s why I never published a predetermined time for pledges to be fulfilled.
Once we had a capital campaign to support a three-year project at the Cleveland Orchestra. One donor wanted to fulfill his pledge over ten years. “No problem,” we told him. He pledged the full amount we asked for. I am positive that had we said, “Sorry, but we need your donation to be in our hands in full within three years,” we would have lost part—maybe even all of the gift.
I know organizations need cash from capital campaigns to pay for expenses as they come due, but that can be done with cash payments made up front by other donors. Any pledge balance to be paid is a receivable that will be coming at some future date. Good project management will take into account the reality of extended fulfillment time for some pledges. You build it into the aging of your receivables from the campaign. That’s good project management!
Longer Time to Pay Fundraising Pledges Has Benefits
Sometimes I’ve heard it said that the cost and effort expended to maintain and keep pledges on the books over a longer period of time is troublesome. I’ve found the cost and effort to be negligible. But whatever inconvenience might result is a happy problem to have when you consider that the more time a donor has to pay, the greater the possibility that a larger amount will be given. And let’s not forget that by extending the length of the stewardship/relationship we gain added opportunity to strengthen donor loyalty and interest.
I have always believed and continue to believe that imposing a fixed limit—especially a short one—on the amount of time over which a pledge can be fulfilled is big mistake. Not only may you receive less money, but if the donor takes umbrage with the time limit, you might not get any at all. In general, I have found that absolute and intractable stands are likely to be counterproductive when it comes to nurturing relationships with donors. Let’s not forget, it’s their money. Donors have the right to expect us to accept their gifts in ways that are advantageous to them as long as those ways are legal and ethical.
At the Cleveland Orchestra we always offered and promoted accepting pledges on a multiyear basis. Our campaign pledge cards left the schedule of payments open to discussion between solicitor and donor. An example of a generic pledge card follows.
To assist the ______(organization name)______ in meeting its Fund For The Future Capital Campaign goal, I/we agree to contribute the amount of $_________________.
I/we plan to make payment(s) on the following basis, understanding that I/we can do so on a multi-year schedule if I/we choose:
Amount pledged: $ ____________
That open ended opportunity to fulfill their commitment encouraged donors to extend pledges over whatever length of time worked best for them. We eliminated timeframe as an objection to giving or as a reason for giving less. And yes, in a few cases we had to take out a bridge loan to pay some ongoing capital expenses while we waited for pledges to be fulfilled. But because of our flexibility, we always received considerably more money overall. By being willing to wait, we always came out ahead.
A limit on the time donors have to fulfill pledges runs a high risk of smaller gifts and fewer donors, and that can result in the need to borrow even more money to complete a capital project than would be required to bridge the time between project completion and pledge fulfillment.
Chances Are You’ll Get the Money Earlier Anyway
My experience with capital campaign pledges has been that a very high percent of the pledges are in fact paid earlier than the donors initially scheduled—sometimes much earlier. In the case of the ten-year pledge mentioned above, it turned out the donor paid in full after only five years.
While you can structure, suggest, even impose what you want them to do, donors in the end will make the decision that is best for them. It’s their money to give when they want to give it. Refuse to accept this and you may lose.