Hank Lewis, MA, CFRM – Page 4 – Management Library

February 3, 2016February 13, 2023

Capital Campaigns – An Overview

By definition, a Capital Campaigns is an intense effort to acquire sufficient commitments to add up to a specific large sum, for a specific valid/urgent purpose.

The word “Capital” refers to the money needed to erect/expand/renovate a building, the funding needed for the purchase/installation/overhaul of (major) equipment and the funding to create/expand an endowment.

The term “campaign” has it’s origin in a military context — although it’s rarely used that way today. It referred to the actual period of time that the troops were in the field, engaged with the enemy. It was/is a period of action/activity that, ideally, had been planned very carefully. In this context, it is the period of time in which most of the needed dollars are solicited/pledged.

The “intensity” of the effort refers to having board members, staff and other volunteers commit the (additional) time and energy necessary to achieve the dollar goal in a specific (relatively short) timeframe. The typical campaign was designed to take 12 months – but, these days, it tends to be shorter.

Typically, a capital campaign solicits pledges – significant dollar commitments to be paid over an extended period. Fifteen/twenty years ago, the period was five years, but considering the societal changes and people’s reluctance to commit to that long an obligation, three years is now typical.

The “specific sum,” the goal of a campaign, is an amount that will allow the organization to pay for the “project” that is outside its normal/ongoing budget requirements. This cannot be an arbitrarily chosen dollar figure voted on by a board or committee, it must be one that has been determined through a very careful and detailed process.

“Valid” means that it the nonprofit organization was asked to justify why the project was needed, the NPO could clearly explain/demonstrate that a real need exists in the community and that the project would address that need.

“Urgent” excludes any project for which the NPO could accumulate the funding over an extended period of time without the need for a special fundraising effort. It would also exclude any project for which there is not a demonstrable need for the service(s) that will be made available because of the project.

• A capital campaign is not a “fundraiser.” It is as far beyond a dinner event as building a motorcycle is beyond building a skateboard.

• A capital campaign is not for the faint of heart. In conducting a capital campaign, an organization puts its credibility and its future on the line.

It is one of, if not THE most important and risky things a nonprofit organization will ever do !! Should a campaign fail — as many do (because of poor planning, lack of long-term preparation, inadequate fundraising skill and/or insufficient campaign experience), an organization’s credibility and future fundraising prospects can be harmed, irreparably.

• A Capital Campaign is not (for the most part) about the needs of the NPO. It’s mostly about the needs of the potential donors. The question is, in essence, “What will the donor get by gifting/committing a large sum of money to support a specific project?

• A Capital Campaign is not for Public Awareness … until you’re ready to announce the campaign. And you don’t announce a campaign until (at least) 60% of the goal has been reached – 80% is better, 100% is best. You don’t even discuss the possibility of a campaign outside of the organization’s leadership.

In the context of public awareness, a capital campaign should be pretty much completed before there is any groundbreaking or other visual sign that there is or will be a need to raise money. Beginning the project that the campaign will fund, before the campaign begins, (strongly) suggests that the organization already has most-or-all of the needed funding.

• Capital campaigns cannot be an excuse to raise a lot of money – there must be a goal that relates to specific URGENT needs.

• A capital campaign is not an effort that should be taken on by the inexperienced, even after reading my ebook on the subject. ☺

Capital campaigns are a synthesis of everything else we do in development; but, because much of it takes place in a relatively short time frame, and because so much more is at risk, the skills and experience required to design and implement these efforts must be at a level much higher than those needed for ongoing fundraising.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
This posting is a sample of what’s in book five of the series – Capital Campaigns

If you’re reading this on-line, and would like to comment/expand on the above piece, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply.” If you’re reading this as an email, and you want to comment on the above piece, email Comments to offer your thoughts. Your comments, with appropriate attribution, could be the basis of a new posting.

January 27, 2016February 16, 2023

A Planning Study Over A Feasibility Study, Every Time

A business team coming with a plan for work

For the last 60-70 years, a Feasibility Study has been “required” before planning and/or implementing any major fundraising effort, and its basic concept and structure hasn’t changed in all that time; and, it is my contention that the Feasibility Study is not only obsolete, it’s counter-productive.

Now don’t get me wrong. I’m not saying that we shouldn’t first determine the feasibility of acquiring leadership for and attaining the goals of a major fundraising effort.

Of course we must interview prominent members of the community, prior donors and prospective leaders/example-setters. Of course we want to determine if success is likely, even probable. Of course we want to begin the education and cultivation of those who will be campaign leaders and major donors.

But feasibility studies are designed to ask interviewees if they think the goal is feasible, if they think there are any individuals who could lead a campaign to its goal, if the “community” will support the effort. A typical question is, “With your knowledge of the community, do you think/believe that ‘this’ goal can be achieved?”

If you’re asking people if they think you can succeed, you give them the impression that you might not. Why plant the seed of doubt? In fundraising, a “Study to determine Feasibility” is really bad psychology.

Never ask if an interviewee thinks the goal is attainable? Avoid asking “if,” but rather work to create the impression that success is a given. Get people to buy into that success, then you’re more likely to succeed.

Want to create a Major Gifts Program, a Bequest Program, a Special Event, a Recognition Program, a Capital Campaign ??

The most important information you’d want to have is whether your (prospective) constituents/donors will agree with what you want to do, and what would motivate those folks to want to support and/or participate in your activity.

The best way to get the best answers to those questions would be to ask. And, the best way to ask would be by means of a “Planning Study.”

That the “Study” is for “Planning” purposes suggests that you’ve not committed to taking a particular action and/or to creating a specific kind of program – even though you may have!!

When you ask someone to participate in this kind of “Study,” you are asking for their advice and saying that what you do (or don’t do) will be impacted by what they say (or don’t say).

Unlike the obsolete “feasibility study,” with all its “baggage,” a “Planning Study” asks in-depth questions about a broad range of subjects. Then, based on the study’s findings, a nonprofit will be able to proceed with programs/activities it knows will be supported by its constituents.

And, by the way, the reason the “Planning Study” is “almost always the first step” is because it is a strong means of cultivating the folks you hope will be your leaders and donors … when you do whatever it is that you’re “planning” to do.

When you ask someone’s advice, they’re more likely to look upon you favorably … because you were smart enough to know to ask them ☺

To quote an old fundraising saying: “If you want advice, ask for money; if you want money, ask for advice.” And a “Planning Study” is a great way to ask for advice.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)
This posting is a sample of what’s in the Third book in the series –
“Guidance for the New Nonprofit, Executive Director and Board Member”

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Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
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questions/problems to engender further discussion.
Look forward to hearing from you.
Comments & Questions
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January 20, 2016February 28, 2022

Ensuring A Nonprofit’s Future – With Major Gifts

Most non-profits don’t live on grants from corporations, foundations and governments, or from event generated income.

Roughly 80% of contributed dollars come from individual donors or their estates. And the common wisdom is that at least 80% of that amount — or about two-thirds of all contributed dollars – come as major gifts from individuals.

Planning-for-the-future, therefore, involves identifying potential sources of funding sufficient to ensure continuation or expansion of the programs that satisfy the needs of the people and the communities being served.

Worded another way, “Ensuring future funding requires minimizing the risk of losing a large percentage of your income.”

A major gift program is easier to design/implement and more cost effective than direct mail and the vast majority of events. Major gifts are also a more reliable source of long-term charitable funding than all others.

So, what is a Major Gift ?

Many Non-Profit Organizations (incorrectly) use the term “Major Gifts” to refer to those that are larger than the usual range of gifts that arrive in the mail. Typically, $1,000 is the magic number.

But, unless an organization’s budget and/or the amount to be raised via the fundraising process is unusually small, gifts of $1,000 won’t significantly aid in pursuing financial goals.

A Major Gift is not based upon exceeding a specific dollar figure, but requires:

1• Amounts that will significantly help to attain fundraising goals
    — 1% or more of the goal would be significant. If your goal is
    $1,000,000, at $1,000 each, you’d need 1,000 gifts; and, unless
    you have the prospect base with that many donors who have given
    at that level in the past, that’s not very likely. Realistically, for a goal
    of that size, gifts of $10,000 and up are necessary.

2• That prospects be cultivated and solicited on a face-to-face basis.
    Consistent with the concept/practice of “development,” in order to get
    donors to want to make “major” gifts, there must be a relationship
    between the donor and the person doing the asking. And that person
    must also be one of the people, in not the person, doing the cultivating
    and educating of the prospective donor.

3• Ask amounts that are well thought out and well researched.
    When asking for ANY gift to a non-profit, it should always be for a
    specific dollar figure. For a major gift, it should be a figure based
    on the donor’s ability to give. And, you should always be able to
    give the donor a good reason “why that amount” … including how
    making that gift will satisfy his/her needs.

4• The development and implementation of an individual plan,
or strategy for getting each potential donor to the point where s/he is
ready to make the gift you want him/her to make.

January 13, 2016February 14, 2023

Does Your Organization Have a REAL Director of Development?

Ideally, from day one, an organization should have someone who knows/understands the NPO, its mission, its leadership, and its hopes and aspirations. This person like the Director of Development should have the experience and skills to help the NPO plan for next week and next year.

This person should have input at all levels, should be able to guide/train the board members and the CEO, and should be able to bring to staff awareness and understanding of how they affect the development process.

A large organization, with a large development staff, must have someone to coordinate the various programs and be sure that they support, not conflict with, or duplicate each other. Sadly, the vast majority of new/nascent NPOs don’t have the money to hire a person with the requisite experience and capabilities.

Smaller organizations that live on grants need a grants officer. If much of an NPO’s income is from events, then an event coordinator is needed. If one person can do both, all the better.

To hire a staff person to focus on one or two activities, and give that person the title of Director of Development, is to lie to that person, to that person’s next employer, and to the board and staff of the NPO doing the hiring.

You’re kidding yourself if you think that by hiring a person and giving them that title you’re actually getting all the experience/expertise that comes with a real director of development.

The director of development is a critical hire for an organization. The right person can greatly help ensure an organization’s future….

So many non-profit organizations are hiring Directors of Development without really knowing/understanding what “development” is supposed to be about and how a DOD is supposed to function.

The misunderstanding is the belief that “Director of Development” equates to “income generator.” So many NPOs hire DODs with the belief that they’re getting someone who will raise the needed funds; and, the sad thing is that so many NPOs hire DODs so that organizational leadership (board and other senior staff) won’t have to be involved in (or even think about) fundraising.

Hire a person to raise the money, and the amount of money that can be raised is limited by the time/effort that one person is willing/able to give to the process.

Hire a person to create and/or direct a development program and there’s no theoretical limit to how much money can be raised … considering the person’s level of experience and expertise.

A Director of Development creates and/or plans for and directs a development program … an effort that incorporates many (if not all) of the elements of the development process: mass solicitation (mail or telephone), grants (government, foundation, and corporate), events, major gifts, bequests, donor cultivation, etc….

How many organizations do you know of that have a Director of Development who isn’t !!??

If you’re reading this online, and would like to comment/expand on the above piece, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply.” If you’re reading this as an email, and you want to comment on the above piece, email Comments to offer your thoughts. Your comments, with appropriate attribution, could be the basis of a new posting.

January 7, 2016February 28, 2022

Fundraising vs Development

It Can Be Confusing to Someone New to the Field….

To review a basic concept, the terms “Fundraising” and “Development” are not synonymous. Development refers to the process of establishing, maintaining and enhancing relationships with individuals, corporations and foundations … for the purpose of creating/maintaining a giving constituency that provides ongoing support for a nonprofit organization.

Fundraising, as a distinct sub-category of income generation, includes those activities that get people to GIVE their money to non-profit organizations and, ideally, to get them to keep giving.

Fundraising does not include raising money by selling things; and, although those activities labelled “fundraisers” generate income, because they are not based on “giving,” but rather on selling, they aren’t part of “Fundraising.” Income generation, “Yes.” Fundraising, “No.”

People who buy candy or cookies from local students are (usually) looking to help the student or satisfy a sweet tooth, not necessarily to support the school activity.

Frequently, people who buy tickets to an event do so because of who’s selling the tickets and/or because they see the event as entertainment. Too often, attendees at dinners know little if anything about the organization the event supports.

In many people’s minds, fundraising equates to “philanthropy,” another term that’s misused a lot. The origin (Greek) and original meaning of the word is “love of man,” or “love of humankind.” Today, the term is often misused to label almost anything to do with fundraising.

In fact, “philanthropy” is a (small) subset of fundraising. It’s about self-motivated giving – giving in consideration of the needs of others, as opposed to most fundraising, which is about the needs of the donor.

In a broad sense, raising money is about getting people to want to give; and, whether it’s a Corporation, a Foundation, a prospective Major Donor or the recipient of a mass solicitation, they’re not going to write you a check if the process doesn’t satisfy their needs.

Getting a Corporation to want to give to a non-profit organization is a simple matter of learning, understanding and acting on the needs of the corporation and those of its decision makers. Will giving to you help the corporation’s marketing efforts and increase its revenue? Will supporting you and espousing your cause make the corporate leaders look good?

Foundations give based on their mission and the needs of the foundation leadership. Do you solicit foundations whose leaders feel strongly about your programs/activities and about the people you serve? Do you know who those leaders are and what is important to them?

To get an individual (potential) major donor to want to give, you have to know that person well enough to know what is important to him/her. You have to know/understand his/her priorities. Why would someone make a gift if doing so didn’t satisfy his/her needs?

Just because a NPO does wonderful things in a cost-effective manner doesn’t mean that potential donors will want to give to it.

Getting people to want to give, and corporations and foundations are run by people, is about learning, understanding and appealing to their various needs.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have a comment or a question about starting, evaluating
or expanding your fundraising program?
AskHank
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We’ve been posting these pieces for the last five years,
and we’re now at a point where, to keep this resource alive,
we need your questions/problems to engender further discussion.
Look forward to hearing from you.
Comments & Questions
=-=-=-=-=-=-=-=-=-=-=-=-=-=

If you’re reading this on-line, and would like to comment/expand on the above piece, or would just like to offer your thoughts on the subject of this posting, we encourage you to “Leave a Reply.” If you’re reading this as an email, and you want to comment on the above piece, email Comments to offer your thoughts. Your comments, with appropriate attribution, could be the basis of a new posting.

December 23, 2015March 1, 2022

A Capital Campaign Horror Story – Part Three

This is a three-part story of a small Historical Society that embarked upon a Capital Campaign at the urging of their current President and her husband, who donated $1M for a major project. The campaign was undertaken without a Planning Study; and, in their second year of fundraising only $156,000 has been raised… $100,000 of which is from one donor.

(Again, this is a response to an email, with my comments in bold.)

Please understand we still do not have blueprints and specs on this – so it has not gone out to bid. We have no hard numbers yet.

I have three questions:
1. Conflict of Interest as it relates to our President holding that office while she & her husband are pitching this project.

Any board member can pitch any project or course of action.

It’s not a conflict of interest unless the president and her husband stand to benefit from what’s being proposed. It is an example of board members with money bullying the board on which they are not a majority; and, it’s an example of a board that’s hiding behind very thick rose-colored glasses.

2. The soundness of our ED’s and a few others’ statements on how “in their experience” the money will come in after we break ground because of the excitement.

In my 40+ years as a fundraising consultant/mentor/educator I have never seen the excitement (defined as an interest in and/or willingness to give to the project) build after the groundbreaking. Typically, the perspective is that if you’re breaking ground you must have enough money to complete the project (which you should), so you don’t need my money.

3. How and whether a Donor’s Capital Campaign contribution is returned when it is requested. Can the threat of this continue to drive decisions?

Keep in mind that your organization’s reputation is at risk, and the reputations of the individual board members. Returning contributed funds shows good faith and transparency. The organization may look like it failed at the project, but good faith can go a long way toward long term survival.

I have serious doubts as to whether we can raise the remaining funds for this project. Our Town has not had that depth in the past and we compete with a number of other nonprofits with more sex appeal.

I think that your last paragraph sums it up. It’s what I gathered from reading the rest of your note.

Final Note: It must be emphasized that a properly done Planning Study would have uncovered the extent of support (or lack thereof) to be expected from the Society’s constituency/community, and it would have uncovered the extent of the board’s acuity and/or naiveté. There’s no substitute for Planning.

That’s it for this year.
Wishing You All the Happiest of Holidays,
and the Best for the New Year.
We’ll see you on January 6th.

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)

December 16, 2015March 1, 2022

A Capital Campaign Horror Story – Part Two

(Again, this is a response to an email, with my comments in bold.)

My finance committee and I thought we would continue fundraising until our goal had been reached.

My reaction to that is that it seems that someone is not dealing with reality.

The Executive Director (without the Treasurer or approval of the Board) applied for a Bridge Loan with a local bank – which came back as an approval for a $ 500,000 Construction Loan. Such a loan (line of credit), if drawn upon, can only be paid back with future fundraising. And, there is no room in our Operating Budget to handle the monthly payments for this.

An ED applying for a loan without board approval is a definite NO-NO. I can’t understand how a bank could approve such a loan without the documents that would also be needed to conduct a capital campaign planning study — plans and specs !!

If the reality is that the organization could not pay the payments on such a loan, then the board must vote to decline the bank’s offer.

Board Members of a nonprofit have a fiduciary responsibility, and they could become liable, individually, for any debts accrued by the nonprofit. I’d strongly recommend asking the advice of an attorney with solid knowledge in nonprofit law.

I managed to get this before our entire Board of 19 members but they voted 13-6 to go along with the loan because our President and her husband offered to cover all expenses above 1.7 M conditional on board approval of the $500,000 loan. If the board did not approve this they were taking their marbles and going home.

At this point, I would advise the board to hand them their marbles and show them the door.

The future of the organization is at risk. The board should not let itself be blinded by what appears to be easy money, money they don’t have to “give or get.”

Next Week – Part Three

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Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)

December 9, 2015March 1, 2022

A Capital Campaign Horror Story – In Three Parts, Part One

(This is an email I’d received, with my comments in bold.)

We are a small Historical Society that backed into a Capital Campaign when our current President and her husband donated $1M for a new vault and study center.

A design and build Contractor on our Board did the best he could, without plans and specs, to estimate the cost of the structure. He came in at 1.2M. But apparently a number of things were not included in his estimate and the suspected cost is now 1.7 M. Before overruns.

Our 2nd year of fundraising for this project only yielded $ 156,000 and $100,000 of that is from one donor.

I gather that your organization did not have a Planning Study done to determine if and how a capital campaign could/would be successful.

As there were no plans/specs, I don’t see how you can legitimately ask people to give to support a project the depth of which is unknown.

It is my impression, just from your first paragraph, that the organization saw $1million on the table, and did no thinking or planning.

It is my opinion, based on the above, that you should not have gotten into a capital campaign.

Our Executive Director has told the Board that if we do not build within 2 years we have to start returning the money?? Is that true?

I can’t say if there are any State laws that would required returning the donated funds within a specific time period – I don’t know !! I do know that, at the rate money is being raised, that your organization’s credibility is on shaky ground.

Without a firm capital campaign plan, there is no way to know, to even
have an idea when/if all the needed funds could/would be raised.

Accepting contributions for a specific purpose, without being able to
assure donors of a timeline for the use of those funds for that purpose,
again brings your credibility into question.

And, accepting such contributions and not using those funds for the
intended purpose within a reasonable timeframe could border on fraud.

With what you’ve told me, and if you can’t come up with a solid plan
(based on reality, not wishful thinking) for raising ALL the needed funds
within a reasonable timeframe, my reaction is to tell you to return the
funds that have been contributed.

So, though I don’t know your ED’s thought process, I must agree with the conclusion.

Next Week – Part Two

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Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)

December 2, 2015March 1, 2022

Should We Ask Our Donors To Give More Than Once Each Year ??

An email noted: “Staff members at my organization seem to believe we will lose our donors if we ask them to give more than once a year. I would appreciate hearing from others on this concern.”

OK. I know I’ve said this before, but the worst, absolutely the worst, thing that has ever happened to nonprofit fundraising is the invention/use of the term “Annual Fund.”

“It” tells/convinces (inexperienced) development staff that they only have to ask constituents to give once each year, or that they only have to get constituents to give once each year.

“It” also suggests to donors/constituents that they should only give once each year.

Boy, is that dumb. Why would any non-profit organization want to do that ??

Fundraising/Development is an ongoing process of cultivation/education, solicitation and stewardship. In case you never heard the expression, “the thank-you is the first step in cultivating for the next gift.”

People who don’t approve of asking more than once each year, are the same people who think that asking for money is basically distasteful; something someone else should do, not them — it’s beneath them.

What that means is that they have no clue what the non-profit sector is all about.

Of course, if the folks at your agency are right, then all the experience and experts are wrong. What do you think the odds are of that ??

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)

November 25, 2015March 1, 2022

HAPPY THANKSGIVING

WISHING YOU ALL THE BEST

AND HOPING YOU’RE SPENDING THIS HOLIDAY

WITH PEOPLE YOU CARE ABOUT AND

WHO CARE ABOUT YOU

See You Next Week

=-=-=-=-=-=-=-=-=-=-=-=-=-=
Have you heard about
The Fundraising Series of ebooks?
They’re easy to read, to the point, and inexpensive ($1.99-$4.99)