What You Need to Know to Run a Successful Capital Campaign!
What is a capital campaign?
Capital campaigns are intense fundraising efforts designed to raise a specific amount of money within a defined time period. They typically raise much more than an organization has ever raised in a single campaign and are generally used for construction/renovation, property acquisition, or large equipment purchases. It can also be used for startup funding for new programs and services, or grant, scholarship, and endowment funding.
BEFORE YOU BEGIN (Do you have to?)
Capital campaigns require a COLOSSAL effort, and are not to be undertaken lightly! Ask yourself a few questions before beginning, to ensure that a capital campaign is the right solution for your problem.
What is your project and does it require a capital campaign?
As with any fundraising project, having a clear relationship between the need of the community and the outcome of your project is key. It is important to remember that the capital campaign itself, the fundraising process, is not the project. The project is how the funds will be used to improve your nonprofit’s ability to carry out its mission. Here are some examples:
The rental market is unstable, which is threatening the continuity of services to your community. Your nonprofit would like to transition from property rental to ownership to ensure the longevity of your activities.
Your nonprofit helps reduce the high school dropout rate in an at-risk community, but has not yet been able to support the transition to university. Developing a scholarship program would address this gap.
Do I have the necessary resources?
Throughout a capital campaign, you will need to spend money to make money. Nonprofits invest approximately 10% of their total capital objective in the campaign process. Some of these expenses will pop up right away, before you have received your first donation, so it is important to evaluate the human and financial resources available within your organization before you begin.
It is strongly recommended to conduct a feasibility study before launching your capital campaign. Consider finding funding for this phase of your project!
Depending on the goal of your campaign, other expenses may include:
Hiring a nonprofit consultant and/or additional staff
Grant research and prospect development
Communication expenses
Developing building plans and projections, and other design fees
Contracting technical experts (architects, engineers, financial advisors, etc.)
Community outreach and consultation
Event planning and execution
Additional responsibilities for your Executive Director (and Board of Directors - check out this article to evaluate your board’s risk tolerance!)
PLANNING PHASE
Prove your potential!
Since capital campaigns are larger than an organization's other fundraising efforts, potential funders, especially in the early phases, will probably be skeptical of your nonprofit’s capacity to execute the project. This is especially true if it is your organization’s first capital campaign. You will need proof that the intended outcome is even remotely possible! Some examples might include:
A feasibility study (do it!)
In the case of a renovation project, a deed and mortgage, or written permission from the proprietor if the land is not owned by your nonprofit
Zoning information
Engagement letters from partners
It takes a village.
There will be multiple groups of people needed to work on your capital campaign:
A fundraising team including staff and board members, and potentially volunteers who have connections to donor markets.
A planning and/or steering committee of volunteers to oversee the management of the campaign and to ensure representation of the interests of the community. A technical team such as engineers and architects, in the case of property acquisition, renovation or equipment purchase.
Your teams will help identify the two main elements of your campaign: the timeline and the goal amount!
Practice compelling storytelling.
A case for support is the central argument on which your fundraising will be based. This should be crafted based on the need and solution identified in step one. Flesh out your case for support by defining the project’s:
Values and cause area
Target population
Statement of need
Action plan
Intended outcomes and impact
Partners, if applicable
How to donate
Use these ideas to tell the story of your project in an eye-catching document that makes a request for donation. Try to balance clarity and detail with succinctness, giving enough information to inspire the reader without losing them. Other elements you could include in your document are:
Your nonprofit’s history and successes
Testimonials
Multimedia engagement (images, infographics, links to videos, webpages)
Consider adapting this document for different donor types (size, public vs. private, cause of interest) and creating a sponsorship package for corporate donors.
Help your reader imagine how their gift will be transformed into impact!
Strategize!
Early in your campaign, the major obstacle you will encounter is the reluctance of funders to be the first to support a large project. When your confirmed funding is only a small fraction of your goal, funders will see the remaining funding gap as a liability. How can you convince funders that you will achieve your goal, and that their gift is essential, from the beginning of your campaign?
Utilize warm contacts
It is recommended that capital campaigns go public only when 75% of the budget has been secured. The first half of your campaign should take place between your nonprofit and your prospects (called the “quiet phase” - more on this below). Start your requests with funders and donors who have previously given to your organization, or who have a relationship with a member of your fundraising or planning committee. Your funding gap will be less intimidating to them because of their existing relationship of trust with your nonprofit.
Make sure that their funding guidelines include contributions to capital campaigns - many foundations and corporations will not accept capital projects!
These sollicitations should be highly personalized, and addressed from the person who has the connection with the potential donor, rather than the ED. Consider offering a pledge option, in which a major gift can be paid in installments over the course of several years.
Divide and conquer
As with any fundraising project, one of the first steps is identifying the cause areas your project touches. From there, you will be able to create a list of prospects that have a history of donating in these areas. However, with a capital campaign, you may be able to break your big project down into smaller parts to touch on a wider range of funding areas. For example, will your building have multiple rooms, with different purposes (ex: community kitchen, daycare, classroom)? Could the construction items themselves be divided by subject (ex: green energy or accessible infrastructure)?
Develop a description and budget for your subproject that can accompany your case for support. This will help potential funders have a concrete idea of what they are funding, and can reduce the difference between their contribution and the goal.
Plan your prospects and pipeline
Arrange your prospect list according to the potential gift size of each funder, cause area, and granting deadlines. Identify how many donations you need at each giving level. Contact your local government representatives (municipal, provincial and federal) to find out what funding opportunities are currently available, or upcoming within your project timeline. Purchase a grant research resource such as GrantConnect to discover new prospects. Using all of this information, create an action plan including a calendar of activities and delegation of responsibilities. Prepare a system, called a pipeline, to track the progress of each prospect once you have begun the campaign.
Stay tuned for PART TWO: The Fundraising and Stewardship Phases!