For a nonprofit professional, fundraising is a constant priority as it provides the necessary resources for daily services and operational expenses. Nevertheless, when there is a requirement for a substantial amount of funding to support significant initiatives that go beyond the day-to-day expenses of the nonprofit organization; like constructing one’s own facility or scaling up a program with a significant number of staff, a different approach is necessary. In such cases, capital campaigns become an essential tool for the organization to secure the required funds.
In recent years, the United States has experienced a noticeable shift in the distribution of wealth due to income inequality and an unstable economy. As a result, a disproportionate share of the country's wealth is held by a small group of wealthy individuals, leading to concentrated wealth and philanthropic power as mentioned in the “Inequality and Philanthropy” article by Inequality.com. This phenomenon has given rise to "Mega donors", who are responsible for a significant portion of total individual giving. Notably, as stated in the Giving USA 2022 Report, in 2021, MacKenzie Scott and Dan Jewett donated a combined total of $2 billion dollars, illustrating the immense impact that such "game-changing" gifts can have on universities and non-profit organizations.
The presence of mega donors in philanthropy does not deter individuals from making small donations to their favorite causes. In fact, there has been a growing trend of micro-donations, where individuals contribute small amounts to support various nonprofit organizations. Though they make up a smaller percentage of total donor dollars, micro donations are on the rise as stated in the article “Micro Donations: How Small Gifts Can Make a Big Difference”. With the rise of online giving platforms and social media, it has become easier than ever to make a donation of any size. The article also mentions that younger donors, especially, prefer to commit to smaller gifts. Therefore, encouraging micro donations can help you engage Millennial and Gen Z donors.
The presence of both mega and micro donors in philanthropy can make fundraising easier and more flexible for projects like capital campaigns and other initiatives. By engaging both mega and micro donors, organizations can create a diversified funding base that can help them achieve their goals.
Now let’s dive deeper into the world of capital campaigns.
WHAT IS A CAPITAL CAMPAIGN?
A capital campaign refers to a focused fundraising initiative that has a specific duration. It is a comprehensive undertaking that necessitates extensive preparation and evaluation, as well as a committed team that will work together to attain a clearly-stated objective over several months or years.
Capital campaigns are different from other fundraising initiatives, since they are extensive in scope, targeting sizable projects and setting ambitious objectives. Secondly, they have a lengthy duration, spanning several years from the initial planning stage to the public stage. Thirdly, they provide opportunities to connect with potential and current donors, motivating them to engage or enhance their contributions. Furthermore, capital campaigns are distinct because of the specific stages that determine when to approach different categories of donors.
WHY DO NONPROFITS TURN TO CAPITAL CAMPAIGNS?
Capital campaigns are frequently employed by non-profit organizations as a platform to raise awareness of their mission within the community. However, nonprofits only undertake capital campaigns when they have a substantial demand that necessitates substantial financial support and growth.
Now, let's examine the four primary reasons why a nonprofit may need to execute a capital campaign:
Construction of new buildings or expanding existing ones: Major organizations frequently need to expand their facilities to meet the needs of an increasing number of patients or students. These projects need substantial financial resources, which is why they are typically completed through capital campaigns. For organizations led by traditionally marginalized folks, it is also a critical piece in addressing community needs and building community wealth. Owning one’s own space is transformational.
Acquisition of land: Nonprofits highly value land due to its ability to boost their investment portfolios, generate supplementary revenue if leased, and create prospects for future facility expansion. To fund the purchase of land, organizations rely on capital campaigns as a means of raising sufficient funds.
Large-Scale Equipment/Supplies Purchases: Nonprofit operations frequently need specialized equipment or supplies, such as pet food, cat litter, and pet toys for an animal shelter or an MRI machine for a hospital for example. Capital campaigns can provide essential funding to support such major purchases.
Capacity Building - Growing the Team Internally: A nonprofit might need to enhance its capacity in order to better achieve its goals over time. One aspect of capacity building involves growing the team internally, which means developing the skills, knowledge, and expertise of the staff members to improve their performance and increase their contribution to the organization's success. This may involve training programs, mentoring, coaching, and other initiatives. To invest in internal capacity building, nonprofits may need to run a capital campaign.
WHICH NONPROFITS CONDUCT A CAPITAL CAMPAIGN?
While any nonprofit can gain advantages from conducting a capital campaign, larger organizations with extensive projects generally run them. These organizations have strong backing from their key stakeholders and sufficient resources to conduct major campaigns successfully.
Nonetheless, two principal categories of organizations that heavily depend on capital campaigns are:
Healthcare institutions, such as hospitals and hospices.
Educational institutions, such as universities, private schools, and independent schools.
Other types of nonprofits that can use capital campaigns to fundraise:
Arts and Culture Nonprofits
BENEFITS OF RUNNING A CAPITAL CAMPAIGN:
Mobilizing an enthusiastic group of supporters to champion your cause: A successful capital campaign can create a sense of urgency around your nonprofit's mission. It can inspire your donors and volunteers to become more active and engaged in your organization's work, leading to a stronger sense of community and shared purpose. The excitement generated by a capital campaign can also help attract new supporters and build lasting relationships with them.
Improving the probability of drawing in fresh major donors: Capital campaigns provide an opportunity to reach out to potential major donors and increase the likelihood of drawing them into your campaign. Through targeted outreach efforts, you can identify and cultivate relationships with individuals and organizations that have the capacity to make significant contributions to your campaign.
Encouraging previous donors to make repeat contributions: Capital campaigns allow you to reconnect with previous donors and encourage them to continue supporting your nonprofit's mission. By highlighting the progress made possible by their past contributions and demonstrating the continued need for support, you can encourage previous donors to make repeat contributions to your campaign.
Involving local media to enhance your nonprofit’s visibility and public recognition: By developing compelling stories and messaging that resonates with your community, you can attract media attention and generate publicity for your capital campaign. This can help raise awareness about your nonprofit's mission and impact, and attract new supporters to your cause.
Offering a pathway for donors seeking to redistribute their wealth or give via a reparations lens: Capital Campaigns and strategies can allow for donors who desire to give back as part of reparations and healing to communities. Since much of philanthropy’s corpus has its history in exploitative acts, a capital campaign strategy can signal to donors that you have a place for them to put that wealth back in a powerful way to begin to heal divides and support the marginalized folks in that community.
WHAT ARE THE ESSENTIAL REQUIREMENTS TO HAVE IN PLACE BEFORE STARTING A CAPITAL CAMPAIGN?
A timeline with strict deadlines: It's crucial to set a specific deadline for completing a capital campaign. This deadline will help you create a comprehensive campaign timeline, which should include smaller, achievable milestones leading up to the ultimate goal.
A dedicated and focused team: A capital campaign cannot be solely managed by the fundraising team, it is an “all-hands-on-deck project”, as it is crucial that all members of the organization are committed to it.
A clear financial goal: A clear financial goal is essential to ensure that the campaign has a specific purpose and that donors understand where their contributions will go.
A well crafted plan with a feasibility study: A feasibility study is critical to assess the organization's capacity to run a successful campaign and identify potential challenges that may arise.
An internal research campaign for major donors: Conducting an internal research campaign for major donors can help identify potential donors who have the capacity to make significant contributions to the campaign and take out the donors who don’t meet your requirements.
A public marketing campaign: A public marketing campaign is necessary to raise awareness of the campaign and engage the broader community in supporting the organization's mission. This may include social media, email marketing, direct mail, and events.
PHASES OF PLANNING A CAPITAL CAMPAIGN:
The planning phase: To begin a capital campaign, start with setting a specific goal and determining deadlines and budget. Continue by conducting a feasibility study which can help assess your organization's readiness and secure stakeholder support. Make sure to form an effective and focused team, including consultants if needed, and conduct prospect research to develop a gift solicitation strategy; use this information to build a gift pyramid. Finally, prepare a case for a support document to use in fundraising.
The Quiet Phase: Before announcing your campaign to the public, the quiet phase occurs and it can last a year or even longer. During this phase, you'll concentrate on prospect research and pursuing major gift leads, starting with your board members. It's a critical stage as 50-70% of the total funds will be raised during this period.
The Launch: Following the quiet phase where major donors were quietly courted, it’s time to launch your campaign! This phase typically involves hosting a press conference, launch party or an event to publicly launch your campaign. The purpose of this phase is to generate excitement, awareness and support for your campaign among the broader community, beyond the initial group of major donors. This phase can also involve outreach and engagement efforts, such as media and public relations, to build visibility and attract new donors to support the campaign.
The Public Phase: The public phase marks the final stage of the campaign. In this phase, the focus shifts towards reaching out to the wider community and soliciting smaller donations. To achieve this, the nonprofit may employ various fundraising strategies such as hosting events, initiating peer-to-peer campaigns, and promoting their recurring giving program. Additionally, the public phase also includes the follow-through stage, where the project or program that the funds were raised for should be in progress or already completed. This is a crucial moment for the nonprofit to express gratitude to its donors and recognize the dedication and hard work of the internal team. Overall, this phase signifies the successful completion of the capital campaign and the achievement of the set financial goal.
Campaign Evaluation: After a capital campaign has ended, the organization needs to evaluate its success. The evaluation should include assessing whether the campaign goals were met and if the funds raised were used effectively. The fundraising methods used during the campaign should also be reviewed to identify effective and ineffective strategies. Feedback from donors and stakeholders can provide insights into areas for improvement in future campaigns. The impact of the campaign on the organization and its stakeholders should be assessed, which could include measuring the effectiveness of the new program or service funded by the campaign.
In conclusion, a successful capital campaign can make a significant impact on your nonprofit organization's ability to achieve its mission and pursue its long-term goals. By leveraging the power of effective fundraising and community engagement, your organization can secure the necessary resources to realize major initiatives.
Take advantage of the current philanthropic landscape and capture assets to ensure your nonprofit can become more sustainable with time!
If you are considering launching a capital campaign, we are here to help. Our team has the expertise and experience to guide you through the entire process, from planning to execution. Contact us today to learn more about our services and how we can support your nonprofit's fundraising efforts. Together, let's make a difference and create a better future for our communities.