There are several things to take into consideration when planning for a capital campaign. Constructing a new facility is a difficult task for any organization, it goes without saying that major donors and Board members should be in full support. However, it is outside the organization where the success of a capital campaign will be determined. Planning for success requires interviewing key community stakeholders, I recommend a targeted group between of 40-60 people, depending on size and scope of the project. This interview process will provide the information needed to decide whether or not an organization is ready. Being financially strong does not always insure a successful campaign, other factors come into play when physically growing an organization.
All capital campaigns requires an organization to leverage its strengths and overcome some challenges. The most common obstacles for a capital campaign include; donor education and giving potential, organizational leadership, internal readiness, economic climate and timing, and community support. A feasibility planning study will detail any challenges and positives of an organization through the remarks of the targeted interviews. If there is a “no go” determination of a capital project, the planning study should make recommendations to the organization on how to improve their “case for support” and identify the areas where improvement is needed.
A well researched feasibility planning study seeks to determine the organization’s readiness to conduct the capital campaign and the communities receptiveness for such an effort. Primary goals of a feasibility planning study should include:
- To evaluate the public’s perception of the need for such a project
- To establish an achievable goal for the project based on the responses to the study, the community’s perceived need, and the economic climate of the community
- To establish a baseline of the community’s image of the organization and it’s leadership
- To gather as much information as possible concerning the communities identification of its leadership (Executive & Board leadership)
- To determine the campaign’s chances for success
- To determines the public’s awareness of the project
- To determine what corporations, businesses, and philanthropic individuals necessary to support the campaign
Two important conclusions of a feasibility study are identifying the outstanding community leaders from outside the Board of Directors to be included on the capital campaign steering committee and which leading philanthropist in the area will the organization be successful in securing a leadership gift from. No matter what target amount is determined through the study if these two pieces are missing there is little chance an organization will reach its campaign goal.
A comprehensive marketing and public relations plan should be put into place using the results of the feasibility planning study that reflect specific goals and objectives of the organization. Organizational leadership will determine the methods used to measure success at the outset and be included in the campaign action plan. Educating the public and working with community groups is essential in the beginning of any campaign to rally support for addressing “the need” of a new facility and expanded services.
When it is all said and done the kind of fundraising an organization takes on is not the most important key to success- people are. People deeply committed to the organization and who will work enthusiastically on its behalf and whole heartedly believe in its impact on their community.
Capital campaigns are my favorite topic concerning development and fundraising for several reasons, but mainly because of the excitement that surrounds an organization after deciding to take on a capital project. Capital campaigns are an opportunity for a nonprofit to introduce their mission to new donors while creating a tremendous amount of awareness for the organization. Campaigns usually bring in a lot of donors not normally connected to an organization who like to give to special initiatives or building projects. I have talked about the essential elements of a campaign that need to be in place before one can begin, now I want to dive into three different types of campaigns a nonprofit can consider when growing their organization. Capital campaigns are very exciting opportunities to expand the reach, effectiveness, and impact of an organization within a community. Understanding which type of campaign is right for your organization is the key, I will discuss three; brick & mortar, endowment, and combined campaigns.
Brick and Mortar Campaigns are usually what people mean when they talk capital campaigns. They are campaigns that fund capital improvements to an existing space or the construction cost to build a new facility and furnish it. Many donors like this type of campaign because it involves creation of something new (some legacy building involved as well). Capital campaigns bring in what I like to call “sexy dollars,” or funds people like to give in order to drive by a building one day and say to the person next to them “I helped build that.” Brick and Mortar Campaigns should only be taken into consideration after completion of a feasibility study or when capacity has been reached in current facilities and a new building is the next stage of your strategic plan.
Endowment Campaigns are designed around establishing or continuing to build an endowment. A growing organization might start an endowment campaign before a capital campaign to prepare for the increased operational cost a new building will have. Endowments funds provide donors with a variety of ways to give (planned gifts, deferred gifts, and cash donations). As an endowment grows so does the amount of investment income available to the nonprofit (unrestricted funds). A healthy endowment can take on the additional operational cost a growing organization has those first few years in a new facility (ie. staff, equipment, occupational cost). This allows the nonprofit’s leadership time to grow annual funding efforts to where they need to be in order to support the new size of the organization.
Combined Campaigns (combining a Brick-and-Mortar campaign with an endowment) have been more popular with nonprofits over the last 10 years. Endowments in this type of campaign can be used to solely provide maintenance for a new building or to off set the increased operational cost a new facility will have on an organization. Either of these ways is attractive for donors because they answer questions concerning sustainability, which many donors have anytime an organization they support decides to grow.
Word of Warning: It is important for nonprofits big and small to realize that “building” is not always the answer to tackling organizational growth. A new facility might sound like a great idea to you, but donors and supporters may have a different opinion. Just because an organization grows does not always mean its annual funding efforts will grow with it. A planning process, which includes key stakeholders and community imput, is important for any transition concerning an organization’s physical size or scope of services.
In my experience make your capital campaign a multi-phase operation where you ask for donors to pledge their money over a specific period of time (2-3 years). This provides potential donors with enough time to give an amount they feel most comfortable with or desire. Starting construction or site work on a new property usually requires a large amount of up front funding, so make sure at least 75% (or more) of the funds are collected before construction begins (or within 6 months of final collection of all pledges).
Capital projects should be considered only when an organization’s current facilities, equipment/technology, or endowment funds are no longer adequate for the populations served or the programs provided. Build only when the organization is ready and when questions of sustainability have been answered. A successful campaign can allow an organization a chance to be viable and beneficial part of a community for a long time.
Nonprofit Boards need direction and coaching when considering taking on a capital campaign. Bottom line here is a capital campaign will be the toughest undertaking your agency will ever go through and the first three years after your building is built- will be the next toughest.
I just recently spoke to a Board about their desire to start a capital campaign and the point I stressed the most was the need for an increase in Board involvement. Without a Board willing, able, and ready to commit a tremendous amount of time and resources- taking on a capital campaign will be an exhausting uphill battle. There must be a steady build up to building something sustainable and certain steps must be recognized in the process.
Step 1: A feasibility study must be performed. Never start a capital campaign without undertaking this process. Too many times I have seen campaigns start with an incredibly high target goal announced and you can tell the organization greatly overestimated their worth in the community. Use this process to determine how your services are valued, how your brand and reputation are perceived, and if your mission is well-known. Ask these questions to the same folks you hope to be asking for funding, including; Board members, past donors, corporate and civic leaders, and even the populations you serve.
Look at the organizations around you, about the same size financially, to see what their campaign goals were and if they were met. Always understand that a new building will require an increase in operational dollars raised, so have an idea what that new goal will be each year. For a successful transition to a new building “sustainability” should be your Board’s biggest concern and a proactive resource development plan should be in place before you move into a new building.
Step 2: 100% Board support and giving. This is super important, why? Because everyone wants to see this. Most foundations and matching grant opportunities will not contribute if your Board does not give at 100%- and really why should they? Even more important than making sure everyone on the Board gives something they need to give at a level beyond any previous donation. Boards must do more than just WANT a new building or expect an Executive Director to pull one out of a hat. Boards need to show both current donors and potential major gift donors that they mean business.
Step 3: Create a capital campaign committee. You need people who no one in your community can say “no” to. I would recommend only a couple of agency Board members serve on this group for continuity in leadership and consistency of message. However, this group must be made up of “heavy hitters” in your community. Rome was not built in a day, but if it would have had a strong capital campaign committee- who knows? I suggest a committee of 10-15 strong philanthropic individuals with big names and a long reach of influence. Even if these folks have no prior involvement, they are usually intrigued enough in the organization to be a part of it in its most publicized hour (just being honest here).
Step 4: Market the campaign to the world. People like to be part of the process- so let them participate. Service groups (Kiwanis & Rotary), Chamber of Commerce, small businesses groups, and philanthropic individuals will contribute many times because of “who else” is involved. Let them know, publicize the vision and the effort being taken by the capital campaign committee- let the community see their leaders in action.
Remember: In a capital campaign “action” without proper research and planning is a disaster waiting to happen. Keep your growth realistic to what your organizational fundraising efforts (and Board) can financially support and sustain for years to come. Learn the process and appreciate what it can mean for your organization and the populations that rely on your services everyday.