Some Myths About Capital Campaigns
By David G. Phillips, Custom Development Solutions, Inc. (CDS) on October 4, 2016
As a capital campaign consultant, I have read many books on the subject, attended plenty of seminars and training sessions and I have learned a good bit about what others say is important to the success in planning and managing a capital campaign. Much of it is utopian bunk, delivered by people who really have not run many (or sometimes any) capital campaigns.
First, let me tackle one issue which is the name: Capital Campaign. Many people feel that a capital campaign is only done to raise money for buildings or real property. Nothing is farther from the truth. Capital is simply money. When you need money in a public business, you go to the capital markets. When you need money to run your organization, whether nonprofit or for-profit, you go to the bank for working capital. You can do a capital campaign to find the funds you need to build buildings, create or improve programming or to retire debt or build an endowment fund.
Your charitable organization can run a capital campaign at any time; and the best organizations are always running one, finishing one and/or starting a new one. Fees, tuition, dues, ticket sales or whatever revenue you earn alone simply will not drive a world class organization to the pinnacle. To ensure you have the funding to do extraordinary things, you have to map out a plan to raise it from donors who share your vision.
Yet for so many institutions, it seems such a daunting task—especially if you have never done one before. Where do you start? What do you need to do to be prepared? Should we build a better board, or try to build our annual giving program? The answer to these two questions is generally “no,” because those two activities may go well and you might have some success, but it delays you a year or two and that time is hard to retrieve.
Often, people read a book, or attend a seminar, and the speaker tells them they have to have the perfect set of circumstances to proceed. They advocate for having:
- One of the most prominent people in town to chair the campaign. Prominent in the business and social community. A person to whom nobody wants to say ‘no.’
- A principal donor who is prepared to give you 25% of your overall campaign goal to serve as your Lead Gift.
- Many established major donors who have been giving consistently to your annual fund campaign, and who have a deep and lasting relationship with the institution.
- A committed board which is unanimously and unambiguously in favor of the campaign’s case for support and anxious to give leadership and large gifts.
- A professional staff who is committed to advancing the mission through this particular project.
- Promising economic conditions and a favorable economic climate.
All of these conditions would be welcome and will help improve your chances to succeed. But, if you wait for all of these stars to align, you are doing yourself and your organization a terrible injustice. You will be in a permanent holding pattern, planning to plan and planning to improve your plan, without ever launching your plan into motion and adapting to the conditions you meet once you begin.
Benefits of Mounting a Capital Campaign
Esprit de corps
Every organization can achieve and succeed on some level, so it is more a matter of working to assess your potential carefully and then taking massive and determined action towards your goals. Every organization has the potential to raise more money through a capital campaign, but it has to be the primary focus of the agency. It must become, for a time, the primary institutional priority for the board, the professional staff and the volunteers. By coordinating this campaign to receive everyone’s best efforts you can accomplish much more together than you could working each by yourselves. This is why a capital campaign is so much more effective than simply trying to improve the annual fund over a period of years.
Compounding Effect of 5 Year Pledges/More Calls to find more donors
By ‘circling the wagons’ and giving a tireless and passionate effort, you can do more, faster and make more progress than you could with each person in the organization plodding along. Furthermore, you have the opportunity to ask for long-term pledges of three to five years.
For example: In most annual campaigns, you have the same board/staff members approaching the same donors—always hoping they don’t get bored with the cause, get involved in other causes or simply move away or fall ill and die. Perhaps you can muster the troops to see 50 people each year. You have 50 reliable donors each year, and it never seems to grow.
Because the campaign is a major initiative, and you form a campaign executive committee of 8-15 prominent leaders to carry your standard for that year, you might be able to make 125 calls that year, securing 100 five year pledges and another 25 one time gifts. If, in each of the next four years, you continue to send board and staff out to see another 50 prospects, you will have 325 regular recurring donors at the end of year five, rather than the 50 with which you began. And, in year four, you can return to the 100 donors who made pledges to the campaign in year one and ask them to consider continuing to make their annual commitment to the organization which has become so much more effective because of their gifts.
The Big Effect of Big Vision
As you look for significant and prominent leaders and donors to serve as leaders in your campaign efforts, you will find that big prospects are drawn to big dreams and substantial vision. Remember the quote attributed to Daniel Burnham: “Make no small plans for they have no power to stir men’s blood.”
When you seek the help of the giants in any industry, you have to capture their vision. They don’t want to be involved in running the annual fund, because that seems like ‘peanuts’ to them. They want to be involved in the visionary stuff of ‘heavy lifting’ and life changing opportunities that will test their mettle and also draw other broad shouldered and financially powerful and influential people to the table. Big vision attracts big pocketbooks, which usually come with big egos, who want to work with other big egos. An ambitious capital campaign has the potential to draw these types of influent and affluent people onto the leadership team.
During the capital campaign, professional staff and board members can deepen relationships with these leaders and encourage them to get further involved in the next major initiative and to stay engaged with the organization in more significant ways. You begin to get access to their friends, and the friends of their friends, who all tend to have the same characteristics of affluence and influence. You are building for a stronger tomorrow and a bigger campaign the next time—much bigger!
David G. Phillips is President/CEO of Custom Development Solutions, Inc. (CDS), a fundraising consulting firm based in Charleston, SC. David has over 35 years of experience and has personally run campaigns which have raised over $750 million for nonprofits all over the world. CDS professionals have raised over $2.5 billion worldwide. He has written, taught and lectured extensively on major gifts fundraising and capital campaigns. Mr. Phillips is on the board of America’s Charities as well as Children’s First and Health First. CLICK HERE if you are seeking capital campaign assistance. You may contact him at: dgp@CDSfunds.com or 800-761-3833.