Raising Capital: Your Guide to Fundraising
Brian L. Bates, The Laurus Group
There are several key pieces to conducting a major capital campaign. Based on my experiences as a campaign consultant, I will provide an overview of the process of organizing a capital campaign. I hope the article will help you understand what to expect before and during the campaign.
Before the Campaign
Before you begin the capital campaign there are a few key issues you have to address. These include developing and implementing a communication program, developing a plan to maintain the chapter facility that you wish to build or renovate, and conducting a feasibility study. The first two concepts are not directly related to organizing a campaign, but are critically important to a campaign’s success.
Develop and Implement a Communication Program
Have you been conducting a regular communication program that effectively reaches your alumni/ae? One of most common complaints heard when doing a capital campaign is, “I haven’t heard from you XX years and now you want my money.” Make sure that you distribute regular alumni/ae newsletters, ensure your website is current, and hold regular alumni/ae events such as Homecoming reunions and Founders Day events.
Develop a Plan to Maintain the Chapter Facility
You need a plan in place prior to conducting the campaign to manage and maintain the property once the renovation/construction is completed. You are asking alumni/ae to give thousands of dollars and they want some assurances that their investment into the project is going to be taken care of and maintained. A good facility management program, regular maintenance, and a strong partnership with the collegiate members will assist you in maintaining the long-term support of your alumni/ae.
Conduct a Feasibility Study
Finally, you need to conduct a feasibility study. Just because you “want” or “need” the money does not mean you can raise it. A feasibility study involves spending time with your key alumni/ae to gauge the answers to three important questions: Do they care? Do they have the capacity to support the project? Are they interested?
A typical feasibility study runs between 4-6 months and should answer each of those three questions. Ideally your major donors will care, are interested, and willing to commit to the construction or renovation project. You can never assume that is the case, which is why they need to be asked.
During the study, it is also important to start identifying other volunteers who can assist with the project. You should begin to identify potential steering committee and construction committee members and peer-to-peer solicitors. At the conclusion of the study, a report should be prepared for your board that discusses the findings, answers to those three questions, outlines any potential areas of concern along with recommendations on how to address or resolve them, identifies volunteers, and provides you with an estimated campaign goal.
It is critically important, before we go any further, to make sure you have funding options in place outside of a capital campaign. It is very rare for a campaign to cover 100% of your costs, both hard (construction) and soft (architects, consultants, furnishings). You should have your financial pro formas run and know if you have the ability to draw on lines of credit, cash reserves, or other financial resources. Additionally, in any given campaign, you typically do not become cash flow positive until year two and beyond. The previously mentioned funding options are vital to prevent costly delays and ensure your ability to cover incurred costs during the early stages of the construction or renovation project.
During the Campaign
You can expect the actual fundraising campaign to last between 12 and 18 months depending on the amount of work needed to reach the goal. Within that time period, the campaign is broken into 2 distinct phases: the lead gift (or quiet phase) and the public phase.
During the quiet phase, campaign organizers should contact organization insiders (board members, key volunteers) and the major donors, who were consulted during the feasibility study, to solicit a campaign contribution. Board members and key volunteers should give at their highest level possible. They help set the tone for the rest of the campaign and serve as benchmarks for other alumni/ae.
Some ask why conduct a “quiet” phase. The answer has everything to do with perception and momentum. When a campaign is “announced” and there are already several dozen if not several hundred alumni/alumnae already committed and the goal is already over 50%, there is a psychological boost. Very few want to be “first” especially if their gift seems insignificant compared to the overall goal. But once there is momentum and alumni/alumnae see their peers who have given, that small gift no longer seems insignificant. But this is not done in a vacuum.
During the public phase, there are two major events happening. First, at an organizational event, such as Homecoming or Founders Day, the campaign should be unveiled. Renderings of the proposed construction or renovation project, donor boards, and giving thermometers should be displayed and campaign brochures/case statements along with pledge forms should be made available. This is the first opportunity to make an impression among your alumni/ae, you should take this seriously, do it right, and show the membership that the leadership is committed. Presentation is an important selling tool.
Second, a team of volunteers should begin their peer-to-peer solicitations. The team consists of the alumni/ae identified during the feasibility study and quiet phase of the campaign as being members who are interested in the project and have the ability to solicit their peers in support of the project. It is not possible or realistic for campaign consultants or your board members to be able to contact each of your alumni/ae. A strong team of volunteers will help bridge some of those gaps and help the project reach or exceed the goal. The more volunteers that are actively engaged, the more alumni/alumnae can be reached.
As with most volunteer activities, you can expect the 80/20 rule to apply when forecasting participation in the fundraising campaign. For rough numbers and easy math, let us assume you have 1,000 members in your organization and you have a goal of raising $1,000,000. You can expect 20-30% of your membership (250) to participate in the campaign. Here is where the 80/20 rule really comes into play: about 80% of your goal ($800,000) will come from 20% of your donors (50). No that is not a typo, the majority of your campaign dollars will come from a very small number of your donors. This is why it is critically important to conduct your feasibility study. The feasibility study helps you ensure you have the support and interest from those key alumni/ae, who have the ability to affect the project with significance.
This article provides a brief overview of the process of organizing a capital campaign. If you have any additional questions, I would be more than happy to discuss your particular project with you. Good luck!