[VIDEO] Capital Campaigns: Best Practices, Common Mistakes

Brent A. Hafele, M.A. recently joined us for a webinar in which he reviewed three best practices to better ensure capital campaign success, as well as three common mistakes that can sink your campaign.

In case you missed it, you can watch the full replay here:

Full Transcript:

Steven: All right, Brent. My watch just struck 1:00. Okay if I go ahead and get us started officially?
Brent: Take it.
Steven: All right. Cool. Good afternoon, everyone if you are on the East Coast and good morning if you are on the West Coast or somewhere in between. Thanks so much for being here for today’s Bloomerang webinar, “Capital Campaigns: Best Practices and Common Mistakes,” although we’ll spend more time on the best practices, hopefully. My name is Steven Shattuck and I am the Chief Engagement Officer over here at Bloomerang and I’ll be moderating today’s discussion, as always.
Just a couple of housekeeping items for you. I just want to let you all know that we are recording this presentation. So if you have to leave early, as much as we hate to see you leave early, don’t worry. You’ll be able to watch the full presentation later on. I’m going to send that out as well as the slides just in case you didn’t already get those. So have no fear. You’ll be able to review all the great advice you’re going to hear today.

Speaking of that, please feel free to use that chat screen right there on your webinar screen. We’re going to save some time for Q&A at the end, so don’t be shy about sending us your questions and your comments. We’re going to try to answer as many of those as we can before the 2:00 Eastern hour. If you are on Twitter, if you’re a Twitter person, please follow along there. You can even send us tweets as you’re listening. We’d love to see those as well. Use the hashtag #Bloomerang or send us a message @BloomerangTech.

If you’re listening today via your computer speakers, if you have any trouble with the audio, we found that the audio by phone is usually a little bit better than the web audio. So if you have a phone and you don’t mind using it, if you have any trouble there, it’s usually a little bit better. So just dial into the number in the email from ReadyTalk that went out around noon Eastern.

If this is your first webinar with us, we want to say an extra special hello. We do these webinars just about every Thursday. We bring on a great guest like Brent and they’re going to give a great educational presentation. We’d love for you to keep joining those webinars. I’m going to share the schedule with you later on.

If you’re also new to Bloomerang, Bloomerang offers donor management software. So if you’re in the market for that or looking to switch your software or just want to learn more about us, please visit our website. You can even download a quick video demo and get a look at the software. You don’t even have to talk to a sales person if you don’t want to. So feel free to check that out and we’d love to talk to you more about that later on.

But for now, I’m super excited to introduce a really great guy. He’s actually in Indianapolis now, but he’s not at the Bloomerang office, which I feel bad about, but he’s visiting one of his clients, actually helping them out with some campaign stuff. Brent Hafele joins us. Hey, Brent. How’s it going?
Brent: Hello. It’s going well. It’s ironic because we’re doing this national webinar about five miles from each other.
Steven: Yes. I wish you were here with me, but I understand you’re a busy man. You’re helping out a nonprofit client. So he’s taken time away from that to share all this good advice with you guys today. I’m excited for it. I just want to brag on him real quick before I turn it over. Brent is a VP of Client Services over at Dickerson Bakker & Associates, a really great agency.
He provides counsel in actually a variety of areas including capital campaigns, which he’s going to talk about today. He also dabbles in major gift fundraising, annual funding, strategic planning leadership development, board governance and maybe my favorite, vibrancy planning. Brent, we’re going to have to have you on to talk about vibrancy planning. That sounds really good.
Brent: I would love to do that. It’s one of my favorite topics, actually.
Steven: Yeah. He got his chops as ED over at Chippewa Valley Free Clinic. He’s also served as Development Director at Hope Gospel Mission. Until recently, he ran his own shop. He’s going to talk about that, I’m sure, but he recently merged his consultancy with Dickerson Bakker & Associates. So it was a good get for them because Brent is super smart. I’m going to pipe down so that you can all see how smart he is. So Brent, take it away, my friend.
Brent: Yeah. It’s hard to follow up on an introduction like that without failing. So thank you for that way too kind introduction, Steven. I very much appreciate that and the opportunity to share with you all. Today we’re going to be talking about capital campaigns, as you know.
A little bit about Dickerson Bakker, we’ve been in practice for over 30 years and have worked with well over a thousand clients. But of those clients, we probably have done somewhere in the order of between 200 and 250 capital campaigns. So this presentation is a summary, I guess, of some of the things that we have seen that have made capital campaigns great and where we have seen some of the biggest failures or problems. I think it’s important to know these things in order to be the most effective that you can be.

One of the things that I want to share is when I started my career, I started at Hope Gospel Mission, a rescue mission in Eau Claire, Wisconsin. In that opportunity . . . that was my first capital campaign. It was for a women’s shelter. It was where my first major donor ask. It was a number of things that was really, really cool. That was when I learned how capital campaigns work and how they function.

One of the things that I want to do today, I want to start with what is a capital campaign? How do they work? How are they best approached. One of the things that I found over time is that people have a lot of different impressions of what a capital campaign is.

So one of the first things I want to do is actually help you define it because as we look at what a campaign is, we need to have the same definition because there are so many definitions that are out there. My favorite definition is from Bob Duncan. Bob has a real simple definition. That’s a large capital goal or large cash goal against a short time frame. If you want to get to the simplest, I think Bob’s definition is great.

But here are three elements that fit a capital campaign and that fit what they are, how they work. The first step is that they are an intensive, highly coordinated fundraising effort. This is not for the faint of heart. In many ways, when I go in to work with an organization that’s doing a capital campaign, we’re setting up almost a separate department or a separate almost organization for a period of time in order to get the agency, in order to get that campaign goal going. So it’s very highly coordinated with steering committees and volunteers and staff members and sometimes new staff members that come on board. It is an intensive, highly coordinated fundraising effort.

Second, it’s typically for a very large goal. It is for a large goal. Typically that goal is three to ten times your annual income. Now, this is a rule of thumb, the three to ten times. For some organizations like a hospital or a university, it might be three to ten times what their fundraising annually is.

For other organizations like a startup, it could be 30 times what they have raised in the past. It’s not unusual to see a startup that’s been running for a year at $30,000 on a $40,000 budget launch a new homeless shelter or museum, a children’s museum or something like that. Their campaign is for $5 million. But nonetheless, it is a very, very large goal that you’re looking for.

Then finally, it is for a defined period of time. The great thing about capital campaigns is that they end. This too shall pass is a way to think about your capital campaign. Your reward for a capital campaign is a new building. It’s a new program or a new operation of some sort. That’s what I think makes capital campaigns different, because your reward for annual giving is you hit your annual giving goal for the year. Your reward is you get to start it up again the next year and do it again. With capital campaigns you can enjoy your new building or whatever you’re raising your money for, that large feature.

So let’s dive in just for time’s sake to the best practices. I’m going to start with best practice number one is planning ahead, thinking ahead and making sure that you are ready for a campaign. It just happens that since I am in Indianapolis, I had breakfast with a former client of mine who is planning a capital campaign. Interestingly, because of the way that her agency is partnering with another organization, they are looking at doing a capital campaign in about seven years.

I looked at her from across the table and I said, “Do you know what a great opportunity this is?” If you were to use the next five years to start building your organization’s fundraising efforts and actually establish a robust major giving program, by the time you hit the capital campaign, you will be so well-prepared. Unfortunately a lot of organizations come up to me and they say, “Brent, we need a capital campaign. We actually need the money yesterday. So we’re wondering if you could help us.”

In fact, I had a client just recently that contacted us to do an assessment on their organization. They wanted to raise money for a building that they bought and they’re moving in next month. I said, “If you would have contacted us a year ago, my goodness, it would be a very different thing,” especially two years ago. But right now, debt fundraising is very hard. So best practice number one is planning ahead.
Now, we have a worksheet here on the screen and it’s called, “Are You Ready for a Capital Campaign? Campaign Pre-Planning Checklist.” With this checklist, I’m going to walk you through six areas that you need to plan ahead on and think about as you’re approaching your capital campaign.

If you want to get a hold of this checklist along with a couple other handy whitepapers that we’ve got, all we need you to do is sign up for our blog at DickersonBakker.com. Go to the Resources tab and just sign up for our blog. If you do that by Monday at noon Eastern time, we’ll send you this checklist along with a couple whitepapers for your reading. If you like what you’re hearing, you’ll also get on a weekly basis some of our best thinking.

So planning ahead, one of the first things that you need to do as far as planning ahead is really thinking about your strategic plan. So you have a strategic plan in place. Do you have a track record of setting lofty goals? As Jim Collins says, BHAGs, big, hairy, audacious goals. And actually achieving those goals, are you following through with that? Because with capital campaigns, very similar, you need to be in a process of setting a big goal and actually breaking down that project and achieving it.

If your organization is struggling to just get the daily work done and doesn’t have the capacity to take something else on, you may not be ready. With that strategic plan, being able to take a strategic plan on, set some lofty goals, achieve those goals and sometimes even having it within your plan is a good thing when you’re looking at your capital campaign.

The next area is your fundraising program. So with your fundraising program, do you know your top 50 donors? Do you know your top 100 donors? Do you know your top 500 donors? In a capital campaign for a $10 million goal, your top donor is going to be a $1.5 million gift is what you need to do that. So when you’re looking at that, do you have someone in your portfolio to do that?
Some other things you want to look at is are your receiving processes working the way they are? Are you getting receipts out within a week of the time that you get those receipts? I actually in my office, when I was running both the free clinic and the rescue mission, my goal was to get receipts out within 48 hours of our opening that envelope. So just responding really well that way.

Do you have a strong communications program in your fundraising? Do you have a database system, a donor management system of some sort? Bloomerang is sponsoring this session. They offer a very quality package.

So have you looked at is your database system doing well? Finding out midway through your campaign that your database doesn’t work right or that’s it’s not functioning the way that you need is a problem because that’s the time when you need to be entering in sensitive donor information. It’s also a time when you need to be pulling out valuable information. So getting that data system in place is critical.

The next is with your staffing. Do you have the right CEO on board? Do you have the right development director and top leadership in your team? Are they competent? Are they likely to retire in the next year or so? If they are looking at retiring, do you have a plan to deal with that? Do you have a succession plan in place as you’re contemplating your capital campaign? All of those features are critical as you’re thinking about your next steps for a capital campaign.

At the same time, you also need to think about your board. Does your board give as an organization? Do they give as donors to your organization? Were they supportive in that way? Are they active in fundraising? Do they get along with the CEO?

When you get into a capital campaign, they’re very, as I said, they’re tense, highly coordinated exercises and activities. As an intense activity, they’re the type of thing that there is going to be stress. There’s going to be pressure. There will be times when things aren’t going well or people don’t like the way they’re going in just about every campaign, that seems to be the way things go at some point, there’s a lull somewhere in there.
If any of you are marathoners or distance runners, you know there’s a point where you hit a dip in your energy level. You’ve got to run through that. If you’re already not at a good stable relationship with your board, then getting through that period may be even more messy. You don’t need that mess. So making sure that your board relations are solid is also critical.

A couple more things. Thinking about the project, have you actually budgeted out your project? Have you talked with not just an architect because one of the things I’ll encourage you to do is don’t just take your architect’s word for how much a project will cost, “Oh yeah, I did a cost per square foot estimate. This should be a $5 million building.”

Architects are not builders. They’re designers. So they have a rough idea, but take that number and bring it over to a builder and have them spend the $5,000 or $10,000 that you need to get an actual estimate for the facility that you’re looking at so you have the right numbers ahead of time.

The other things that you need to do is make sure that you are estimating inflation, cost of inflation adequately. Just because it will cost you $5 million to build it this year doesn’t mean that it won’t be $5.5 million the year after because something is changing in your market or something big is happening.

Right now, it’s interesting. The cost of construction in the Minneapolis-Saint Paul area has been incredibly high because everyone was working on the Vikings Stadium, on US Bank Stadium, and getting it ready for the Super Bowl next year. So they were all getting that stadium ready. Well, they couldn’t find construction workers anywhere because they were all working on the stadium. So construction costs for a couple years were really expensive. Those are things you’ve got to think about.

A couple other things you want to think about too is do you have a pro forma. Do you know what it’s going to cost to actually sustain the building that you’re building? So it’s great that you can build it, but can you keep it going? Donors, especially high end donors, high capacity donors, get more and more sophisticated. They’re asking questions about the sustainability of your project. Once you open that building, are you going to be able to run it or are you going to run out of money and come begging? They don’t like that. If you’re going to build it, they want a strong organization.

The final thing is do you have counsel in mind, capital campaign counsel? Capital campaigns are, like I said, intensive. They’re special gigs. A lot of work involved and they take . . . there’s a lot of work in that effort. One of the things they encourage you to do if you’re planning ahead is seek out counsel.

Go talk to several firms, consultants. I’ll let you in on a little trick. If you give them a call, you can often get free consulting for an hour or so from these folks and kind of take them for a test drive, find out, “Do I like this person? Do I respect them?” When you’re ready to do the campaign, then you’ll have a good idea of who you might want to go with or at least what your top candidates will be, instead of, “Now we’re ready to do the campaign, let’s go find somebody that will work.”

So when you’re at conferences, even if you’re not ready or you’re thinking to campaign in a few years, go talk to a few consultants or reach out to a capital campaign counsel that you know of and start asking them, “What things should we do to prepare for this?” So that’s best practice number one is planning ahead.

Number two is having a leadership focus to what you’re doing. In the leadership focus, a couple things that are critical. When you have a capital campaign, having those right leaders in place, the type of people that can bring the campaign to success is absolutely hard to ignore. You need to have the right leaders. It seems like in any community, in any town, in any group, there are certain people who, when they beat the drum, others are going to come marching.
So building relationships with people who can be leaders to that campaign is hard to replace. That’s just good fundraising anyway. Peer to peer fundraising is really where some of the most effective fundraising exists. So identifying that is really helpful.

By the way, I see some questions that are coming in on the chat box and I thank you for them. I’m going to take them. Most of them I’ll take at the end. But I do encourage you to keep putting those questions in so that Steven can collect them and we’ll ask them all at the end, but I want to make sure we’ve got time to get through the content and then we’ll take your questions at the end as we go.

So the third best practice that we’ve seen, this is something that is a unique observation that we’ve had at our organization is minimizing the goal to maximize the gift. What I mean by minimizing the goal to maximize the gift is that donors often will look and they’ll say, “All right, you have a $10 million goal. What is my $5,000 going to do to a $10 million goal?” Really, $5,000 toward a $10 million goal does nothing. But still, the $5,000 gift is important or the $50,000 gift is important.

So in that, breaking up your goal into small pieces can make a big difference to your donors. We have a rule, and this is probably more a guideline than anything else, but a guideline at Dickerson Bakker & Associates that we use called the 55 Rule. Here’s how it works. When we are working with major donors, we do not ask donors for more than 50% of the goal and we do not ask for less than 5% of the goal. This is specifically with the biggest of the big donors.

So as we’re looking at working with our donors, we will adjust the goal accordingly. So you have a $10 million goal. We may sit down and say in this $10 million goal, we have a goal of raising $3 million or $3.5 million for the leadership phase of this $10 million goal. “We need to do this by October or by August” or whenever the timeframe is. “Would you consider a gift of $1.5 million to get us moving forward towards that?” That’s that 50% towards that goal.
The reason that we don’t want to go over 50% is donors want to make sure that other people have skin in the game. You don’t want to go under 5% because then they suddenly feel like their gift is insignificant or doesn’t make a difference. So once you’ve reached your $3 million, you have half of your $3 million leadership phase goal, then you might go to another donor and ask for that and ask for that. Pretty soon you’ve got your goal whittled down to, “We need another $500,000 to reach our $3 million leadership phase. Would you consider a $100,000 gift?” That $100,000 gift is within that 55 window. So it’s an effective fundraising ask.

That’s a trick that we’ve found. I haven’t seen it in a lot of capital campaign work. We break those campaign cases down. We break the offers down very specifically to the donors so that we try as much as possible to make sure they’re in that 55 window.

The last best practice that I’m going to share today is thinking sustainably. I kind of foreshadowed this a little bit in the planning, during the planning ahead. There are two areas that I want you to consider as you’re planning your capital campaign. The first is preserving annual giving.

Many folks can get . . . sometimes capital campaigns can cannibalize, especially successful capital campaigns can cannibalize the annual funds. So you’re doing really well on your campaign goal, but suddenly annual giving tanks and you’re 20% below or 30% to your annual goal. So having an awareness as you enter the campaign that you need to preserve annual giving, that you’re not going to go underwater is really critical and being aware of that ahead of time.

There are a couple of ways to avoid that. One prominent way to avoid that is when you’re asking donors for a capital gift, you simply say in addition to your faithful annual giving or in addition to your faithful annual gift. There are times when you can say that and you actually put their annual gift into the proposal, “We’re hoping that you’ll continue your annual gift at $10,000 a year for the next three years. In addition to that faithful annual gift, would you consider a gift of $100,000 a year for the next three years to fund the capital campaign?”
The second sustainability thing is really thinking about post-campaign operations. You need to make sure that you can fund the operation once you get this. So please think about this ahead of time. Write your pro formas out for your staffing, for the cost of operating the building and supplies and everything else you need to keep that organization going for the next ten years, even maintenance that you budget in if there’s going to be, as you build it, you’re going to need a new technology system.

In five years, you’re going to have to replace the computer system in your brand new building. Great. Capitalize that. Plan it ahead of time so that you are coming in fully thoughtful and fully ready to go.

So those are the four best practices. We’re flying through this pretty quickly. Those are the four best practices that we recommend for capital campaigns. The first is planning ahead and making sure that you are ready. If you know even in the next three years that you’re going to do a capital campaign, now’s the time to start planning that. Build up, beef up your fundraising program and reach out to wise counsel to help you with building that.

Number two is make sure you’re leadership focused. Start building relationships with key community leaders who can help you in the campaign and help you build that program. It’s hard to come up and say, “Hey, you’re the right person to help us raise this money. Nice to meet you. My name is Brent. Would you help us get $10 million?” That’s not as easy.

Whereas if you’ve built a relationship with them over a couple of years and you have those targets ahead, your campaign will go much more effectively. Number three, minimize the goal to maximize the gift, stay within that 55 window and adjust your goal. Yes, you have a $10 million total goal, but you can break those goals into sub goals that can be meaningful to your donors.

Then finally, think sustainably, both making sure your annual campaign is not cannibalized and that you can operate the organization well after you have your new facility. Again, I’m seeing questions. Kim Welch has asked a couple questions. I see a few other people that are asking good questions as well. So I appreciate you doing that. Please keep the questions coming. I’ll be ready to answer them in about 10 minutes, maybe 15, somewhere in that range. So more than happy to help you with your questions and I can even stay a little longer if necessary.
Let’s break into mistake number one. Mistake number one is skipping the study. I want you to think about if you’ve ever played the game of clue, the classic murder mystery game, the game of clue has three goals. Who did the murder in which room with what weapon? It doesn’t matter if you play that game in Indianapolis, Indiana or Walla Walla, Washington, or some place in rural Oklahoma. The rules of the game are the same.

The truth is the rules are the same in capital campaigns as well. The difference is that instead of Colonel Mustard with the candlestick in the conservatory, you have, “How does the case resonate in the community? What’s the capacity to fund this project? Who is best to lead this campaign or this project?”

If you have those three elements, you have a campaign. If you don’t have these three elements, you don’t have a campaign. It’s as simple as that when we’re thinking about running a campaign, case, capacity and leadership. So let me take a quick moment to go through each of these terms just so that they’re clear.

Case is your argument for why donors should give you an exorbitant, highly generous gift. That’s what the case is about. So when we’re thinking about case, have you thought through the full element of that? In any good case, you need to identify what the problem is. Not just what is your problem, but what’s the community’s problem? What’s the region’s problem? What’s the nation or the world’s problem that needs to be solved? Why are you the ones to solve that problem and how do you propose to do it? Really going into all of those elements of the case.

The donors need to recognize how that works. I did a project, a feasibility study or a project in Washington state. In that feasibility study, I met with prospective donors of a small community about the possibility of building a pool. Interestingly, 80% of the people in that community, they were actually surveyed. It was small enough where they could survey everyone. They had like a 95% response rate or 80% response rate. Eighty percent of the people in that community wanted the pool.
But I did the feasibility study and I met with the individuals, the top individuals who could give the gift, who would give and actually reach the goal. What was interesting is the people who could give the money to make the pool happen did not see the same value in the case. It wasn’t because they were cheap. It was because they saw different values in the community. It was an issue of case and the argument and the community need was not accepted from those who had high capacity to give to that project.

The second area is capacity and making sure that the community has the capacity to actually support your project, given environmental factors like other capital campaigns that are in the community, other fundraising efforts, given the economy, given just the people that you’re connecting with. Do those individuals have a capacity? The final is leadership. Who is it that you need beating the drum in order to raise this money?

So in a good capital campaign, the very first step is doing a feasibility study or a campaign planning study and really going out and meeting with individuals who have the capacity to give a top ten gift and meeting with them and being able to say, “Do you resonate with this case? Do you feel like it’s valid? Do you feel like this is exciting to you? Is this important? Is this a project that you would give to? If so, what would the size of that gift be?”

I point blank ask when I’m doing a feasibility study, I point blank will ask the prospective donors, “I’m not asking you for a pledge, but can you give me an indication of where your gift might land?” I actually go through a list of numbers and be able to check a box, “Oh, so your gift would be between $100,000 and $150,000. Thank you for sharing that.”

That type of information, that type of intelligence is so valuable. In a good feasibility study, that will help you in having the intelligence of saying, “Is this a $5 million campaign or is this really a $3 million campaign that you need to borrow $2 million for?”

The final is that leadership and who can you beat that drum? Who are those people that can bring this in? Now, one of the side benefits of doing a capital campaign is that it prepares donors and leadership for the campaign itself. If the consultant is going to be walking around and meeting with some of these individuals and asking them about the potential giving and their interest in the project, these donors are savvy enough to know, “Well, I’m guessing people are going to come back and ask for . . . they’re going to come back and ask for a campaign gift. I better keep this on my radar.”
So it’s really the first step of the campaign that gives these donors kind of a head’s up that this is coming. They’re kind of pre-committing in some ways. The other benefit of doing a feasibility study is the old adage that when you ask for money, you get advice and when you ask for advice, you get money. That whole fundraising adage, the feasibility study is a way of asking donors for advice. “How do you feel about this?”

Asking a donor for advice, the reason that adage makes sense is that the donor actually when they’re giving advice, has to come over to your side of the table and look at the problem with you instead of me against the donor and whoever wins gets your money. Suddenly the donor is on my side of the table thinking like a partner. So it changes that donor psychology to be more effective that way.

The next mistake is not asking for major gifts. In any capital campaign, the top 15 gifts, top 10 to 15 gifts will provide 50% of the total goal. Unfortunately, I have seen campaigns start, and these are not campaigns that we would endorse or we would be part of, but unfortunately I have seen campaigns where they will start with annual giving techniques right away and they’ll say, “Let’s send a mailing or let’s send something out,” and they don’t have a major gift focus to what they’re doing.

So here’s how campaigns actually work. I’m going to bring out the old donor pyramid. On this, what you can see is that surface area on the left triangle, the left pyramid, surface area is people. So you’ll have many, many people in the mainstream that are giving small gifts, $100 gifts, $1,000 gifts, things like that. They’ll go all the way up to lead donors to very few people that give at the very top.

Well, the pyramid is actually flipped when we’re looking at a capital campaign. In those campaigns, you have a very small group of people, probably like I said, about 10 to 15 that will give 50% of your total goal. If you can’t get those 10 to 15 people, you don’t have a campaign. The bottom 50% is often 300 people, 300 gifts.

So really, you have to think with a major gift focus in these campaigns. If you can’t get that top, you won’t get the bottom. The thing is that fundraising, especially capital campaigns, giving is sequential that goes from top to bottom, so you need to make sure that you’re doing that in that right manner.
That leads us to our third mistake. That’s premature timing. That’s really building before you’re ready to build, moving before you’re ready to move. We’ve identified three pressure points where folks tend to move prematurely and they get into trouble. So I’m going to share those three pressure points or pinch points that cause problems.

On the screen, what you can see is the process of the capital campaign. At first, there’s a readiness. That’s all your preparation. Then you move into your feasibility study, quiet phase, public phase and then finally your fulfillment phase. This happens with all capital campaigns. Now, the first pinch point is right when you choose to launch. We’ve talked about planning ahead.

We talked about the six areas in that checklist that you need to make sure you have a pretty solid understanding of and comfort level with before you progress. If you jump too early before your organization is ready, before your project is ready, before you have all your T’s crossed and your I’s dotted, you can get into trouble. We have found that campaigns are not as successful if they launch at this pinch point before they’re ready.

The second is they kick off the campaign too early. Now, the way a capital campaign works is, again, we’ll just say $10 million goal. It doesn’t matter if you do a $10 million goal, a $1 million goal or a $100 million goal. The concepts are the same. But if you launch a $10 million goal and you go up to your community and you say, “Hey, we’re going to have a $10 million goal. We’re raising $10 million. We need everyone to pinch their pennies to help us raise this goal.” Your $5,000 donors, your $500 donors are going to look at that and say, “My money is not going to do anything for a $10 million goal. I’m going to hold on to it.”

But if you raise a significant chunk of your money at the beginning of the campaign, if you raise your money at the beginning of that campaign in a quiet phase . . . this is what typically happens if you raise that top 15 gifts that accounts for 50% of the goal, 60% of the goal, if you raise that ahead of time, you can go out to your community and say, “Hey, we’re doing a capital campaign. We’re trying to raise $10 million and oh look, we’ve got $6 million in the bank. We need your help to get the last $4 million. We have $8 million in the bank. We need your help to get the last $2 million.”
All of a sudden, those goals seem doable. Donors that are lower in the donor pyramid will suddenly see that the goal is achievable and they will be more likely to give. It’s a critical thing, making sure that you hit that pinch point. I typically recommend that for most organizations, they kick off the campaign once they have 60 to 80% of the total goal secured in cash or pledges. You don’t want to go early.

The last pinch point that I’m going to share is breaking ground. Groundbreaking is also a very strategic thing from a fundraising perspective. You don’t want to break ground early. I had a client in Indiana, actually, that I was working with that did a capital campaign. I was not involved in this. I was hired for strategic planning for this organization, but was doing a capital campaign. They broke ground after they were at about 40% of their goal because they were really chomping at the bit, “We need to do this. This is an important need.”

So they started building. They did their ground breaking and started building. Low and behold, the building was up and they were only at 50% of their goal and three, four years later, they’re still at 50% of their goal. Donors stopped giving. Essentially what they’re saying is, “What do you need my money for? I can see it. It’s right there. You don’t need my money. I can see the building.”

So if you break ground at the wrong point, yes, there’s a bump when you break ground, donors get excited and they say, “Yes, this is a project that’s going to happen,” but that bump is short-lived. It lasts a few months and then after that, it stops. So if you break ground too early, you’ve got a problem.

I often recommend ground breaking at about 80%, between 80 and 90. Now, there are some strategic reasons to do it at 60%, but in general, that 80 to 90 is a much more comfortable zone.

The final mistake that I want to share before I launch into questions, and I want to thank you for putting all the questions in, my goodness, you have a lot of them. This is going to be great. The final mistake is poor follow up. After you get done with the capital campaign, it’s really easy to get tired and like, “We reached our goal. I can rest.” Just because you reach your goal in cash and pledges does not mean you’re done. There is still a fulfillment phase. You need to collect on those pledges.
So this is where the fulfillment phase is so critical of following up with your donors on a regular basis, giving them construction updates, meeting with them, sending updates on a regular basis, sending them reminders to fulfill their pledges and helping them through that fulfillment phase.

In any good fulfillment phase, you want to do a few things. Number one, first and foremost, you need to celebrate. Holding a big celebration of some sort, whether that is an open house or some sort of community block party or something, but you want to invite the community to your organization to say, “Thank you for coming. Thank you for your help,” and really celebrate what they did as donors.

The second reason you want to celebrate is to share that, “We are the type of organization that sets big goals and look at what we do when we’re trusted with those. We accomplish them and we do it with excellence.” It’s a way to help kind of polish your brand.

The third reason that you want to do a really good job in celebrating in a fulfillment phase is because it helps you position well for annual giving. A good capital campaign, in a good capital campaign, if you do it right, your annual giving will have a big boost. But once you’re done with that celebration, you need to keep going and keep actually stewarding those donors so they pay their pledges all the way through.
Organizations that do not pay their pledges all the way through or do not follow up and keep cultivating those pledges and stewarding those pledges all the way through can see loss rates of sometimes 10, 20, sometimes even 30% because they did not get the proper follow up. So that’s something to really think about is don’t fall short on that follow up.

So here are the mistakes on this side. Number one, skipping the study and not paying the money, frankly not investing in a feasibility study and getting an outside perspective. It can be tempting to say, “I can go talk to my donors myself.” The challenge is if you go talk to your donors yourself, donors don’t always tell you the truth. So that outside person can help in getting really accurate data.

Number two, not asking for major gifts, going right out to the regular donors base right away without getting those top ten big gifts. Premature timing, not hitting those pinch points at the right point and passing go and collecting $200 before you’re ready is a problem. Then finally, poor follow up, you reached your goal but you didn’t follow through on pledges and kind of left donors hanging.

So I’m going to open it up to questions in just a second. Now, I saw a couple people asking how do we get that campaign checklist? I just want to remind you, if you go to the Dickerson Bakker & Associates website at Dickerson-Bakker.com, go up to Resources and just sign up for our blog, you will get . . . if you do that by Monday at noon Eastern time, we will send you probably Monday afternoon or Tuesday morning, we will send you three whitepapers, one of them including that checklist on capital campaigns.

The second thing you’ll get by signing up for the blog is you will get our blog updates. I just recently wrote a story . . . I just wrote a blog entry about selling out of your own pocket. One of the things you shouldn’t do with major gift fundraising is sell out of your own pocket. I won’t tell you what that’s about. You can go to the blog and find out. But those are things that are good reminders as you think about campaigns.
So with that, what questions do you have at this point?
Steven: Well, that was great, Brent. I don’t mind forwarding you some of these questions if it’s okay if I can kind of moderate them to you.
Brent: Please do.
Steven: That was awesome. Thanks so much for sharing all that good stuff. Yeah, you’ve got a lot of people thinking and we’ve got a lot of questions here. So we’ll role through them as fast as we can. I’ve got one here from Kim. Kim, it looks like she’s with a startup organization. They’re a nonprofit film production school, sounds really cool.
Brent: Wow.
Steven: Struggling to give a tour when she can’t. There isn’t a facility yet. It seems like they’re a new organization. What can you do when maybe the org isn’t quite off the ground and you don’t have a lot to show to a potential donor?
Brent: That can be really tricky. Kim, I think a couple things come to my mind. One is that you can use events very strategically. Events can be really problematic because they can take a lot of time. They can cost a lot of money and they can be without fruit. But events don’t have to be a big deal. They can be 15, 20 people getting together to watch the screening of something.
So if you’re doing a film production studio or something like that, being able to invite key people and setting up a studio in a warehouse somewhere and saying, “This is kind of the thing that we want to setup. Let us give you an example of what’s capable.” Giving them a taste of what the impact of that can be.

You can also introduce them to potential people who could benefit from such a training program. Being able to say, “This is someone who aspires to do this. He’s a high school student in our area. This is the benefit of that.” I think those are some ways, Kim, that you can do that. But great question.
Steven: Very cool. Here’s one from Sylvia. Sylvia is wondering, she’s often heard a capital campaign ask amount is often 10 times a donor’s annual giving. Do you agree with that range, Brent, or is there another range that you like, sort of tying the ask to what a donor has previously given, some sort of multiplier or some other range of deciding that?
Brent: I’m frankly uncomfortable with the ten times. I think that that’s kind of an old school way of approaching it. I think this is where you need a good feasibility study, frankly. In a study, that’s where your consultant is going to be asking questions, specifically to try to tease that out. In addition, this is where doing some sort of wealth screening is helpful.
Frankly, doing just donor screening with your board members, you’re doing donor screening with some of the individuals that are interviewed in the process is helpful as well. Simply asking, “Can we ask George and Harriet for a $50,000 gift or is that out of this league?” It’s not uncommon for donors to give $100 a month or $100 a year or something like that and then you get into the capital campaign and they are properly engaged.

I see so many nonprofits that are not doing a good job engaging their major donors. Suddenly you have put a project that is exciting to them and they haven’t given $100 a year or $1,000 a year and now all of a sudden, they give $100,000. If you go by that 10 times, thing, you’re going to leave money on the table in some cases and you’re going to insult people in the other.
Steven: Yeah. It seems a little arbitrary.
Brent: I think that’s an old way of looking at it. But thanks for asking, Sylvia. I’m glad to get that off the table.
Steven: What about the public phase of the campaign? So Gwen is asking about strategies there. She’s seen a lot about the readiness stage, the feasibility and the quiet phase, but what about tactics in that public phase, specifically? Any advice there? it seems like there are a lot of best practices for every other phase but the public one.
Brent: Yeah. Well, one of the best practices for public phase is get all your planning done in the quiet phase. I’m working with my clients months in advance of the public kickoff to get everything in place so that we are planning the announcement.
We are planning some sort of . . . if it’s going to be a gala or a community event or something like that, if it’s a Christian organization, we’re planning our church blitz, where we’re going to present to 20 to 30 churches in two weekends or one weekend. We are connecting with social service organizations. We’re scheduling those out ahead of time. I think that is a really key effort.

The second best practice is don’t lose sight of major gifts. So a lot of times we’re like, “Thank gosh. We are now to the public phase. I’m so grateful we’re there.” So now I don’t have to ask major donors for gifts. That just is dangerous and problematic because you still may have $2 million to raise. It’s still a significant amount of money and you’re not going to raise that from $25 gifts through the mail.

So you have to continue to go out and present proposals to donors and there will be some six-figure donors they give at the end of the campaign instead of the beginning. There will be some mid-level donors that give $10,000 or $25,000 that they need to be approached in a very particular way in order to get that. So don’t be afraid, don’t miss that. So I think those are two big best practices when it comes to public phase funding.

I think the last thing I would share, I don’t know if this is a best practice. It’s just a caution. Be cautious with how much marketing and advertising you do for the campaign. This is a time when a lot of folks like to say, “We can put something in the newspaper.” I often don’t see a reaction to that. If you get a story on the front page of the newspaper, that’s awesome. But paying for an ad that people are going to reply to, I just don’t see a lot of results in most places. You need to be cautious with that element as well.

The last thing I’ll share for best practice for public phase is get it done with. Get that phase done as fast as you can. As soon as you launch and go public, when you roast a turkey, there’s those little turkey timers or little turkey temperature things that when it pops, the turkey is done. Capital campaigns have those little turkey thermometers or turkey timers as well.
So I think after you announce the campaign, it’s about six to nine months. After you hit six to nine months, people say, “Yeah, that’s done.” You can’t maintain the momentum any longer. You need to be cautious about that and get as much done. It is an absolute blitz once you hit public phase. Quiet phase is nice and steady and you just kind of work as you go, but public phase is all hands on deck working at a furious pace to try to get this reeled up in six months or less. Great question, Gwen, thank you.
Steven: You don’t want that lasting years.
Brent: Yeah, exactly.
Steven: Here’s one from Julia. I really like this question. What about rewarding those major donors? What’s appropriate? I think we see brick pavers and invites to maybe exclusive events. Have you seen any creative recognition for those major donors for the people who help us out in these campaigns?
Brent: Yeah. There are a number of things that can be done. Some of the classic ones are naming the room, naming the building. I encourage you to, with your naming policy, make sure that you have those policies in place before you start your campaign so it’s real easy to implement them instead of later on, you have a lot of problems with, “Well, we’re not sure. We haven’t decided that.” You can come up with an issue.
But one example of a real creative thing that has been done is there was an organization I worked with up in Bemidji, Minnesota, an arts organization, Watermark Arts Center. They had a donor who they were moving into the building of Jan and Joe Lueken. This building was where the Lueken family started their grocery store business. So they started their grocery store business here in this building that is now going to become the arts center.

The Luekens gave a very nice gift to the campaign. In recognition of that, instead of naming the building, instead of naming something else, everyone calls it the Lueken Building anyway by its history, one of the things they did is they are going to build a tribute wall just kind of documenting the history of this family in Bemidji and their good work in that. That was a real touching way of honoring and recognizing their generous gift, not just to the organization, but to the community.
Steven: Very cool. I like that a lot.
Brent: Any time you can make it personal, any time you can make it not just like, “Well, it’s a quid pro quo. You have $500,000. Here’s a room.”
Steven: Right.
Brent: But we see you. We see you as a person. We thought about it. We thought this is honoring your daughter who died and we know this was a passion of your daughter. So we thought that naming the band room in a private school or something like that after your daughter would be something that would be so appropriate for her because of her passion for playing in the band. Those are the types of things that just are so meaningful and much better than a, “Here’s your gold watch for giving us a big gift,” or something or whatever that happens to be.
Steven: Yeah.
Brent: Thank you, Julia.
Steven: Well, there’s no way we’re going to get to all these awesome questions, Brent. We’ve probably only got about two minutes left. Is there a way people can email you? Do you mind answering questions via email? I know it’s on the screen, but I just want to get your okay.
Brent: I am more than happy to take your emails, first of all. The second thing is if you’re comfortable, Steven, in sending me the questions, I like to blog on these things. So this is where I get a lot of my blog topics is questions. I’m more than happy to take these questions and over the next six months pick out select ones and answer them. We’ll just post them up on the blog as we go. I’m more than happy to do that.
Steven: Sure thing.
Brent: I can stay longer if you want too. I don’t know if that’s of interest.
Steven: I’ll send you the questions and I would definitely encourage folks, please do email Brent. Tweet him. Obviously a super smart guy and wants to answer all these things. So Brent, this was awesome. Thanks for hanging out with us for an hour or so. I know you’re busy especially today in Indy. But it was really cool to have you.
Brent: It was my pleasure. Thank you so much for having me. Again, I encourage anyone who’s listening if you’re contemplating a campaign or you have questions or there’s anything I can do, don’t hesitate to contact me, even if we’re not going to do business together, that’s fine. I know that’s the way Steven works as well. They have a similar perspective of we just want the nonprofit sector to grow and to be effective. So if there’s anything I can ever do for you, don’t hesitate to contact me. But thanks for taking an hour out of your day today.
Steven: Yeah. Absolutely. I know you all are very busy too. It’s always cool to have you listen in on these webinars. Speaking of webinars, we’ve got another great one next Thursday. If you have trouble asking for money in person, definitely listen to this one. It’s a nice sequel to this webinar, I think, because I think you’re probably going to be doing some in person asking. Check us out. One week from today, Brian Saber, his thing is asking in person.

So he’s going to give some really practical tips. Even if you’re a really shy, introverted person like I am, you’re still going to take something away from it and start using it right away. That’s going to be a really great one. We’ve got other webinars scheduled for the rest of the year. You’ll see some other topics on there that you may be interested in. We’d love to see you again on another Thursday webinar.

But thanks again to all of you for joining us. Look for an email from me with the recording and the slides and I’ll definitely include a link to our upcoming webinars in that email as well. So stay tuned for that this afternoon. Have a great rest of your Thursday and a great weekend, for sure and hopefully we’ll talk to you next week. Bye now.

Kristen Hay

Kristen Hay

Marketing Manager at Bloomerang
Kristen Hay is the Marketing Manager at Bloomerang. She also serves as the Director of Communications for PRSA’s Hoosier chapter.
Kristen Hay
By |2017-06-10T18:04:50-04:00February 6th, 2017|Webinars|

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