Sunday, January 16, 2011

How A Capital Campaign Is Different From Most Other Fundraising Methods

Is your nonprofit organization considering or planning to build or buy a building?  If so, as you know, this is one of the most expensive if not the most expensive goals that a nonprofit can set for itself.  Having said that, it is most certainly not an unusual goal to achieve successfully, if a nonprofit lays the proper groundwork, implements a viable capital campaign, and runs an effective and efficient campaign to raise the funds for the new building.

Capital campaigns are, as they say, "their own animals".  This means that capital campaigns, among all of the fundraising conducted in the nonprofit world, are unique.  As a capital campaign is still fundraising work, there is of course cross over in all fundraising in the basic principles such as: fundraising ethics and professionalism, donor care, managing and track donations and donors, overseeing the entire campaign for effectiveness and success, efficiency, and to engender a feeling between your organization and each donor of partnership, gratitude, and mutual achievement for the best of the community.  Where capital campaigns differ from any other type of fundraising campaign or fundraising method is most noticeably how much money is usually needed to be raised in order for the goal of building or buying a new building, or to raise funds for an endowment fund.

Using building as an example, if, for instance, a southern Californian nonprofit is going to build in downtown Los Angeles; or if a Washington state nonprofit in Central Washington is going to buy a building in smaller Ellensburg, Washington; the two buildings' costs are going to be different, but the point is that relative to the nonprofit organization (and given each locale's regional economy) they are each respectively enormous financial undertakings, in terms of the capital campaign.  One building may cost its organization $4 million and the organization's building expense may be $800,000 but neither amount (especially relative to each organization's respective local economy) is small or inconsequential.

Capital campaigns differ from any other type of fundraising in other ways, as well:

__ The nonprofit will want to conduct and oversee the entire fundraising campaign, itself (even with the hired effort of a consultant, this type of fundraising campaign should be run 'in house' because it is raising such a large amount of money and potential community buy- in and recruiting all kinds of larger increment donors.  No nonprofit should ever forgo the opportunity to develop and raise more support from any donor who gives once (let alone a larger increment donor)).

__ The nonprofit usually has no in-house expert on staff or even successful capital campaign fundraiser on its board, though sometimes a board member or two are recruited for board vacancies specifically because of their success in recent and excellent (ethical, professional, efficient) capital campaigns completed by other nonprofit organizations (in the region or nearby).  This campaign, by its very nature, requires that at least one or two people on its committee truly have successful capital campaign experiences among their credentials.  As already indicated, a nonprofit most certainly can also hire a talented, successful capital campaign consultant, too.  Similarly, (whether hiring a consultant or not) most everyone on the capital campaign committee (and also pertinent volunteers and staff) will want to learn about how a capital campaign is conducted according to professional nonprofit best practices, today, in order to ensure the highest likelihood for success.

__ There is no way to avoid the usually long and detailed planning period involved in such a large increment fundraising campaign, in particularly necessary for a capital campaign.  Any fundraising requires advanced planning (including a learning curve among the nonprofit's leadership if a fundraising method or type of campaign is new to it (usually the case for a capital campaign)).  Also, all fundraising requires some initial planning and implementation period.  No fundraising that is new to any nonprofit can 'just be initiated' one day, if success and efficiency is seriously expected.  Also, no fundraising new to any nonprofit raises more money than the specific fundraiser costs, in its first year (usually).  Depending on the fundraising method or campaign being discusses, usually it takes 2 - 5 years of repeating a single fundraiser annually for a nonprofit to make more net, than it costs to produce.  This is normal.  A capital campaign, though it occurs over years of time usually due to planning and initiating the campaign, must make more money than is spent on the campaign once the campaign is begun.  This expectation is generally unusual in most all other nonprofit fundraising.

__ All other normal annual fundraising and fundraising efforts, during the entire life of the capital campaign (which, again, is usually years) must also concurrently be successful and grow (as they always should) year to year.  So, all total fundraising to be conducted over the duration of each year, including the capital campaign, must be planned out very thoughtfully and effectively.  If, for instance, you have a few programs that are funded annually by a small group of your organization's major donors, you don't want the capital campaign committee to 'usurp' those donors.  Instead, you want their fundraising and the rest of all of the organization's fundraising to be planned out (with each campaign, its expected outcomes, and the financial goals for each) to be coordinated, planned and organized in advance, and you want everyone (and I mean everyone) involved in any and all fundraising efforts for each year to be clear about the coordination, plan, and goals for each and all fundraising for each year, all years.  If Mrs. Takahashi is a major donor and has given $25,000 annually to partially fund the children's rehabilitation program - and she suddenly gets correspondence or requests from the capital campaign committee (something she's never given to before nor indicated she's interested in funding, in addition to the children's rehab program, this might be confusing at a minimum, but perhaps even seem worse, to her).  Never put any donor (major or otherwise) in a position of having to get your organization's volunteers', staff, or committees' efforts or goals organized.  You absolutely want to keep your organization's relationship with Mrs. Takahasi mutually comfortable, if you want to continue to get her assistance in funding a regular program.

__ Though, if run well, the capital campaign will net a considerable and much larger increment amount of money compared to how much it will cost to run; a capital campaign is absolutely one of the most expensive fundraising campaigns to conduct.  Therefore, everyone in a leadership position (volunteer or staff) must absolutely be clear and fully capable in a few skills: budget design; budget oversight; modern, professional, fundraising methods and their best practices (because best practices are such due to their high level of success and efficiency rates); communicating and listening; viewing the mission and current organizational goals as the guiding principles directing all decision making; program planning (including staffing, time allocation, setting anticipated outcomes, including evaluations, budgeting, oversight for reporting, compliance, efficiency, and effectiveness;etc.); public relations; marketing; major donor asks; networking in the community; and more.  Larger increment fundraising is traditionally a nonprofit organization's responsibility because face to face asks are one of the best methods to raise large increment single donations; and having no less than the organization's leaders doing the asking is a 'peer to peer' relationship builder.  Also, most nonprofit leaders donate to the organization that they work for and it is a fundamental fundraising best practice that leaders who have given, themselves, have an easier time (after training and rehearsal, as always) asking major donors to give, also.  Leaders are not just conducting the usual organizational oversight, planning and working to develop new organizational goals, and doing their usual fundraising duties.  During a capital campaign, at least some of the organization's leaders will have new additional duties and responsibilities - but again, the pay off is exceptional for the organization (and for the community).

__ The various fundraising methods that will be necessary to raise such a large amount for the nonprofit, necessary by any organization conducting a capital campaign, may require the organization's fundraising volunteers and staff to learn, have to be successful in fundraising methods they've never done, and other additional and new professional challenges.  Diversification is the greatest defense against a bad economy, exposing the organization to deficits or loss in the capital campaign, and over-tapping one or two sources of support in an organization's community.  So, a more successful capital campaign will involve a few different types of methods to raise funds, such as: face to face major donor meetings, grant writing, sometimes bequests, new and unique individual appeal campaigns, sponsor drives, new and unique special events, and more.  Being certain to involve at least a few different fundraising methods makes it certain that no organization loses because it expected too much from one type of supporter (i.e. a grant donor like a foundation).  Also, keeping in mind all other usual annual organizational fundraising will be going on concurrent to the capital campaign, diversifying the fundraising methods used to raise money for the capital campaign also is some insurance against over tapping established long time donors to an organization.

__ Other factors: most certainly the national and regional (local) economies, the organization's reputation, the organization's success rate and how well the community knows this, whether the community even knows about the organization's capital campaign and why it is necessary (which should be compelling), the organization's potential for future success for the community it serves, how much networking the organization's leadership has done and will do among all of the community's various types of donors (grant donors, individual donors, corporate sponsors, etc.), whether other similar organizations or other organizations in a small community are also conducting capital (or larger increment) fundraising campaigns at the same time, and more can STRONGLY effect the potential or outcome of a capital campaign.  For this reason, many smart nonprofits' leaders conduct a feasibility assessment or needs assessment to determine whether the time and climate is strong enough for the organization to be successful at a capital campaign.  these kinds of studies can also indicate what work it has to do before it can successfully raise such a large single amount from its community.  From a feasibility assessment, an organization can be informed one of the following: there's a highly likelihood for a successful capital campaign, the time is not right now (for x, y, and z reasons) but in two years the outcome looks more likely, and other potential findings.  A nonprofit can hire a professional fundraising feasibility assessment consultant) to create, disseminate, tabulate, and make recommendations based on the study's findings.  These are wise studies to conduct before initiating a large campaign of any kind, but especially a capital campaign, because there is almost no nonprofit (no matter how well run, how well marketed in its community, how successful) that can simply begin planning a capital campaign and easily launch the campaign without having some work to do to shore up its community's misconceptions, lack of knowledge about the organization and its work, or any other public relations situation.

Capital campaigns are unusual forms of fundraising for a nonprofit to conduct as usually most organizations do not need to build or buy a building but once or maybe twice in the organization's lifetime.  In other words, it's not something any organization does regularly terribly often.  Also, capital campaigns (while very capable of being successful when conducted well) are ventures to raise exceptionally large amounts of money in a single time and finite time frame.  While this time frame should be realistic, and so is usually long, it doesn't make the effort any less intimidating, arduous, or exceptional.  Having said this, as is always the case, simply educating yourself and everyone who will in any way be involved about what a capital campaign is, how a successful one is run today, training everyone involved, and planning and then informing everyone involved in the organization what the plan is and how all efforts will work along with the capital campaign, itself, is a perfectly fine way to get the successful capital campaign going.

In my next instructional post, see How A Capital Campaign Works.

No comments: