December 17, 2016

Getting Ready for a Capital Campaign

Capital campaigns are the pinnacle of fundraising. There is an enormous amount of complexity and preparation involved with conducting a successful capital campaign, and it should not be taken lightly.

Before embarking on a capital campaign, it pays to have a well-maintained donor database and study it carefully. How many donors does your organization consider to be major donors? Aside from major gifts, how many donors have given three years, five years, or even ten years in a row? What are the average gift amounts your organization receives? How many donors have a cumulative life-time giving total of $1,000, $10,000, or $20,000? How many individuals who have ever given to the organization are in the database with good contact information? All of these are key data points that will help determine if the stated goal of your capital campaign is even a possibility.

While it may be the case that a high-profile capital campaign could attract new potential donors, this is a strategy fraught with risks. Typically, a major gift is not the first gift a donor will make to an organization, and generally past major gift donors are the best prospective donors for future major gifts. Yes, it is possible to achieve a capital campaign goal by bringing in numerous new major donors, but it will be absolutely critical to work with a network of dedicated fundraising volunteers. The organization on its own won’t be able to achieve its goal if a large number of as-of-yet unaffiliated major gift prospects are required.

After assessing the internal donor pool, it often pays to perform a wealth screening on the entire database of current and potential donors. There are numerous professional wealth screening services available. The website of the Association of Prospect Researcher for Advancement or the Association of Fundraising Professionals will have a list of companies that offer these types of services. That said, wealth screening services are not cheap.

Capital campaigns are one of those cases where the saying “you need to spend money to make money” holds absolutely true. The up-front cost of a capital campaign can be quite substantial, especially for smaller nonprofits with an already tight budget. If this is the case for your organization, it may be worthwhile to seek a capacity building foundation grant first before fully committing to the rigors and expenses of a capital campaign.

The next phase of the capital campaign planning phase is a feasibility study. Select a handful of donors and community members (about two to three dozen), and ask them questions about the organization and the campaign.

  • What do they think of the mission of the organization?
  • Do they believe the organization serves an important need in the community?
  • Are they aware of the services the organization provides and the people in the community it serves?
  • How do they feel about the need for the proposed campaign?
  • How do they feel about the amount of funding the organization is trying to raise?
  • Do they have any questions or concerns about the project, the finances, or the leadership of the organization?
  • Are there other capital campaigns currently happening in the community that might make it more difficult for this organization to successfully raise the required funds?
  • Would they consider supporting the campaign (note: this is not a solicitation visit, and will not be followed-up with a request for a gift during this meeting)?
  • Are there other individuals the person interviewed would suggest to the organization to speak with about the campaign?

A feasibility study is an ideal activity to engage an independent consulting firm, because interviewees may be more inclined to give frank and honest answers to a third party than they would if the Executive Director, a board member, or other respected community leader would be sitting in front of them. The consultant will then compile the responses and share them with the Executive Director, the board of directors, and other internal stakeholders. Any potential objections and concerns should be honestly and openly discussed. If the preliminary assessment reveals that it may be a challenge to raise significant gifts at the higher giving levels, the overall goal or the timeline for the campaign should be re-evaluated.

If all the initial planning steps indicate that the timing, the time table, and the overall goal for the capital campaign are on track, the next step is to establish a campaign steering committee. The campaign steering committee will be a mix of campaign volunteers, board members, and executive staff of the organization. Key positions of the campaign steering committee should be filled by volunteers with the ability and capacity to make major gifts who also have the connections to other high net worth individuals. In addition to a campaign chair (and possibly a campaign co-chair), the steering committee needs to appoint committee chairs for the various giving segments (for example gifts of $100,000 and up, gifts of $50,000 and up, gifts of $10,000 and up, etc.), and committee chairs for any special events done in the context of the campaign.

With the steering committee in place and the collateral and communication pieces developed, the role of the steering committee shifts to volunteer recruitment and volunteer training. The volunteer training itself will focus on a review of the campaign case, the communication pieces on hand, and practice runs of one-on-one gift solicitations.

All of this work is typically done well in advance of any public announcement of the capital campaign. In addition, capital campaigns generally don’t go public until about 50% of the goal has been raised or secured through firm commitments. Some additional guidelines to assist with the planning of a capital campaign are:

  • The lead gift will generally come in between 15% and 25% of the goal.
  • About 80% of the overall campaign goal will come from 20% of all donors.
  • For each gift, your organization needs to identify three to five potential donors. In this case, potential or “qualified” donors means they have been identified through the database, the wealth screening process, and confirmed with fundraising campaign volunteers. Unless they have a relationship with you, Bill Gates, Warren Buffett, and Oprah Winfrey do not belong on this list.
  • The campaign will need to identify more donors at the upper giving levels. As you work down the list, fewer prospects are needed because some people who declined to make a gift at the higher level may end up committing to smaller gifts at lower giving tiers.

Capital campaigns have the potential to significantly advance the mission of an organization, but they only succeed if mission, message, and strategic plan are in absolute alignment. The more an organization invests in the early planning stages, the greater the possibility of success for its capital campaign.

About Marc Huber

Marc Huber is a fundraising professional with over seventeen years of experience, including strategic messaging, board development, annual giving, capital campaigns, and volunteer consultation and training. He's also the author of The Fundraising Co-Pilot.

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