The Ten Requisites for Conducting a Capital Campaign

 A Posting by James V. Toscano

Capital Campaigns, which, for purposes here, include endowment as well, used to be a once-in-a-lifetime event. One could expect one’s religious institution, alma mater, cultural center and favorite charity to solicit a capital donation once.

Now, there’s a certain circularity cycling capital campaigns every x years.

An institution of higher education near to my home has just gone over its $500M goal and is celebrating. It is simultaneously planning its next campaign, perhaps in five to seven years.

What is changing? Like telephoning people at dinnertime, it seems periodic capital campaigns do not wear out their welcome. Certainly there is need; clearly there are deep pockets that push many campaigns over the top. So why not?

Capital campaigns fulfill both the dreams of donors and institutions. It is not unusual for multi-billion campaigns to be announced by our leading national institutions every decade. And most reach their goals, with some taking a bit longer if the economy weakens.

But is this pattern again changing? We see some studies showing large sums still available for “impact investing.” Does this intent include capital and endowment? Do donors want more of a rush? Will they settle for the 4-5% return on endowments?

It is clear that major donors, those who make or break capital campaigns, are narrowing focus, many giving less total money each year, with the younger donors looking for deeper involvement in the actual operation of whatever is proposed.

New Conditions?

Given the above, are there new rules emerging in the capital campaign world? For one, we see more feasibility studies, once more or less of a joke to get consulting business, now resulting in recommendations against campaigns or specific campaign goals.

Many prospective campaigns in the last few years have reduced their initial goals and/or have pushed the length of the campaign back a year or two. The economy does matter.

Combined with the increasing reluctance of peer solicitors to join campaign committees, are we needing a new set of rules about if, when and how to launch a capital campaign?

Evidence suggests that there is a mixed picture out there, with some campaigns sailing to completion with oversubscribed goals, while others are struggling. This has been the case for a long time, but are negative aspects emerging as a more significant component in beginning a campaign?

Ten Imperatives

To increase the probability of success in a capital campaign, here are ten conditions that should be robustly in evidence before launching a capital campaign.

1.  Balanced operating budget. Don’t even think of a capital campaign until the operating budget is running in the black, perhaps for a few years. Retention of annual donors needs to be well above 75%.  Capital money shouldn’t be used to replace money that isn’t contributed to annual operations.

2.  Quality in program. Indicators and empirical measures of both continuous quality improvement of program and impact on society are essential to a capital effort.

3.  Value proposition, case, mission. Call it what you will, the value the agency brings to the community must be articulated and backed by empirical evidence of performance. The purpose of the fundraising must be seen as both desirable and achievable.

4.  Positive feasibility. Results of a professionally conducted study must show positive receptivity if not enthusiasm for a proposed purpose of a campaign and the financial goal to achieve such purpose. Indications of charitable intent and of lead gifts and leadership must also be evident in sufficient amount to conduct the campaign. Make sure the numbers add up to success. If you don’t have the donors before you start a campaign, you will not find them during the campaign. The gift charts needs real names, real prospects in abundance.

5.    Leadership. Both Board and volunteer peer leadership and institutional staff sufficient to the demands of a campaign must be present and available in the amounts of time and energy to conduct a successful campaign.

6.   Lead gift. One, better more than one, lead gifts should be secured before launching the organized effort. (See my posting “The Courage of the Lead Gift”)

7.  Competent staff. From the CEO to the IT input person, a team of professional staff must be available and focused on the campaign if it is to have the infrastructure and management to move to completion.

8.  Consultant. In most cases the expense of an experienced consultant who brings know-how and guidance to a campaign is often the difference between success and near-success. Hire one.

9.  Buzz. Every institution needs positive public image as a highly successful institution as well as good standing in the community. Long before any capital campaign begins, a major institutional effort in marketing, brand, communications and public relations over a broad media spectrum must exist. In the “Quiet Campaign” that period when most of the largest gifts are received, amounting to over 70-80% of the goal, the themes of the media work are institutional, only turning to specifics of the capital campaign during the succeeding public campaign for the final 20% of goal and the victory celebration.

10.  Enthusiasm. Campaigns are not only intense periods of effort to achieve a financial goal, they constitute wonderful opportunity to achieve a new level of morale, spirit and support for the institution and people involved in the campaign. Make sure this is not ignored.

Successful completion of the campaign does, in fact, establish the foundation for the next campaign. Somewhat like Mao’s two steps forward, one step backward, the nonprofit’s next big need will become apparent and the planning will again begin. But it can only be done if the previous campaign was successful and a blend of new and experienced leadership and lead givers are available and ready for the next effort.

Please send me your thoughts at jim(@)toscanoadvisors.com.

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