Most of those associated with the Finances in an NGO would know that budgeting is not just about the project being implemented for the donor but also entails the costs required for the day-to-day running of the organization. This includes the cost of paying for non-project staff, maintenance of assets and purchasing new equipment.
Charity organizations do not generate revenue by conventional methods as they usually do not generate marketable products or services. Here the revenue is generated by submitting proposals and concept notes to donor agencies to solicit donations. For a charity organization the majority of resources come in the form of donations, gifts, and grants. Hence it is important to understand how donations work and what sort of campaigns can be undertaken to generate funds for the organization.
Charity organizations and NGOs raise funds for their operational and administrative expenses through what is known as capital campaigns and endowment campaigns. In this section, we will learn ways to raise funds for the NGO to manage its capital resources and nonproject expenditure through a capital campaign.
What is Capital Campaign?
A capital campaign raises money to cover the cost of capital assets that cannot and should not be part of a non-profit organization’s annual operating budget. This is a campaign designed to raise funds for a very urgent cause on behalf of the organization. This may be to meet an immediate need, such as repairs for the building in which the organization is run or upgrades to the existing office space to meet new building guidelines. It may also be used to upgrade equipment within an organization which is essential for the organization to deliver consistent quality of services. Most of the time, capital campaigns are designed to meet the tangible needs of a charity organization which can be measured clearly in terms of cost and implications of investing in the same.
A capital campaign will have a fixed payment schedule and waypoints for cash-in-hand required to be made against a capital asset that is being acquired. The construction of a building is a prime example of this. In cases where the capital asset is acquired prior to the projected completion date, the prospects are not informed of the completion, should they think that their money is any less needed at this point. For such funds, even though it is not advisable to seek deferred gifts actively, it is wise to accept them as they come so that they can be added to associate endowment campaigns. The income generated in the future by such gifts may be sufficient to cover operating expenses for future capital asset acquisitions.
What all qualify for Capital Campaign?
By definition, Capital Campaign is all expenses pertaining to the capital asset column of an organization’s balance sheet. Buildings, machines, equipment, and all other physical assets that the organization acquires for its operations form part of the capital assets of the organization.
For a trust managing a Cancer Hospital, the Hospital building, medical machines, equipment, ambulance, etc. qualify for capital assets. Hence a campaign that aims at raising money for either of these things will qualify for a capital campaign. It could be different for different organizations according to their needs. For a charitable school it could be to finance a new building. It is different from when the school requires funds to pay for education, food and living expenses for the students.
How to Plan for a Capital Campaign?
Now that we have identified what financial need qualifies for Capital campaign we can now focus on how to plan for it. The following steps may be followed by an organization to run a successful capital campaign.
- Conduct a Feasibility Study: Conducting a feasibility study helps you determine if your organization is ready to undertake a capital campaign or not. Organizing a capital campaign is very different from other fundraising campaigns, and therefore, you need to diligently plan the process by undertaking a feasibility study. Many small and mid-sized organizations initiate capital campaigns without giving due attention to the feasibility study and, therefore miserably fail in raising the desired financial goal.
As part of this feasibility study, you should ask a few questions to your board members, staff members, and donors to ascertain if your organization is truly prepared to start a capital campaign. Here are a few questions that can be part of your feasibility study:
- Do you have a strategic plan in place?
- Does your strategic plan require you to have a new building, equipment, etc?
- What is the capital for which you need funds?
- Do you really need the required capital immediately?
- Does your organization have sufficient human resources to undertake a capital campaign?
- Do you have a strong donor base that will be willing to support you in the capital campaign?
- Do you have a list of prospects?
You will be required to interview around 25-30 people, their responses will help you determine if you truly need a capital campaign. The feasibility study forms an integral part of a capital campaign as it will determine the campaign design and format.
- Planning: If the feasibility study indicates that your organization requires a capital campaign, you must start planning. Capital campaigns will drain you off your time and energy as, unlike other campaigns, capital campaigns are long and intense undertakings. You need to plan each and every aspect of the campaign before rolling it out. Some of the aspects that you need to plan carefully are:
- Financial Goal: Setting the goal for the capital campaign forms the most important element of the entire campaign. The entire campaign activities will depend on the amount that you plan to raise through the campaign. To reach a final amount, it is important for the board to discuss with the project staff and settle on a goal that is realistic and within the capacity of the organization. The feasibility study will also throw light on the amount of money that should be raised through the capital campaign. Before setting the final goal of the capital campaign, make sure that you calculate all the expenses. While setting the capital campaign goal, it is also important for you to assess the current resources within the organization.
- Duration of the campaign: An important characteristic of a capital campaign is that it has a fixed duration. Your capital campaign should have a clear time frame for achieving the goal. This will largely depend on the goal and the list of prospects. If you have a large donor base and are certain that the present donors would support the capital campaign, you can run the campaign for a shorter duration, however if you have a small donor pool, then instead of running an endless campaign, it would be better to reduce the goal of the campaign.
- Budget: Make sure to develop a comprehensive budget for the capital campaign. Many organizations spend too much while organizing a capital campaign and often realize it only when the resources get exhausted. Before you start the campaign, make a detailed budget of all the expenses that will be incurred during the course of the campaign. This may include costs related to printed material, special events, internet, travel, telephone, etc. Most often, the expenses should be in the range of 10-18% of the capital campaign goal.
- Leadership: For the campaign to be successful, you need a dedicated leader to get the desired output. You need a person who believes in the cause and has the ability to guide the team efficiently. Identify a person who is confident, expressive, and can communicate with donors.
- Identify Teams: Along with a dynamic leader, you would require several teams to successfully execute the different phases of the campaign. Most organizations from the following teams while running a capital campaign:
- Donor Management: This team will be primarily responsible for identifying and communicating with donors. The team can be further subdivided to deal with individual donors and corporate and donor agencies to ensure smooth execution. This team will be the face of the campaign as they will directly interact with the donors.
- Finance: This team will work on ensuring smooth financial management during the course of the campaign. The team will comprise of your financial officer and accountant’s officer to keep both the income and expenditure within limits.
- Marketing and Events Management: As the capital campaign will continue for a long duration, the responsibility of this team will be to organize special events, brochures, social media campaigns etc. to raise funds.
- Volunteer engagement: Volunteers are a great asset to any organization, as they bring with them energy, experience, knowledge, diverse skills and enthusiasm. They are an important human resource especially for smaller organizations with limited finances and limited staff. Volunteers can be an important resource when you are planning a capital campaign.
- Donor Profiling: It is important for your team to have a comprehensive list of donors. This list should have the names of your prospects, present and past donors along with the past donations they have made. This list will give you an idea of who the donors are to most likely support your cause. Donor profiling is most often done by the fundraising manger, as he/she has a good idea of how much a particular prospect will contribute. This will help you in figuring out the exact number of donors you will have to pursue to achieve the campaign goal.
- Developing a Case for support: Your capital campaign will be successful only if it is able to connect with the donors. To build a strong connection with donors, you need to develop a strong case of support. A case for support is a narrative of your organization that tells the prospective donors about your funding requirements and the problems you would address on receiving the funds. In other terms, it is a document that provides donors with information about your organization, future goals and aspirations, accomplishments, and why a donor should invest in your program. This document is one of the most important tools that would attract donors to support your organization. Key features of a case for support are:
- Should be attractive
- Should be donor-centric
- Should clearly illustrate your funding requirements
- Should showcase your accomplishments
- Should convince the donors to engage with your organization
One should remember that the case for support should have a human touch to it. Use simple language and be expressive while describing the social problems you will be addressing. You should be careful while writing the case statement, as you shouldn’t make it appear like a movie story. Along with making an emotional appeal to the donors, it is equally important for you to quote facts and figures to reinforce your case. A fine balance is to be made between quoting factual data and the emotional pitch.
- Develop a calendar for the campaign: It is important for you to develop a comprehensive calendar for all the necessary events you plan to organize during the course of the campaign. The calendar should have details of when a particular event should be organized along with major milestones/financial projections that you should achieve. This will help you in monitoring the campaign and make necessary changes if you are lagging behind the projections.
- Train your Staff: Make sure everyone involved in the campaign has been trained to solicit funds. Soliciting funds is not an easy task, and therefore, all people involved in the process should be trained to deal with different situations. Your fundraising manager can take training lessons for the volunteers so that when they approach the donor, they are able to confidently ask for funds. You can also develop a pitch to be used by the volunteers or staff while they communicate with the donors.
- Involve your Board: Make sure that the board members are involved throughout the campaign. The board will not only provide you with the necessary feedback and direction but will also help you to connect with donors. As senior professionals, the board members will most likely have better connections with the donor world, and involving them in the process will ease your work.
- Funding strategies and tools: There are a large number of strategies that can be used for raising funds during a capital campaign. These include:
- Gift table: A table that indicates different sizes of donations that will be required to accomplish the campaign goal. It is usually made in close consultation with the board members and is largely based on your past experience.
- Gift Pyramid: A fundraising tool representing the distribution of different donations.
- Named giving: While raising funds under a capital campaign, named giving can be an important tool to raise funds. The named gift opportunity is a gesture to honor and appreciate the donor for their support.
- Pledge Cards: Pledge cards are a fundraising tool for soliciting funds. Donors fill these cards as an indication that they will be provide a particular amount of money to support your organization’s cause
- Campaign Launch: You should launch the campaign once you are confident about the preparations. The first phase of the campaign is referred to as the Quiet Phase as you do not make the campaign public in the very beginning. During the quiet phase, you approach close friends, board members and loyal donors of the organizations. Most often maximum donations are raised during the quiet phase itself. The quiet phase gives you an excellent opportunity to test if your case stands a strong chance and is appealing enough to attract donors. In case you do not get the desired gifts during the phase, you can always change your case of support and try out a new strategy. Once you have raised a significant amount of money, you should publicize and run the campaign till it achieves the desired goal.
The quiet phase is followed by Public Phase in which the campaign is made public and the case of support is disseminated to a wider audience. During this campaign you reach out to as many donors as you can. You can use a variety of communication tools like – social media messages, radio message, advertisements, special events, dinners etc. to reach out to people. You can also publicize the campaign by organizing a special event or by launching a website. In today’s time when everything is just a click away, it is essential that your campaign is on the internet. There are several benefits that an organization can have through presence on the web; along with enhancing your organizations visibility it also makes you look more professional to donor agencies and potential partners. Making the campaign live on the web will help you get access to several people.
- Campaign Closure: As the deadline of the campaign nears, you will have to put extra effort to reach the financial goal. Motivate your team members to make the capital campaign a success. If you are a little short of the financial goal revisit your board members and friends to contribute. You should plan a grand campaign closure by organizing an event to thank the contribution of all the donors and team members. This event can also be used as an opportunity to make a roadmap for the implementation of the project.
You are answerable to every person that has contributed to your campaign and you should submit a report to them about the project updates. This reporting can be done on a monthly or annual basis, depending on your case. You should update the donors about the progress or delays with respect to the project through newsletters. Remember to follow up with donors who have pledged a given amount and request them to continue their support.
Since this is one of the most important ways to raise money for a non-profit organization apart from government funding and grant money, charity organization benefits a great deal from capital campaigns. It is advisable for the organization to design and execute a detailed fundraising plan and integrate the above-mentioned steps to generate maximum revenue from the capital campaign.