Zimmerman Lehman : "Capital Campaigns: Ten Steps to Success"

Is your nonprofit feeling cramped at your current location? Are you spending too much money on rent? Are you refusing service to potential clients because you don't have the physical space to accommodate them? If you answer "yes" to any or all of these questions, it's time to begin thinking seriously about mounting a capital campaign.

If the thought of raising a lot of money in a relatively short time for capital improvements gives you pause, here's a word of encouragement: it is easier to raise money for capital campaigns than for annual funds. That's right: bricks and mortar campaigns are "money magnets!" Why? First, capital improvements are tangible: imagine a major donor marveling at the beautiful lobby of your brand new building and thinking to herself: "My $100,000 helped pay for this!" It's easier for a donor to get his or her mind around a capital gift than an unrestricted gift.

Second, capital campaigns offer naming opportunities. While some donors prefer to give anonymously, most love to be honored and feted. Capital campaigns afford the opportunity to honor donors by naming buildings, wings, rooms, etc. after them. (Zimmerman Lehman served as capital campaign counsel to a private school a few years ago; we put donor recognition name plates on everything that was or was not nailed down, including individual computers in the computer lab!).

By the same token, the decision to initiate a capital campaign should not be made lightly. Your readiness to undertake steps one, two and three below will help you assess your readiness to mount a capital campaign. If you are indeed prepared, steps four through ten will help ensure your success.

Step 1: Make the case for capital improvements.

The fact that your staff would like bigger offices or a location in a better part of town is no justification for a capital campaign. Successful capital campaigns depend on convincing donors that clients will be better served as a result of the capital improvements. Don't succumb to the "edifice complex:" i.e. "We've been around for a long time and we deserve bigger offices/a more posh location/a staff Jacuzzi." Donors will not be impressed by your proposed capital improvements unless you can demonstrate that your clients will benefit. Additional counseling rooms, a children's wing at the library, an expanded oncology department, space for senior exercise classes-these are the things that will warm donors' hearts. At bottom, fundraising is an emotional business every bit as much as a logical one; your job is therefore to create "emotional resonance" by showing how clients' lives will be improved by the proposed capital improvements.

At this stage, the "case" need only be a couple of sentences. E.g. - "The town of Happy Valley has experienced a 100% increase in residents aged 3 to 12 in the past five years. The new children's wing at the Happy Valley Library will enable us to meet the educational needs of our most precious resource-our children."

Later in the capital campaign process, the case will serve as the basis for a "case statement," which is a handsome document designed to convince donors to make significant contributions to your campaign.

Step 2: Locate a site, prepare architectural plans and draft a campaign budget.

One of Zimmerman Lehman's "15 Rules of Fundraising" is "specificity is next to godliness." Once you have determined that you do indeed have a saleable "case" for the campaign, the next step is to find a site and develop preliminary architectural plans. If your capital improvements will occur on your present site, you still need to prepare these plans. Donors will not buy "a pig in a poke;" they will insist on knowing where you will be located and what the improvements will be.

Do not fall victim to the assumption that, because you can make the case for the importance of the improvements, donors will fall in line whether you have the architectural plans or not. For example, it is one thing to demonstrate that your nonprofit pre-school turns away one child for every child it accepts due to severe space limitations. It is something else entirely to show donors that you have a site in mind for a school that will be twice as large as the current school, and that you have detailed architectural plans and a drawing of the new school.

Step 3: Determine the financial and organizational feasibility of proceeding with the campaign

You are now ready to conduct a feasibility study to determine whether to go forward with the campaign. Nonprofits usually hire consulting firms to conduct feasibility studies, though there are certainly instances in which the study has been done by a staff person (usually the director of development). The principal value of hiring a firm is that the folks who are interviewed for the study will often be more comfortable and forthright in talking with an "objective third party" than with a staff member.

The typical feasibility study involves 30 to 40 interviews of current and past board members, current and past staff, donors, volunteers, clients and other "organizational intimates." The person leading the study will also conduct formal research on those grantors (foundations, corporations, religious grantors and government agencies) that are the "best bets" to make grants to the campaign.

The purpose of the interviews is five-fold:

A feasibility study "passing grade" means that your community appreciates the work of your nonprofit, understands the value of the proposed capital improvements, and has the financial resources to put the campaign over the top, and that your organizational infrastructure is sufficient to handle the rigors of a capital campaign. E.g. - "In preparing the feasibility study for the proposed new children's wing of the Happy Valley Library, Zimmerman Lehman interviewed 38 men and women, including past and present board and staff members as well as current donors to the library. We also identified eleven foundations that we believe would be interested in making grants to the library campaign. It is our considered opinion that the Happy Library can indeed raise the $3.5 million that it will require to build the children's wing through individual donations and grants."

Step 4: Assemble a capital campaign committee.

Assuming that your board of directors has concurred with the feasibility study recommendation to proceed, the next step is to put together a well-connected, hard-working campaign committee. The committee should include members of your board, appropriate staff, and other volunteers from the community who care about your organization, understand the importance of the campaign and have the time and willingness to see the campaign to a successful conclusion. Don't worry about having too many people serving on the committee, but do make sure that everyone who is invited to join is committed.

The chair of the campaign committee should not be someone who is currently a board or staff member. Rather, the chair should be a person of means who is comfortable both serving as the "point person" for the campaign (e.g. - addressing community gatherings on behalf of the campaign) and soliciting significant contributions from colleagues and friends.

The committee is responsible for overseeing the entire campaign. Zimmerman Lehman recommends breaking the full committee into subcommittees to handle much of the campaign detail work. In a recent capital campaign for which Zimmerman Lehman served as counsel, the subcommittees included: corporations, government relations, loans and other types of "bridge funding," major donors, religious congregations, speakers' bureau and special events. The full committee should meet every two or three months for the duration of the campaign; the subcommittees should meet as appropriate, though we heartily encourage regularly scheduled meetings.

Step 5: Plot your fundraising course.

Capital campaigns depend on as many as six sources of funds: grants from foundations, corporations, government agencies and religious philanthropies; and individual donations at major and modest levels. The capital campaign committee must decide early in the campaign whether or not to hire outside counsel. In either case, the committee must review the six sources of funds above and determine which offer the most significant opportunities.

A word of advice: most capital campaigns depend more on major individual gifts than on any other type of funding. The determination of people of means who are close to the campaign to make-and to solicit-big gifts is the key to the huge majority of successful campaigns. Grants are fine as far as they go, but grantors want evidence of "community support" before they will make capital commitments, and "community support" means the willingness of "organizational intimates" to make significant donations.

All fundraising campaigns have three phases: research, implementation and follow-up. In Zimmerman Lehman's opinion, the most important is research. Whether pursuing a contribution from a grantor or a well-heeled individual, your nonprofit must conduct research to amass all relevant information. Research is the responsibility of the campaign consultant or staff.

With reference to modest individual donors, Zimmerman Lehman recommends conducting a campaign via mail, e-mail or telephone to solicit smaller gifts. These gifts are valuable in two ways: they are campaign revenue and they are "good advertising" in the effort to secure major individual gifts and grants. It is powerful evidence of community support for your capital campaign to demonstrate that, say, 1,217 people responded to your direct mail effort with an average gift of $58. This may represent only a fraction of your campaign goal, but it will show other donors that your community "means business" about the campaign.

One of the most noxious myths in the nonprofit world is "If our written materials look too good, donors will think we're spending too much money on these materials and not enough on programs." If you are to make headway with your capital campaign, you must convince donors and grantors that your organization is a serious "player." Nothing communicates this seriousness like a case statement on high-quality paper that boasts attractive photographs and imaginative design. Scrimping on the case statement is a classic case of "penny-wise, pound-foolish."

With regard to recognition opportunities, capital campaigns provide a marvelous opportunity to honor donors by naming buildings, wings, rooms, etc. Do not take this lightly: some donors will be at least as interested in having their name emblazoned in your atrium as they will be in supporting your worthy cause. Give donor recognition the time and imagination it deserves.

Step 7: Determine who your top individual major gift prospects are, ask campaign committee members for their own gifts, train them in major gift solicitation and schedule meetings with major gift prospects.

The "engine" of most capital campaigns is major individual gifts. Capital campaigns should be "front-loaded;" that is, you will succeed if you get an impressive number of large donations early in the campaign. Foundation and corporate grantors almost never make grants at the beginning of capital campaigns. They insist on evidence of community support before they're ready to commit. Nothing says "community support" like significant individual donations. Also, more modest individual donors-solicited by mail or e-mail-will make contributions once they see that their "big brothers and sisters" have made large gifts.

The capital campaign committee must therefore hold a brainstorming session to locate those men and women who might make major gifts. Categories of prospective donors include:

A note about this last category: major donor solicitation only rarely involves strangers. It is much more important to solicit "known quantities"-folks who have made donations to your organization, are "intimates" of committee members, or do business with your nonprofit. Focus on these categories before approaching strangers.

Remember: "Charity begins at home." Prior to soliciting major individual gifts, each member of the capital campaign committee must make a capacity gift. Obviously, "capacity" means different things to different people: for some folks, $250 is a stretch, while others can comfortably give $500,000. The chair of the committee must visit or telephone each committee member and ask for a donation. Capital gifts are "one time only" contributions that should be significantly larger than committee members' previous gifts to your organization's annual fund (if they have in fact made such gifts). The more the committee gives, the easier it will be to convince other donors and grantors to make sizeable contributions. A corollary: be sure to recruit people to the capital campaign committee who have the wherewithal to make significant gifts. We don't expect that everyone on the committee will be wealthy, but the more money that can be generated by the committee itself the better.

Zimmerman Lehman cannot emphasize too strongly the importance of training committee members in the art and science of major gift solicitation. It would be foolhardy simply to send committee members out on major gift "asks" without training them first. When we conduct full-day trainings for capital campaign committee members, we focus on four things:

Once the training is over, committee members must get on the phone or on e-mail to schedule meetings with prospective donors. The committee chair has an important role in "nudging" committee members to make these calls.

Step 8: Solicit grants from foundations, corporations, government agencies and religious grantors

Once your committee has had some success with major individual donors, it's time to submit letters of intent and full proposals to grantors. A staff person or consultant is responsible for doing the research to determine your "best bets" among grantors. In Zimmerman Lehman's experience, most grantors are not interested in capital campaigns, but those that are interested often have the ability to make large donations. It is imperative that the grantor have a history of giving both to organizations in your subject area and to capital campaigns.

We do not recommend that volunteers who serve on the capital campaign committee conduct research or draft letters and proposals. Where these committee members can be helpful is in (a) contacting people they know at grantor agencies in the effort to move your letter to the top of the pile; and (b) meeting with grantor program officers who have expressed interest in your campaign.

In preparing letters and proposals to prospective grantors, keep in mind that these grantors often have vast experience with capital campaigns and therefore will ask you hard questions. For example, you may be quizzed on your plans for funding building operations once the bricks and mortar improvements are complete. One of Zimmerman Lehman's "15 Rules of Fundraising" is "Specificity is next to godliness." Vague promises to raise money for building operations will not suffice. Grantors will expect that you have given a great deal of thought to raising these funds and that you have specific kinds of campaigns in mind.

Step 9: Hold a kick-off event and solicit modest individual donations.

Once you've raised approximately 50% of your capital campaign goal, it's time to move from "the quiet phase" to "the public phase." Zimmerman Lehman recommends that you hold a splashy kick-off event to announce to the world that you have exciting plans to erect a new building or renovate an existing one. You may wish to have the event at the building site; the upside is that prospective donors and grantors, as well as members of the press and members of your community, can see exactly what you have in mind. If, however, the site is too dirty, dangerous or otherwise undesirable, there is nothing wrong with holding the event at a local restaurant, community center, or even at the home of a board member or major donor.

The reason to hold a kick-off event is not to raise money on the spot, but to give your campaign a public profile. It is therefore imperative that you invite members of the print and electronic press. Draft a press release and have copies of your case statement handy. You certainly should have a formal program, but keep it short. Likely presenters include your board president, executive director and architect. Make sure, too, that you display architectural plans, as well as a drawing and three-dimensional model of the completed facility.

Following the event, begin to solicit modest individual gifts via direct mail, e-mail or telephone. While these gifts will not be large, they have great advertising value. Major donors and grantors are impressed when they see that community members of relatively limited means have "stepped up" and made contributions to your campaign. This will smooth the way in securing those final major gifts and grants.

Step 10: Celebrate your success!

Once you've successfully completed your campaign-on time and in full, we assume!-bring capital campaign committee members, donors, grantors and other "organizational intimates" together at the site to party the night away. Be sure to have a short formal program in which you thank everyone who was instrumental to the campaign's success. Remember: today's capital campaign donor is tomorrow's annual fund supporter, so view this as a link in a long chain.

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