Taking the First Step for a Capital Campaign in 2021
The term “capital campaign” was originally associated with brick-and-mortar efforts, such as fundraising for buildings and facilities. However, capital campaigns are actually organized fundraising efforts designed to help nonprofits achieve long-term financial support, not just for bricks and mortar.
Why are capital campaigns often the preferred method of fundraising? Because they offer widespread benefits with very few disadvantages. These benefits include:
When your nonprofit lacks financial stability, relying on short-term solutions to sustain multi-year strategic efforts is a common mistake. Many nonprofit fundraising approaches, including focused giving days, events such as galas or 5K runs, tend to attract small, one-time donations. Instead, capital campaigns focus on large, recurring donations that can sustain an organization’s long-term efforts in programmatic expansion, new initiatives, technology upgrades, and strategic growth.
Capital campaigns cost just $0.05-$0.10 per dollar raised. This far surpasses the affordability of other fundraising methods, which can cost more than 10 times as much as they raise, according to Association of Fundraising Professional (AFP) data shown here.
Flexible Fundraising Approach
Unlike other fundraising methods, capital campaigns are flexible in their conventions. This prevents wasted fundraising efforts thwarted by unpredictable challenges. For example, many nonprofit events that were carefully planned and booked had to be canceled after the COVID-19 pandemic struck. The flexibility of capital campaigns can help you tailor your messaging to accommodate changes in the social, economic, and political spheres.
Other fundraising approaches rely on quick, surface-level exchanges, while a capital campaign is designed more like a platform. When you build this platform, you gain the time, attention, and opportunity to meaningfully communicate important information about your nonprofit to its current supporters, donors, or as we like to call them, investors.
Attract and Build Your Network of Investors
Capital campaign communication gateways also carry the opportunity to connect with potential investors in your community. Building a network of investors who are willing to offer ongoing and sustainable contributions will provide your nonprofit with long-term financial stability.
Capital Campaigns: Who Gets Funded?
Capital campaigns offer a compelling financial opportunity for nonprofits. You might be thinking that this sounds too good to be true—so what is the catch? Truthfully, not all nonprofits that journey down the capital campaign path achieve their fundraising goals.
According to Tom Ralser’s recently released book, The Five-Minute Fundraiser, the difference between successful and unsuccessful campaigns is the ability to communicate valuable outcomes—a crucial component of what Ralser calls a nonprofit’s Asking RightsTM. While it sounds easy enough, Ralser states, “Every nonprofit, when asked if this is possible, will answer in the affirmative. Often, though, the outcomes they describe are not valuable to those being asked to write a check.”
These outcomes are strengthened by polished fundraising skills and credibility. If capital campaign funding seems too good to be true, you might need to spend more time developing your organization’s Asking Rights.
On the other hand, if your nonprofit can successfully communicate valuable outcomes and organizational credibility with “investors” who are passionate about your mission—you may have the Asking Rights to get the funding you need. You can take the free Asking Rights quiz here for more insight.
So how do you put your Asking Rights to the test and begin your capital campaign journey?
A Thorough Feasibility Study
Once you decide to start funding your nonprofit through a capital campaign, the next challenge is getting started. Almost all successful capital campaigns share the same starting point: a feasibility study.
A feasibility study is a detailed analysis of your organization and your potential campaign to evaluate whether or not your efforts will be successful. While success is defined differently for each organization, this process weighs the time, money, and resource investments required by your campaign against the benefits it is projected to provide your organization.
Regardless of the results of your feasibility study, this process provides you with a clear starting point for your fundraising journey. If your feasibility study projects fundraising success, you can begin mobilizing your campaign. If your feasibility study does not predict fundraising success, you can work to build up the foundation of your organization. Unfavorable feasibility study results do not mean that you cannot achieve capital campaign funding—they simply mean that you may need to work on your organization’s credibility, outcomes, or strategic plan before initiating these efforts.
So how do you get started with a feasibility study? Your nonprofit must first decide who will complete this project—often a capital campaign fundraising consultant.
Choose Your Fundraising Consultant
While you might be tempted to conduct an in-house feasibility study, most successful studies are completed by a third party. Internal bias, lack of experience, and confidentiality troubles can impact the accuracy of your results.
- Internal Bias: Organizations are more likely to favor the answers that they want to hear, which can defeat the purpose of the feasibility study. While you may not consider yourself to be biased, even the most narrow blindspots in your perspective can be detrimental to the success of your study and the resulting campaign.
- Professional Expertise: An experienced feasibility study professional will know the ins and outs of this process. They can conduct the feasibility study in a way that more accurately predicts your capital campaign outcomes and saves your organization unnecessary trouble.
- Confidentiality: One of the most vital elements of a feasibility study is interviewing key nonprofit stakeholders (more on this below). These are often individuals who have built relationships with you and other members of your organization. When asked challenging questions, they may sacrifice honesty to give you the answers they know you want to hear. This can sway the validity of your feasibility study. Instead, a feasibility study consultant can provide confidential interviews, which leads to more honest and accurate results.
How do you choose a feasibility study consultant? Aim to partner with an experienced, knowledgeable organization that you can trust. Trust is essential because you must share vital information about your nonprofit with your feasibility study consultant and be prepared to accept the results produced by this process.
Listening To Your Investors
Your feasibility study consultant will begin with a preliminary analysis of your organization, including your fundraising history, community support, and your outcomes. A closer look at your nonprofit will reveal insight into your credibility, your community relations, and other factors that can determine the success of a campaign.
After they have preliminary information, they can use confidential interviews to piece together the bigger picture surrounding your nonprofit’s possible financial support.
As mentioned above, one of the key steps of a feasibility study is confidential interviews with leading nonprofit constituents. This provides insight into the perspectives of your campaign’s target audience. The interview process includes questions like:
- How does the community perceive this organization?
- What are the challenges that you envision may affect the giving during a campaign?
- Which elements of the campaign do you anticipate funders will be willing to invest in?
In addition to forecasting your campaign success, this process is also successful in building interest among your constituents, encouraging involvement, and raising awareness about your organization’s upcoming efforts.
Preparing for a Successful Capital Campaign
Finally, your feasibility study consultant will provide an in-depth analysis of the data they collected. They will help you understand the projected outcomes of your campaign, explore potential challenges, and give you recommendations for moving forward.
Even if you are not ready for a campaign right now, these steps will prepare your organization for success and help open the doors for a capital campaign down the road. If your feasibility study does have favorable results, you can begin building your campaign leadership and start the quiet phase of your capital campaign immediately.
A feasibility study does more than just predict the success of your capital campaign—it helps serve as a roadmap to your fundraising success. Using the insights your feasibility study provides, you can tailor your capital campaign approach to appeal to large, reliable sources of funding. For help building and executing your campaign, you can find support by partnering with a capital campaign consultant.
While it can be a challenging process, a successful capital campaign will make incredible waves in helping you achieve the financial stability you need to make a meaningful impact on your community.
Written by Convergent Nonprofit Solutions
Convergent is a nonprofit consulting firm specializing in fundraising services for capital and annual campaigns. From strategic growth and positioning services for organizations not yet ready to launch a major funding initiative to feasibility studies, major gift asks, and capital campaign management for those who are, we can provide the professional fundraising expertise to help your organization secure the sustainable funding it needs to achieve long-term success.