Want Your Capital Campaign to Succeed? Here’s Some Candid Expert Advice

Board members and other leaders planning capital campaigns sometimes want to skip feasibility studies in which outside experts assess potential donors’ willingness and ability to give to the campaign.

But such studies, which are expensive—sometimes costing $100,000 or more—have value in “socializing” or educating people about an organization’s needs, said Raymond Happy, a managing director at CCS Fundraising, a New York-based consulting firm. Feasibility studies, which collect and record different viewpoints, he said, can also build consensus around campaign goals and encourage people to commit to the fundraising drive’s success.

While CCS does earn money doing feasibility studies for clients, Happy acknowledged, the consulting firm also refuses to do the studies for many nonprofits that need to engage donors and perform other tasks before they can launch a successful campaign.

Leaving people out of the so-called “quiet phase” of a campaign, when feasibility studies are typically conducted, can backfire when loyal supporters are offended because they weren’t involved in planning the organization’s future, according to Gordon Davis, a lawyer with Venable, which advises charitable organizations on numerous issues.

Both men spoke on a five-member panel about capital campaigns last week at the ninth annual Rooftops Conference for nonprofits at New York Law School’s Center for Real Estate Studies. Happy spoke about capital campaign trends he’s noticed in recent years, including more and better analysis of the data collected in feasibility studies to determine optimum fundraising efforts with certain groups of donors.

Another trend: In the past, universities and other big institutions would beef up their fundraising staffs for a campaign and then scale back afterward. “Those days are over,” Happy said.

Now, with so many charities in constant campaign mode and the demand so high for talented fundraisers, some organizations like the University of Southern California, which has more than 800 people on its fundraising staff, are reluctant to let them go, Happy said. They have decided that the cost of letting fundraisers go, only to have to hire others later, is too high a price to pay, especially when the departing staff is high-performing, he said.

Davis, the lawyer, argued that a campaign is an effort to build up an organization’s board as much as it’s about raising money. The board’s ability to regenerate and grow, he said, is critical to campaign success. For that reason, an organization’s board often looks very different by the end of a successful campaign.

Charities sometimes make the mistake of spending money on fundraising consultants and other advisors before their boards have achieved consensus about the ultimate goals of their fundraising drive, said Davis. Unless they are bringing in an expert who can help them agree on campaign goals, he suggested, hiring consultants too early wastes money.

Other problems: Different parts of a multifaceted campaign can become “silos” that are too cut off from the rest of the drive, and programmatic needs sometimes grow beyond the monetary goals of the campaign, said Stephany Lin, a panelist from U3 Advisors, a New York company that helps nonprofits figure out options, avoid risks, and work with developers on building projects.

It can also be challenging to raise money for needs like deferred maintenance on buildings and other “unsexy” projects, said James Hagy, a New York Law School professor who moderated the discussion. Todd Stern, a colleague of Lin’s at U3, had one recommendation: “Frame it so that you are making the facility viable for years to come, not fixing the boiler,” he said.

Stern also recalled situations when it was difficult for donors to grasp distinctions between capital and operating costs, the latter of which could necessitate hiring additional staff as well as other unexpected expenses.

Happy, the fundraising consultant, agreed and pointed to what he called the “year six problem.” After campaign pledges are paid, he explained, it is “almost always tough” on charities in the sixth year of raising money publicly, particularly groups without cash reserves who suddenly find themselves without income to pay expenses of a new facility made possible by the campaign. In these situations, he added, organizations need to come up with a new business plan for the facility.

Multiple panelists described campaigns that had failed spectacularly, in most cases because the organization’s board was unable to meet an unexpected demand for an expensive addition, or a crisis such as an fire on a construction site. “These projects can be killers,” one panelist said.

Charities should expect difficult and unforeseen campaign issues to arise because “there’s no such thing as a perfect process,” said Davis, the Venable lawyer. He described a half-completed museum of art for which both the fundraising drive and the organization’s board collapsed. “There it sits, an empty shell,” he said.