De-Mystifying Capital Campaigns – Spring 2023
By Sharon Danosky, President

Probably nothing entices or scares boards more than the thought of a capital campaign. They are enticing because of the potential inflow of capital. They are frightening because they are unlike other fundraising efforts and require a structure and methodology that are unfamiliar to most boards. It also can be daunting because most development professionals, as skilled and accomplished as they may be, have never undertaken a capital campaign. So it may seem a little like steering a ship without a rudder…but, first things first.

Why do a capital campaign? Capital campaigns are undertaken when there is an urgent compelling need to raise significant funds for a specific purpose:

• Urgent compelling need: leadership of the organization needs to identify and address one or more critical aspects of their organization in order to continue providing vital services aligned with its mission. This does not mean building reserves for operations or trying to make up for a budget deficit that has occurred over one or many years. It is a need that is forward-looking and visionary.
   
• Significant funds: the organization needs to raise money above and beyond its annual operating revenue or budgeted revenue
  
• Specific purpose: the organization needs to have a compelling purpose for which it is raising these additional funds and a thorough explanation for why it is necessary. This means having a clear vision, something you want to aspire to. In capital campaigns, we often speak in terms of donors giving to lofty visions, not needy organizations.  

How to begin a campaign?

To start a campaign you need to be able to articulate why you are raising funds and how they will be used. That is pulled together in something called a Case for Support (which we will review in an upcoming newsletter). Then you need to perform in-depth donor research and develop a strong prospect pool to support your initiative. 

Selected donors will be interviewed to gauge their interest and provide feedback about the reason you are raising additional money. They will also be asked whether they would be willing to support this campaign and the range of support they might provide, should you move forward. That interview process is called a pre-campaign study or feasibility study.

A feasibility study is usually performed by an independent consultant because of the objectivity it affords and does four things:

1. Evaluates your organization’s internal readiness to take on a campaign
2. Tests your case for support and your funding priorities – will donors support it?
3. Assesses the funding potential – how much money can you raise?
4. Engages your key donors early in the process.

There is an old adage in fundraising: “If you ask for money you get advise; if you ask for advice you get money”.”  A feasibility study is the ultimate advice-asking methodology.

If the feasibility study goes well – what next?

If the feasibility study demonstrates that you have sufficient support for your initiatives, then the campaign can move forward. The first order of business is to establish a campaign infrastructure which includes setting up a Campaign Cabinet, training your volunteers how to raise funds, drafting gift policies, creating naming opportunities if applicable, developing prospect lists, preparing pledge forms and donor tracking sheets, and solidifying board pledges. You will also want to do some kind of notification to your donors who participated in the feasibility study — they will be your first donors to the campaign. Danosky & Associates prefers to do this with a reception for the feasibility participants either in person or via zoom.

With the above in place – you are ready to enter the Quiet Phase of the campaign where over 60% or more of your funds are raised. This is the quiet, one-on-one solicitation of your donors. No publicity, no fanfare – just personal meetings asking your donors to support your initiative. The quiet phase may last 6-24 months, depending on how many donors there are to solicit.

The public phase is the last phase of the campaign – and some campaigns never go to a public phase because the funds are raised in the quiet phase – which, to me, is a wonderful thing! A public phase is right for a number of organizations, but not for all. At the end of the day – a campaign is about raising significant funds, not about generating publicity. And you don’t need publicity to raise money from your most generous donors – you really just need a compelling vision.

Should We or Shouldn’t We?

The decision to enter into a campaign is really dependent on whether there is an urgent, compelling need. There is no right or wrong time to enter a campaign. In 2008, many campaigns were shut down out of fear of not being able to raise funds. Those that did not shut their campaigns down did very well – a very valuable lesson learned – especially for those who delayed their campaigns. The same fear occurred during the pandemic, but that time most consultants advised against closing down campaigns and pivoted. I launched several campaigns during the pandemic – and all performed beautifully in a virtual kind of way. It really comes down to whether it is the right time for your organization.

One last thought – campaigns require an organization’s full focus. They are time-consuming and intense. They are also exhilarating and can transform an organization in a significant way and build lasting relationships with your donors that can impact your organization for years to come. 

If you are considering entering into a capital campaign, please call Danosky & Associates for a complimentary consultation.

The “great resignation,” a term coined by Anthony Klotz, a Texas A&M University associate management professor, is permeating the nonprofit sector these days.  

According to the U.S. Department of Labor, during the months of April, May, and June 2021, a total of 11.5 million workers quit their jobs. A survey of over 30,000 workers conducted by Microsoft found that 41 percent are considering quitting; that number jumps to 54 percent when Gen-Z is considered alone. Gallup found that 48 percent of employees are actively searching for new opportunities. A quick Google Search shows a lot of the analysis of the resignations has been focused on the for-profit sector — though some savvy recruiters are positioning it as a great opportunity for those working in corporations or business to transfer to the nonprofit sector (that is a discussion for another time and place). The reality is – it is happening in our sector as well. 

Some transitions are happening because leaders who have been at the helm of nonprofits for a long time are retiring. Some are resigning, without any plans, simply burnt-out from what has transpired over the past 18 months, to potentially re-emerge at another a nonprofit (or as a consultant). Some are opting for a different lifestyle. No matter what the reason – it is happening and we need to think about the impact it is or will have.

This is not surprising when taken in context: for too long, Executive Directors have been required to do “much with little.” In 2009, the Stanford Social Innovation Review published “The Nonprofit Starvation Cycle” based on research done by the Bridgespan Group. They found that nonprofits are loath to spend money improving infrastructure or augmenting their management capacity because they don’t want to increase overhead spending. However, underfunding overhead can have disastrous results – one of which is the great loss of leadership following a crisis or series of crisis. Many of these executives have felt that they have seen their organizations through the worst of it. Indeed they have; and they have earned a special place in all our hearts. But if we do not learn from these resignations and fund our nonprofits as they need to be funded, we will be far worse than before the pandemic and ill-equipped to support the recovery that could take another decade. 

Meanwhile, nonprofits need to transition and there are some interesting models that have emerged:

• Strategic alliances, particularly mergers or acquisitions, is one such model. Before expending the time, effort and investment in new leadership – the board can consider merging with another organization or even being acquired which will strengthen both organizations’ purpose and mission? With any resignation or transition occurring today, this must be considered as a viable alternative
• Another option is bringing in an Interim Director as the Board considers its next steps. This allows things to slow down for the careful and deliberative process required before replacing and executive. This can be particularly helpful while considering a merger. It can also have a stabilizing effect while searching for new leadership
• It may also be a good time to take a new look on what leadership means. There are more nonprofits looking at dual, tri or even quadruple leadership models – meaning that the responsibility does not fall on one individual (see article below). Few nonprofits have a deep enough management bench to assume all the different responsibilities required of leadership. Usually the Executive Director is carrying the majority of the burden. Co-Executive leadership is emerging, with different variations. The simplest are the outward or inward facing model or the Artistic Director and Business Director; or the Managing Director and Clinical Director. While more costly than a single model, it is less costly than building a management bench. More important, it might just minimize the level of stress and burnout the majority of Executive Directors are facing today

Transitions are never easy – and the ones we are facing today are particularly difficult because of what has precipitated them. Transitions and resignations are a great time to take pause and ask: what is the most effective way to meet your nonprofits purpose and mission?

(If your nonprofit is working through a leadership transition, Danosky & Associates is available for consultation!)