A Capital Campaign Primer – Part 1

30 Nov A Capital Campaign Primer – Part 1

30 November 2020

By David Allen, Development for Conservation

Before I start on today’s post, I have a request. I will get Giving Tuesday emails all day as I’m sure you will. I am interested in the subject lines. What are people using to get/draw attention? I have set up a Google Doc – Giving Tuesday Email Subject Lines 2021 – to help gather information. Please add to it during the day with the subject lines you receive – good, bad, and ugly. I’ll include the results on my Resources page for future reference.

Thank you!

Capital Campaigns

Capital Campaigns are fundraising sprints. They are intense exertions of organizational energy. They are built around a starting point, an event that announces the goal and timeframe to the public, and a specific end point.

Many land trusts use the term “capital campaign” to describe the fundraising for each of their projects, and I often hear of an organization doing several “capital campaigns” at the same time. There’s nothing wrong with that per se, but I tend to call such campaigns “project” campaigns (or more simply “major gift fundraising”) to more clearly differentiate them from larger, comprehensive capital campaigns.

For most nonprofits, capital campaigns are tools used to raise money for “bricks and mortar” projects, such as new construction or major building renovations, or for endowed maintenance or scholarships. For land trusts, capital campaigns are tools used to raise money most often for land acquisition or stewardship endowment. In this specific sense, capital campaigns are qualitatively different for land trusts than for other nonprofits – raising money to keep something substantially the same is qualitatively different than raising money to build something new.

My motivation for writing this post is that I have begun to hear about land trusts exploring capital campaigns for other projects, specifically for operating endowment, stewardship endowment disconnected from land acquisition, and for opportunity funds – money set aside for land acquisition not necessarily connected to any specific project. Each of these projects will have some appeal for some potential donors, but each will face bigger challenges as well.

The problem with each of these organizational needs is that the “case” for support is largely intellectual – NOT emotional. And it will be emotions that drive capital campaign giving more than anything else.

I’ll address each case:

First, capital campaigns are not the best tools for raising operating endowment because operating endowment is not sexy enough by itself. I have seen an operating endowment campaign succeed when an iconic founder or long-term Executive Director is leaving, and the campaign is run almost as a parting gift. But as a broad generalization, I would not use a campaign to raise operating endowment. Instead, I would use planned giving and unrestricted bequests. It will take longer to raise the money, but it is more likely to be successful in the long run.

Likewise, campaigns are not the best tool for raising stewardship endowment because stewardship endowment is not sexy enough either (though more compelling than operating endowment, to be sure). Stewardship endowment campaigns can succeed, like the departing ED campaign in the previous paragraph, when they are the ONLY element in the campaign – when the “case” for support can be made solely around the need to endow stewardship. But even then, stewardship endowment campaigns depend on an intellectual “case” rather than an emotional one, and they will appeal to fewer people. They tend to be more dependent on a few larger gifts than on many smaller gifts. (Feasibility studies are even more critical here – will your most affluent donors support endowment?) Again, I tend to look for planned giving solutions for stewardship endowment needs.

But there is at least one alternative to planned giving. In an ideal world, land trusts would be raising money for land acquisition and stewardship endowment at the same time. I call this the Conservation Costs – the amount of money it will take conserve the property in perpetuity. And it includes costs associated with acquisition and stewardship combined. Let’s say that the endowment riser adds 10% to the costs of acquisition. That amount is typically arbitrary. The land trust could just as easily arbitrarily add another 10-25% to every land acquisition project and begin back-filling their stewardship endowment.

By the way, if you are NOT raising money for land acquisition and stewardship endowment at the same time, you are contributing to this problem.

Campaigns also tend to struggle when they are raising money for so-called Opportunity Funds. When you are asking a donor to make a gift, and especially a significant major gift, not having a specific property in mind is a handicap. Again, it’s an intellectual case to put money aside in a ready fund for a future project. (Specific properties are emotional.) And again, there’s an alternative – Call Strategies. Instead of asking donors to give for some non-specific future project, ask them for permission to come to them for a gift when some specific project comes available that you know they will like.

(See a post that included a more detailed description of Call Strategies here: Fundraising Outside the Lines.)

There are GOOD reasons to do capital campaigns, and I will post some of them next week.

-da

Photo by Mary courtesy Stocksnap.io

PS: Your comments on these posts are welcomed and warmly requested. If you have not posted a comment before, or if you are using a new email address, please know that there may be a delay in seeing your posted comment. That’s my SPAM defense at work. I approve all comments as soon as I am able during the day.