Is a Capital Campaign a Good Idea for Your Organization?

Your space is cramped. You have two desks jammed in a room the size of a janitorial closet. There is nowhere to meet clients or donors that presents a professional face of the organization.

Someone just gifted your nonprofit a piece of property upon which you could build a brand-new facility with all the extras. You could have spacious offices, a board room, a break room, storage, accessible restrooms, air conditioning that works and a lobby that shows a professional look to everyone who enters! If you serve animals, you could build brand new kennels and a surgery center. If you provide food to those in need, you could create state-of-the-art storage and refrigeration space. If you conduct adaptive technology training for people with visual impairment, you could create a top-notch indoor/outdoor training space.

What could be better? As soon as you tell people about your nonprofit’s important mission, someone of means will be motivated to give the $5, $10 or $15 million that it would take to create this new facility on land you already own.

It is very easy to get caught up in the passion and excitement that surrounds the concept of a potential capital campaign—to want to build a one-of-a-kind space to deliver on your organization’s mission.

Be Realistic

Your mission IS important. You are doing good for the community. You can see the next word coming, right?

But…

There are many items to factor in when determining if a capital campaign is right for your nonprofit, regardless of whether you’ve already accepted a gift of land (which is a whole separate article!). Here are just a few questions that must be addressed before determining if your organization should embark on a capital campaign. They may seem basic, but for small nonprofits especially, they must be considered in any capital campaign conversation.

1. Do you have 501(c)(3) status, and are you registered to solicit funds in the necessary states?

2. Do you have a strong board of directors of at least nine to 13 engaged members who are well connected in the community, 100 percent of whom give an annual monetary gift?

3. Is the result of the campaign (new facilities of a specific type) in line with the organization’s strategic plan? If not, strategic planning needs to be revisited to see if the strategic goals of the organization have changed or if the idea for the capital project is outside the appropriate realm.

• If you are planning to build an animal surgery center, but the organization’s strategic plan currently calls for the surgery program to be phased out… then the two are in direct conflict.
• If your organization has decided it has grown to the extent that it wants and has no plans to expand in the future, conducting a capital campaign to build a campus of buildings does not coincide with the organizational strategic plan.

4. Do you have an established annual giving program that consistently brings in enough funds from a significant number of donors to run the organization at appropriate operational levels?

5. Is there a true need, and can you demonstrate it in a solid Case for Support (or Case Statement)?

• Is there a demonstrated need in the community that is not already addressed by another organization, which would be effectively solved or improved as a result of the capital campaign?
• Do you need to build a new facility, or would it be a reasonable option to rent an existing space?
• If you have an existing space, could you do some renovations at a smaller level that would provide the needed upgrades without embarking on building a whole new facility?Do you have corporate partners that would consider helping you with some renovations/upgrades?

6. Have you conducted a feasibility study?

• Many small organizations think a feasibility study is too expensive, and they choose to move ahead without one. But if the organization believes it cannot afford an evaluation to find out if a capital campaign is needed and has a reasonable chance of success, how will it be able to afford to conduct the actual fundraising campaign? Too many nonprofits want to embark on a full campaign without taking the necessary strategic preparation steps.

7. Do you have the reach and resources to recruit a robust, connected campaign committee and chair? (Just making your entire board of directors the campaign committee is not a viable option.)

8. What other organizations are currently running or soon launching capital campaigns in your region?

• If there are seven capital campaigns being conducted by organizations with a strong case for building, how will that affect what resources (both in volunteers and funds) are available to your potential campaign?

There are many more pieces to the capital campaign decision and planning process, but the list above covers the items that should definitely be considered first—before you’ve gone too far down the path. It will save your organization time, resources and stress to honestly answer these questions. Too many organizations embark on capital projects on the wave of good intentions and positive motivation without taking the time to analyze whether the campaign is necessary or if success is possible/probable.

Take a look around your community for alternatives. Consider partnering with existing organizations. Look into renting or refurbishing. If a new facility is really in the cards, take the time to go through the appropriate strategic steps and conduct a feasibility study. You will be glad you did.