A CDS Resource Guide:


What is a Capital Campaign?

“The key is taking responsibility and initiative, deciding what your life is about and prioritizing your life around the most important things.”
- Stephen Covey -

A capital campaign is an important tool for a nonprofit corporation, able to rally support from its board, staff and constituents. It presents an opportunity to gain the approval and ownership from the organization's community to work towards raising a significant sum of money to achieve a specific goal or a series of goals.

Many people believe a capital campaign is only to be leveraged for bricks & mortar, or buildings and equipment, furnishings, etc., all of which are capital assets on the accounting balance sheet. But, in fact, a capital campaign can be carried out to marshal the resources needed to accomplish many more goals than simply capital asset building or acquisition.

Campaigns can be mounted to fund many things, but most commonly they fall into one of these four categories:

  1. Capital Assets — Land, improvements to land, plantings, buildings, equipment and furnishings. Acquiring, building and conserving property.
  2. Programs and Services — This includes the people, processes and systems needed to build the infrastructure to design, create and carry out the programs.
  3. Debt Reduction — The elimination of debt for the corporation, including the mortgage, other installment debt and obligations to free up working capital that was being used to service that mortgage principal and interest.
  4. Building or Growing an Endowment — An endowment is a fund created to help sustain the organization long-term. It can be designated to cover certain expenditures, or it may be unrestricted and left to the discretion of the management team and board of directors. Most endowment funds are established with a desire to ensure ongoing, uninterrupted operations without financial pressure being put on the operation for cash-flow.

It could be said that capital campaigns are more easily mounted for projects in the above order because people like to see buildings and permanent recognition of the work that they have done. You can build it, sit in it, attend meetings in it and use it in a tangible way. Programs and services capital campaigns are the next most easily accomplished, because donors know what will become available and they, or their friends, may in fact use this programs or services. For instance, a teaching and research hospital might offer you the opportunity to join a clinical trial for long-sought treatment of a dreaded disease.

Debt Reduction and Endowment Building are more difficult because people like to pay as they go; they don’t want to pay for yesterday’s folly or tomorrow’s foolishness. Endowment campaigns are, however, typically looked favorably upon by many of the more conservative donors because they like to think that organizations to whom they give will be sustained, and do good into perpetuity.

How do Capital Campaigns Develop, and Why?

Every high-quality nonprofit corporation (like innovative for-profit corporations) is eager to strive to do more and better work, to meet their mission even more effectively. Yet, frequently, there is not money in the operational budget to help pay for this innovation, improvement and achievement. Thus, more money is sought to help realize dreams and vision. Most nonprofits struggle to make the payroll, and to pay the bills. With tight budgets, nonprofits often turn to capital fundraising campaigns to make the funds available to do extraordinary things.

For example, arts organizations are lucky if ticket sales, advertising and memorabilia sales fund 60 percent of their budget, so they are already having to raise 40% of their annual budgets in charitable gifts to sustain themselves. When they consider major improvements, there simply is no money to make them without the special dedicated effort of a capital campaign. Whether the goal is to renovate a performance hall or to produce and pay for a new production, substantial funds are needed and must come from a purposeful effort to raise the money through a capital campaign.

The same can be said for a hospital or major medical center. Each year, they struggle to cover their costs for increasingly expensive patient care, cost for uncompensated care, and the other expenses such as amortizing the debt for the incredibly expensive equipment they have to purchase. Patient payments and insurance payments often leave large gaps which profits will not cover. Therefore, they must raise money through a hospital foundation. Where does the hospital turn when they need a new wing for specialized heart care, or a cancer center or a new emergency room? Often the hospital's chief executive asks the hospital foundation if they can step forward and appeal to the community to make this investment with a capital campaign to raise the millions of dollars to help pay for these desperately needed facilities.

What about a major University, determined to raise its reputation in the research community by making a major investment in Cancer Research over the next decade? Budgets are tight, and it will cost millions of dollars to recruit the highly sought-after team of renowned physicians to build the team that will lead the research. And, it will cost tens of millions of dollars for the equipment they will need and the buildings in which to house it. From where shall the money flow? The University president has struck a partnership with a major pharmaceutical company who has pledged a $100 million challenge grant, which the hospital will match through a capital campaign seeking five year pledged gifts.

What are the Essential Elements of a Successful Capital Campaign?

Every successful campaign is built upon the foundation of four basic pillars - or the Essential Elements.

First, the Case for Support. This is the document that describes your organization and your current project. It answers questions:

  • What does your organization do? What is your vision, intent, mission? Why is this needed and important?
  • Why are you proposing or running a campaign? What, specifically, will these funds make possible?
  • Why are you choosing to run this campaign now? Why is this project developing now, rather than last year or five years from now?
  • Who will this impact? How will it bring transformational change to individuals, the community, the world?
  • How will you do all you say you will do? How will this campaign make these things possible?

The Case for Support, or Case Statement, will incorporate your project description. More importantly, it will tell your story - of your organization, of this particular project, and those you are and will be serving. Be specific in the usage of funds being raised. If your goal is $5 million, specify what that $5 million will accomplish - and also what you will prioritize if, for some reason, only $2 million or $3 million is raised. In addition to facts and figures describing need and intent, provide heartfelt stories and testimonies that illustrate those needs and put a face on those you serve. People don't give to facts and needs - they give to other people who will genuinely benefit from their generosity.

The other three of the four essential elements, as we define them, are: Leaders, Donors, and a Proven Campaign Plan, all of which are explored in depth on this page.

Why are Leaders and Donors so Important?


The opening quote on this page, from Stephen Covey, outlines what a person needs to do to accomplish the best results with their business, their life and their efforts. The same can be said of a nonprofit corporation. The executive director, with input from the board of directors, must take the responsibility and initiative to create a vision and set the course for their institution, and then rally the entire organization to work in concert to achieve those important objectives.

The process of planning a capital campaign can be very different in every institution because of its size, scope, polity, organizational responsibility and board involvement. For best effectiveness, the organization performs comprehensive strategic planning, usually through a committee of the board working in concert with the CEO and the senior staff of the organization. Often a facilitating consultant is engaged to lead this process.

The leadership team is often best made up of volunteers. The campaign chair and members of the campaign leadership team should be recruited from among the organization’s board of directors, major contributors, community leaders and top prospects. The committee should be given a structure with regular meeting times/dates and responsibilities. These volunteer leaders need to accept key roles in the campaign organization, make significant contributions, solicit gifts from key prospects, recruit volunteers, and demonstrate a positive public position regarding the campaign.

The team creates the strategic plan, and put into place the tactical plans to carry out that plan. By assigning every level of management with practical and tangible tactical plans that, when followed properly, will naturally lead to the execution of the strategic plan, you ensure the strategic plan is implemented--and that it can be evaluated, re-calibrated, and tuned to fit the changing objectives of the organization.

This tactical (or operational) plan should be tied to specific operating goals for each division and leader in the organization. The operational plan and the staff leaders assigned to carry it out should be monitored and evaluated on a regular basis to determine whether people are meeting their specific goals and departmental objectives. If the goals are unreasonably difficult to achieve, they may be loosened a bit, and conversely, if they are too easily met, more might be asked of those with operating authority. These adjustments will make modest changes in the timing for achieving the strategic objectives.

Optimally, your top leadership is also your list of initial donors. As part of the leadership team selection process, you want to include your strongest supporters who can also provide strong initial gifts, and can initiate or even lead solicitations with other potential donors as the campaign gets fully underway. Many times, too, with a strong team, the individual leaders can offer up just a few hours of their time every week - rather than dedicating their entire lives to the campaign for its duration.

What makes Capital Campaigns so Effective?

  • Capital Campaigns marshal all the resources of the nonprofit corporation. Board members, leadership team, professional staff and volunteers rally to support this important initiative as laid out by the leadership of the President/CEO and the Chairman of the Board of the institution.
  • Capital Campaigns are like movement, based upon momentum. If you can build them properly, they develop an energy of their own that takes them farther than most people felt they could go.
  • Capital Campaigns are extraordinary undertakings and they are elevated as such in the minds of the institutional leaders, as well as the recipients of the services and the entire community in which the organization lives.
  • Capital Campaigns with large visionary goals attract the best leaders and the best efforts of these leaders. When an exciting project is announced, it is much easier to get the most prominent, affluent and influential people to accept a leadership role because they respond to big ideas, big challenges and big vision. For this reason, you can build a stronger volunteer leadership team.

Why does Alabama routinely get the best 5-star football recruits, and why do Duke University and the Universities of Kentucky and North Carolina generally get the best 5-star basketball recruits? They have created big vision for their programs, and people want to become associated with that franchise because of that vision.

  • Capital Campaigns are often billed as once in a lifetime opportunities to make a difference in the life of your Alma Mater, your community hospital, your extraordinary theatrical group, your prep school, etc.
  • Capital Campaigns solicit pledged support, pledges scheduled to be paid over three, five or even ten years—so they allow the donors to have incredible flexibility as they balance new giving with other commitments, etc.
    In summary, a capital fundraising campaign is an intensive, highly choreographed and carefully planned initiative that unfolds over a period of from one year (small nonprofits) to five years (Colleges/Universities) of active fundraising or gift solicitation. The pledged gifts collected are then paid over a period of three to ten years based upon the goals and strategies set forth by the institution in the planning phases of the capital campaign.

There is no more cost-effective or efficient way to raise large amounts of money, because you are asking people for long-term pledges, using much volunteer effort and the costs of fundraising is generally pennies on the dollar -- whereas special events, and other means of fundraising can cost 20-50% per dollar raised. The visionary goals of capital campaigns encourage people to give more substantial gifts based upon appreciated and accumulated assets, versus giving from income alone. Therefore, you find people who are blessed with large holdings of appreciated stocks, bonds, land or art works, already considering what their legacy will be, who can be approached and persuaded that this is the best opportunity to leave the world a better place by making a substantial investment today.

How Can You Prepare for a Capital Fundraising Campaign?


As mentioned earlier in this discussion, the place to begin is strategic planning and developing a vision for a better organization and a more exciting future. Once you have that vision ready, you can begin to test it with your board, leadership, your major donors and your various constituencies in the community. How do you test it?

The most effective way to test your vision and to prepare for a capital campaign is to engage in pre-campaign planning usually through a process we call a Capital Campaign Feasibility and Planning Study. This can be called a Campaign Feasibility Study, a Campaign Planning Study, or it can simply be named as the first phase of a capital campaign plan and termed the Campaign Organizational and Planning Phase.

Whatever you choose to call it, it is a carefully planned effort to survey potential leaders and donors among your constituents with an eye towards ensuring that they believe in the stated objectives. You want to feel confident that they will work hard to help make the campaign a success by:

  • Giving the largest gift they possibly can
  • Being willing to go with you to recruit other potential leaders and donors from among their friends, business associates and colleagues.
  • Advocating for the success of the campaign by shouting it from the rooftops and soliciting the help of their peers, colleagues, friends and associates.

Capital Campaign Feasibility and Planning Studies are critical, as they answer many questions related to the plans of the institution. And, you want to assure that those people interviewed are comfortable and completely transparent with you. For this reason, most nonprofits choose to hire outside fundraising consulting firm to plan and carry out the study. Because the consultant is not an employee, respondents can answer more openly and honestly without the fear of hurting the feelings of one or more nonprofit leaders. Studies led by consultants generally illicit more honest and complete information, as the consultants know how to probe about the potential for giving graciously and gracefully—and they will provide feedback and analysis upon which you can base your suggested request during the capital campaign.

Capital Campaigns are a very specialized process, which requires careful planning and the use of precise techniques to ensure you get the best possible outcome. Often, the nonprofit organization will want to retain an outside professional fundraising consulting firm to plan and manage the Campaign Feasibility and Planning Study and the Capital Campaign that flows from it. You are in better hands if the consultant that plans and manages your Capital Campaign is the same professional who spoke to 100 or 150 people during your Campaign Feasibility and Planning Study. They build relationships with the potential leaders and donors, and they remember the specific things to which the potential leaders/donors seemed to relate.

How Long Does a Capital Campaign Take?


Depending upon the size of the campaign and its goal, and the size and organizational disposition of the nonprofit agency, it can take anywhere from six months in a small nonprofit to five years in a major university or a worldwide service club (such as Rotary International). Much of the time is not spent in fundraising, but in setting up the systems and educating the leadership and constituents about what is to come--and how they can help.

The actual fundraising (soliciting most of the gifts) is usually about 1-3 years long, with the solicitation happening in cascading phases of activity. You always want to solicit the very largest principal or leadership gifts first ($500,000 or above—$50,000 for small organizations), then the major gifts (perhaps $100,000 and above--$25,000 for smaller organizations), followed by the Impact Gifts ($50,000 and above --$10,000 for smaller organizations), and conclude with the General Gifts ($10,000 and above--$1,000 for smaller organizations).

Always move along a continuum from asking for a small number of enormous gifts towards asking for an enormous number of smaller gifts. You want to keep the ‘floor’ or ‘average gift’ very high. When you ask someone for a $1 million gift and she or he says to you, “Well who else is involved and what are they giving?” and you tell them that we have four gifts from Richard Roe, John Doe, Bobby Bow and Randy Tow, and we have raised $12,000,000, then the prospect thinks, If they have four gifts totaling $12 million, the others are giving an average of $3 million each. I guess I can manage to contribute $1 million to this project.

Though the campaign might take as long as three to four years to solicit all the gifts, most of the leadership is only highly involved for 6-8 months of this activity during the active phase of solicitation with which they are charged. The overall campaign chairman might be involved for the entire time, but the leadership gifts chairman may only be active for 8 months until he/she solicits all his/her prospective donors. Some of those prospective donors will become leaders in the major gifts phase, and they might take 6-8 months to solicit their prospects--and so on down the line. This prevents the leadership from burning out from over-exertion and dropping out of the process.

What Should be Done When A Campaign Wraps Up?

As a campaign concludes, the nonprofit organization should:

  • Celebrate your campaign’s accomplishments and successes at a public victory celebration
  • Recognize your leaders and donors for the help and leadership they offered through various forms of donor and leader recognition and mementos. Acknowledge them at the celebration, in your publications, any newsletters and on your website. Give larger donors a personal piece of recognition memorabilia which they can keep on display in their home or office, and place permanent recognition on a prominent installation within one or more of your facilities.
  • Setup a committee charged with stewarding these donors so that they are well informed, involved and feel loved throughout the pledge collection period. This committee will try to get donors and leaders even more involved as they nurture and build a closer relationship with them.
  • As the campaign pledge redemption period winds down, ensure that a staff member or continuation committee member opens a dialogue as to whether your donors may broaden their legacy to the institution by continuing to make pledge payments for a new, exciting project.
  • Be sure that someone follows up with, and offers support and understanding to, any larger donor who finds themselves in a temporary financial difficulty. You want to reiterate that they are your friends, and they are a tremendous help. If they need more time to honor their commitment, you want to assist them with that.
  • Implement other engagement strategies that forge stronger bonds and involvement with donors and their families as seems appropriate.

Are you ready to discuss your Capital Campaign?

You can reach out to us at Custom Development Solutions and speak to our president David G. Phillips, or one of our other leaders.

You can reach us through our contact page, at 800.761.3833, or info@cdsfunds.com.