Capital campaigns are a wild roller coaster ride of vision-fueled excitement followed by long stretches of slow. slogging. work.
The slow parts require incredible discipline to stay on course. I know because I’ve helped run 18 capital campaigns at schools, universities, and hospitals. Most were at organizations that felt they didn’t have “the right” donors.
And thanks to the vision-fueled excitement, many organizations launch capital campaigns in ways that make it much harder on themselves. Since we can often learn more from our mistakes than our successes, here are the top three mistakes I see nonprofits make. Especially when running their first capital campaign.
Avoid these 3 common capital campaign mistakes
- Skipping a planning stage
The most common mistake is to skip a feasibility study or planning study and just announce the campaign goal. Before announcing a goal, successful campaigns share the project with top donor prospects and community influencers in very structured planning study conversations. I've seen these done most effectively with the use of consultants, but some are recommending an interesting new approach.Feasibility studies allow the nonprofit to identify the aspects of the project that really resonate with the community. It also allows the nonprofit to get a sense of how much money a capital campaign may be able to actually raise and who might be your lead donors. The actual campaign announcement shouldn’t happen until 60-75% of the total money has been raised.
- Underestimating the cost of the project
The second common mistake I see is to base the campaign goal only on building costs, not the total campaign costs. I remember talking about a pending capital campaign to the dean of a well respected university. He'd shown me the plans for the new building and explained the projected campaign goal.Then I asked him a question that stopped him in his tracks.I asked him, "How much of this goal is being used to created an endowment to offset the ongoing costs of this new building?"This articulate dean was gobsmacked. After a few awkward moments, he said, "Huh. Planning ahead for the new costs? I don't think we've ever done that. I wonder if that's why we have so much deferred maintenance on campus."
I would imagine it is.
Another thing to budget is the cost of the campaign itself. A common rule of thumb in capital campaigns is that the nonprofit may need to invest about 10% of the overall goal in order to raise the money. There are all sorts of costs like campaign counsel, temporary staff, extra printing, special events, plans & renditions, etc. While spending only 10 cents to raise a dollar is a great investment, failing to plan for this investment leads to a constantly underfunded development effort and severely inhibits the success of the campaign.
- Thinking the money will magically come from "someone else"
The third most common mistake is thinking that capital campaigns are magic ways of raising money. Boards here of amazing goals being successfully reached so they think it's just a matter of announcing their goal. But an important rule of thumb in successful capital campaigns is that the board will typically give at least 10% of the overall goal.Many first time boards tend to think the money will simply “be there” from other people. But the community responds better when it knows that the board is backing their own project. Having the insiders giving generously goes a long way in helping others want to invest too.
Campaigns are wonderful and complex endeavors. They always tend to overwhelm a nonprofit's existing fundraising and communication structures. And as you can see, knowing some common mistakes can help make the difference between the success or failure of your effort. But starting a capital campaign with a correct goal after a planning study and a board that is already invested gives your effort the strongest foundation possible.