First Steps to a Capital Campaign

A “capital” campaign is a two-to-five year effort to raise money for a one time need over and above the annual budget. They are usually used to buy, build or refurbish a building, or increasingly to begin an endowment.

Capital campaigns allow donors to pledge a large amount and pay it off over several years. Donors are explicitly asked not to decrease their annual gift in order to make a capital gift, which are usually so large that the donor must dip into savings (stocks, property, art). Capital campaigns should be aimed at that part of your donor base who may own property or securities, or corporations, government, foundations, or religious institutions who might not support your annual program work.

There also are individuals who give to capital campaigns but not annual appeals. For example, an attorney who did a lawsuit pro bono for a small community organization in Alabama gave them $50 once after that, but did not respond to their annual appeals. The group decided to buy a building and went to her to make a lead gift of $20,000. She admired their boldness in asking and gave $10,000 plus an additional $10,000 as a challenge to be met by other lawyers, but told the group only to ask her for special projects, not every year.

Where to Start

First, the board of directors must fully support the idea of conducting a capital campaign, which is a lot of extra work for everyone, and may require an initial outlay of money. Key volunteers who are not on the board and long time major donors should also be consulted. There are hundreds of buildings in the United States that are underutilized because key people in the organization did not like the idea of building a new building or did not like the proposed use of it, and did not have a forum to air their complaints. Some campaigns have been called off half way because so many volunteers and donors had left the organization in protest of doing the campaign at all. A capital campaign is very visible, and all the people who are important to your organization need to feel good when they see or read about the campaign.

How Much?

After there is general agreement, set a pricetag. Like in a fancy restaurant, where the true cost of the meal will be double the entree (with tip, dessert, drinks), the true cost of a campaign is not the cost of the project itself. One group learned this the hard way. They found a building that suited them for $250,000, and launched a campaign for $250,000. The true cost of the campaign was $310,000 with insurance, furnishings, cost of the campaign itself, closing costs and so on. The organization spent two years climbing out of a deficit caused by its lack of planning.

The following items need to be added in to any actual cost of building, buying, or starting an endowment: fundraising materials; cost of staff time; office extras; building project extras like insurance, building permits, design costs, and estimates for cost overruns or unforeseen delays; and debt service on bridge loans. Add 10-12 percent for people who pledge but cannot or will not finish paying, or whose stock gift depreciates. Add an additional 5 percent to this total and you have the cost of the campaign.

Your capital campaign goal needs to be at least $100,000. To ask donors to stretch their own giving and to seek donations outside of the immediate “donor family,” it must seem to a prospect that the group cannot get this money simply by asking a few people or writing a grant proposal. For goals under $100,000, run a one-year major gifts campaign instead, or to seek two or three foundation or corporate grants.

Preparing a Case Statement

With the need and cost known and provisionally approved, the organization writes up a case statement for the campaign that focuses on the goal of the campaign alone, and shows how this goal will help the organization meet all its other goals. The case statement implies or overtly states that the work of the group will be greatly enhanced by the addition of whatever the campaign is proposing and will be significantly slowed down or impaired by the lack of whatever is being proposed. The final page of the case statement is the goal displayed as a gift range chart.

A capital campaign gift range chart is much shorter and narrower than an annual campaign chart: 80 percent of the money comes from about 10 percent of the donors. The chart follows this pattern:

1 gift = 15-20 percent or more of goal
2 gifts = 10 percent each or more
4 to 5 gifts = 5 percent each or more…

…then increasing the number of gifts and decreasing the gift size until the goal is reached. Generally, the smallest gift one seeks for a capital campaign is $1000. Figure you will need to speak to four prospects to get one gift.

To decide the timing of the campaign, look at what other capital or intensive fundraising campaigns are going on during the time you’re considering, and assess whether any of your prospects will be key prospects for those groups. Launch your campaign during years when you expect your annual campaign to be doing well.

Measure Twice, Cut Once

Now bring the whole package back to the board, key volunteers and staff for reapproval. When faced with the realities of the money and time involved, they may wish to change their minds, and without full board and staff ownership, the campaign will fail. Taking the time to make sure that everyone understands the implications of the campaign is imperative because once the campaign is launched publicly, it must be seen through the to the end.

This article is adapted from Fundraising for Social Change, which has just been released in a revised and expanded edition. 

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