Monday, January 24, 2011

How A Capital Campaign Works

As stated in my previous instructional post, How A Capital Campaign Is Different From Most Other Fundraising Methods, a capital campaign is a fundraising campaign that, in a pre-determined amount of specific (finite) time, raises a very large amount of capital is raised usually to build or buy a building for the organization, or to begin an endowment fund, or to fund a combination of these two assets for the nonprofit.

In this post, I am going to discuss specifics.

A capital campaign is one of maybe only two or three if not the most money the nonprofit will raise in one fundraising campaign during the history of the organization.  As such, it is a very serious but also doable endeavor.  A capital campaign can take, in total, anywhere from three to ten years to conduct.  The capital campaign's goal should be a single, clear, easy to understand, finite goal.

A nonprofit gains a lot of good from having done a capital campaign.  At its completion, the capital campaign provides more than just the sum of money raised and the asset this money affords.  A capital campaign transforms a nonprofit by raising the organization's bar (including among the volunteers and staff), and creates but also leaves, afterward, a greater level of fundraising capability.  A nonprofit is a different organization, after a capital campaign, compared to what it was before the campaign begins.  The organization's leadership, after a capital campaign, will within the community have conducted much of the fundraising and will be more experienced, clearer in their message to the community about the organization (also called an elevator speech), and each leader will be accomplished. A nonprofit will have typically completely reviewed, analyzed, and updated, affirmed, and if necessary calibrated the organization's core message, identity, values, and reason for operating (i.e. the mission statement) prior to launching the campaign, to be certain the nonprofit, its leadership, and its volunteers and staff are clear about what the organization is doing, for whom, why, and how so that the organization's community is told the same, accurate, and clear message before, during,and even after the capital campaign.  The capital campaign is usually not initiated before the nonprofit conducts a feasibility study to be certain of what the core donors and the community's potential to fund the nonprofit's goal actually is, given the state of the local economy, the community's perception of the nonprofit itself, and more.  The organization's overall fundraising and perhaps also its programs and services (and they are conducted) will be reviewed, analyzed, and if necessary improved before a capital campaign launches.  There are aspects to raising funds in a capital campaign that will spill into all of the organization's fundraising that will strengthen and improve its fundraising outcomes going forward.  I'll discuss these more, in a moment.  Similarly, the organization's public relations, marketing, and social media campaigns will be revamped prior to a capital campaign, leaving the organization, afterward, very capable and perhaps more practiced in these three critical ways to create more and new support.  At the end of a capital campaign, the nonprofit will have achieved its unprecedented fundraising goal, expanded how much and from whom it can raise funds from in the future, and leaves the leaders, volunteers, and staff who were active participants informed, talented, and experienced fundraisers.  A capital campaign transforms a nonprofit into a key fundraising, operations, and successful outcomes-based machine inside, and out, including within the organization's community.

As I said, the capital campaign also transforms a nonprofit' overall fundraising, concurrently with the capital campaign effort, and after the capital campaign is done, through the prep, training, and strategy necessary to run a successful capital campaign.  An organization's leaders, volunteers, and staff can easily take the strategies, best practices, methods, and skills learned during a major fundraising campaign and apply it to all other fundraising, afterward.

A capital campaign typically involves (from initiation to completion) five to six phases.  As stated, these phases occur, typically, anywhere from three to ten years.  The phases of a capital campaign are:

Fact Finding and Preparation - The organization's leadership and key volunteers and staff determine actuals about the organization, how its perceived in the community, about the goal of the capital campaign and how the community would (or wouldn't) support it (and why), how a capital campaign is run and what the current professional nonprofit best practices are to conduct it (internally and when meeting with donors), and internal operations are reviewed, updated, and improved as necessary such as all fundraising, marketing, public relations, social media relations, programs' and services' planning, delivery, and outcomes, everyone involved learns what a capital campaign is, what their roll and expected accomplishments will be and is trained how to do their work to achieve those goals, and more;

Planning - The capital campaign, its goal, its expected outcomes, the: road map, business plan, fundraising plan, marketing and public relations plan, different assignments, action items, donor and donations planning, trainings, plus all other usual organizational operations that must be run concurrently with the capital campaign, recruitment, marketing materials, organizational and also campaign messages, and more are planned, reviewed, re-drafted, and reviewed again until finally the campaign begins to be staged;

Initial Fundraising - Usually involves raising support (capital, assets, pledges, and more) from major donors and acquiring special gifts.  These contributions are what's called lead or leadership donations as the organization can point to this acquired support once the entire capital campaign fundraising gets underway.  These contributions are among the initial fundraising because others, when they are asked to give later, will feel more confident giving and giving in larger increments, once all capital campaign fundraising is underway, knowing who (or what foundations or trusts, etc.) gave lead donations, already, during the beginning of this particular capital campaign and in what amounts (IF the leader donor has stated it is OK for the organization to share that information publicly - and some will as this is not uncommon);

General Fundraising - General donations (not necessarily in larger increments), and finally all levels of donors are engaged specifically for the capital campaign;

Conclusion - Pledges are paid out, grants are scheduled, and all work that required the capital campaign is underway (i.e. an endowment, building or buying a building, or both);

Wrap - All efforts, work, outcomes, and lessons learned are objectively, ethically, and anonymously gathered, tabulated, and reviewed by key staff, volunteers, and leaders.  Improvements, clarifications, and the public wrap and thank you is planned and initiated.  The most important thing that a nonprofit acquires from a capital campaign is not just achieving its campaign goal, but it now has an operating, efficient, and effective relationship with its community.  Its goal must be to manage that relationship such that it uses the new found leverage to the best for the beneficiaries of the organization's mission statement, and also so that it retains these investors, partners, and other types of supporters of the organization and its work.

Grant donors, in particular, that the nonprofit will apply to for capital grants will want to see that the entire campaign, its teams, and its intended outcome are well trained and thought out, are reaching and inspiring constituents, and that there are planned benchmarks, outcomes, and evaluations so that intended outcomes can be compared to actual outcomes, lessons can be learned, and improvements will be made (in the organization resulting in the same in the community).

The success of the capital campaign will depend on everyone involved conducting their role and achieving their benchmarks and role's goals.  The organization's leadership, as its leaders are its public face, the people responsible for networking in the community on the organization's behalf (always explaining its: mission, beneficiaries, programs and services, successes, achievements, accolades, current goals, and why the organization is needed), and the most responsible for the organization's achievements, will (not surprisingly) be the most key people involved in the capital campaign.  For this reason, the board and any related committees must be well thought out, proactively recruited for, and well informed, trained, and rehearsed before launching a capital campaign.

An organization's strategy is the over-arching power behind any successful capital campaign.  If there is no clearly defined strategy then the nonprofit's planning, effort, and results may be lack-luster (at the worst).  A nonprofit must clarify and then reveal to its own teams and also to its community why it and its work in the community are needed, what needs it meets now, its successes and achievements, that it is financially stable and viable, who the organization benefits and how, what the organization's current and future goals are and why, how the public can get involved (in all ways - not just donations, but volunteering, community partners, etc.), and all of this should be confidence building, compelling, and accurate.  If an organization's strategy is not to get its name and achievements repeated in its community, or it is not ready to assert that it is the most efficient, capable, and viable organization to do the work it's doing, then it is not ready to launch a capital campaign.


Unknown said...

I find this post very inspiring. It really gives me insite into this whole capital campaign concept. I really had some confusion initially understanding how it worked.

Mary said...

Thank you for this detailed post on the capital campaign. I have a question for you- Would you consider a truck and vehicle campaign of $2M capital or capacity building?

Arlene M. Spencer said...

You are so welcome and thank you for reading and for commenting.

My answer is it depends. In what capacities will the nonprofit that will own the truck and vehicle(s) use them? In other words, will these vehicles provide services directly related to the organization's mission (programs) or will they be providing transportation so the organization my operate (operations)?

For example, are these vehicles shuttling the organization's clientele who cannot afford transportation by virtue of being low income, to the nonprofit's programs or to acquire the organization's services? If so, they may be part of a capital campaign.

Or are the vehicles being used to enable board members, the executive director, staff, or volunteers (in an operations effort) to do work that focuses on enabling the organization to run (i.e. fundraising, organizational oversight, resource management, volunteer management, etc.)?

I hope that my answer is helpful. I wish you the best in your endeavor!