Podcast: Are You Ready for a Capital Campaign? Indicators of Success and Common Pitfalls

Season 4, Episode 4

In this episode, Amy Eisenstein and Andrea Kihlstedt dive deep into one of the most critical questions facing nonprofit leaders: “How do you know if your organization is ready for a capital campaign?” As seasoned campaign experts, Amy and Andrea walk you through the essential indicators that signal whether your nonprofit is prepared to embark on this significant fundraising journey.

Whether you’re on the brink of starting a capital campaign or just exploring the idea, this episode provides actionable insights and expert guidance to help you assess and enhance your readiness.

Listen Now:

Amy Eisenstein:
You might be wondering if you are really ready for a capital campaign. Let’s find out.

Hi, I’m Amy Eisenstein. I’m here with my colleague and co-founder, Andrea Kihlstedt, and we are going to talk about how to determine whether you’re ready for a capital campaign. And it’s a question that so many leaders ask themselves, nonprofit board members wonder. They don’t know if their organizations are ready. Probably executive directors and development directors also are not overly confident when they’re heading into a capital campaign.

So today’s question is — How the heck do you know if you’re ready for a capital campaign?

So, Andrea, we’re going to talk about a few different indicators. Let’s get started. How do you want to start today?

An Anniversary is NOT a Reason to Have a Capital Campaign

Andrea Kihlstedt:
Well, let me start by talking about an indicator that does not tell you you’re ready for a capital campaign. Let me start with the other side of that. Amy and I talk to a lot of organizations every year, every month, every week. We talk to a ton of organizations and some percentage of them come to us and say with great excitement:

“Our organization next year has this 25th anniversary coming up, and we want to do a capital campaign for $25 million.”

Amy Eisenstein:
Yes. Oh, our hearts sink.

Andrea Kihlstedt:
Let me tell you. Having an anniversary, a big anniversary of any sort does not mean that you are ready for a campaign.

Amy Eisenstein:
Or that you should have a campaign even if you’re ready.

Andrea Kihlstedt:
Or that you should have a campaign. It certainly doesn’t mean that you’re ready for a campaign. So if that’s what you are thinking of, if your board is saying, “Well, we’re going to be 50 years old next year and two years, let’s have a capital campaign,” you need to head that off at the pass. It’s not the right way to think about a capital campaign. And one of the things that you do need to have a successful campaign is a compelling reason to have a successful campaign, and an anniversary is not a compelling reason.

Amy Eisenstein:
Now, that doesn’t mean you won’t celebrate your anniversary, you will. But it doesn’t mean you are going to have a campaign or pace the timing of your campaign if an anniversary falls in the middle of your campaign. It happened this morning that somebody says:

“Well, our campaign’s next spring, so we need to go public by next spring.”

No, you don’t. You won’t even be close to being ready to go public. Luckily, they have a reasonably good reason for having a campaign, but you’re not going to base the timing of your campaign, certainly around an anniversary or a celebration. You will celebrate, but that has nothing or little to do with your campaign.

Capital Campaigns Require a Compelling Reason

Andrea Kihlstedt:
So, Amy, let’s talk for a minute about what do we mean when we say you have to have a good or a compelling reason for a campaign. And we actually mean something quite specific. We mean that you need to have thought through carefully what it will take to move your organization to the next level of service.

What would you have to invest and how would you have to invest it if you’re going to take your organization at the level it is, serving this many children or rescuing this many animals, or feeding this many families, whatever it is your mission is, and how are you going to say, well, we want to do a campaign to do a lot more for the communities we serve?

Let’s figure out what we would need to invest in, in order to move our organization up, in order to springboard our organization to the next level of service. That’s what we mean by a compelling reason to do a campaign.

Amy Eisenstein:
Right. I love that word springboard. We often talk about campaigns as transformational for organizations, for communities. You really need to be able to answer the question, how will our organization, how will our community look different after we’ve done a campaign? If it’s just incremental, if we’re able to serve 5% more people, 10% more people or even 15% do more of what we did, and it’s the same old, same old, that’s not transformational, it’s not springboard. So what really moves the needle of your organization, gets you closer in a significant way to your mission, that’s what campaign fundraising is all about. Otherwise, it’s just annual operating fundraising. Maybe you need to do a little more annual fundraising. That’s fine, but that’s not reason enough to have a campaign.

A BIG Transformational Vision

So first, if you’re going to be ready for a campaign, you need that big transformational idea. And often it starts with a strategic planning process. It doesn’t usually happen overnight, although maybe your executive director had a dream and comes in all excited the next day.

But it really needs to be thought through, it needs to be vetted with the board. So you need that big idea before you can even consider a campaign. What else should organizations be looking for or considering as they get ready for a campaign?

Andrea Kihlstedt:
Well, you touched on it just for a second, Amy, which is, okay, let’s say you have a big idea about what you’re going to raise money for to move your organization forward. If your board doesn’t know what it is you’re thinking, and if they’re not fully behind this big idea to move your organization forward, then you are not ready because you can’t do a campaign without your board’s support.

And it takes time to make all of this happen, takes time to flesh out the ideas on which your campaign will be built. And it takes time to bring your board members along so that they are as excited about a capital campaign as your executive director, for example. Or if one of your board members has been or two have been excited, you need to take the time to bring all of your board members along so that the board really has some idea what this is going to take and is really ready to put their muscle behind that effort.

Amy Eisenstein:
And I think that’s so important. It might be a three-month process, a six-month process, a year-long process. This does not happen overnight. This is many conversations. It’s brainstorming sessions, it’s strategic planning, it’s thinking through. It might be looking at property, it might be talking to an architect or a planner. So there’s lots of pieces and components, and you really do want your board brought along every step of the way so that when you’re really ready, the board is excited. As you said, Andrea, as excited as the executive director is.

Great. All right. So you’ve got your big idea, your board’s on board, literally and figuratively, they probably voted to approve a strategic plan or moving ahead with the idea of a campaign, and now what’s another really important factor?

A History of Fundraising is Practically a MUST

Andrea Kihlstedt:
Well, you need a history of effective fundraising. Very difficult to make a campaign happen if you and your organization have no history of fundraising.

• Maybe you’re a brand new organization, you’ve never raised money before.
• Maybe your organization has been fully government-supported until now, and you’ve never had any private philanthropy.
• Maybe your organization really doesn’t know how to ask for money.
• Maybe you don’t have an annual fund. Very difficult to do a campaign if you have no history and no system for major gifts fundraising. So that’s the third of these things.

Now, there are many other things we can point to, but these three… If you can’t look at all these three things, a compelling idea or a case for a support, a fully committed board, and a history of major gifts fundraising or private philanthropy, and say, yes, we have all of those things, then we know, Amy and I know for sure that your organization is not yet ready for a campaign.

Amy Eisenstein:
Let’s dive into this idea that you need development, infrastructure, and some donors and donor history. A couple of things I want to say about that.

First and foremost, let me take a commercial break. If you’re really interested in determining if your organization is ready for a capital campaign, we do a readiness assessment with one of our campaign experts, or we can do that for you and with you. So visit the Capital Campaign Pro website and go to our services tab, and there’s a readiness assessment there that you can sign up for and work with us for a couple of weeks to really test much more deeply than what we’ve been talking about today, your readiness and really help you get ready. We’ll make recommendations as to the areas that need improvement before you head into a campaign.

You Should Have Some Donors that Give Regularly

But let’s dive into this idea about development. So you do want a history of donors to be able to go to for your campaign, but that of course… You sort of mentioned the word major gift, which I think makes everybody jittery.

Many of the organizations that we work with, they have donors that give $10,000 or maybe even $25,000, but most organizations, small and midsize organizations that are heading into their first campaign, they don’t have a history of asking for million-dollar gifts. And that is okay, that’s not a problem. A couple of reasons for that. One, you may never have had a million-dollar idea before or a multimillion-dollar idea before, so you haven’t had the motivation or the case to go out and ask for these million-dollar gifts. And of course, why would anybody give them to you if you don’t have that big idea? And of course, you’ve never asked for a million dollars before or multimillion dollars.

So don’t let us talking about major gifts get in that kind of way. But you should have some donors that give regularly, annually, 5,000, 10,000. I mean, it would be great if you have $25,000 donors. Those are the people that you’re going to be considering asking for a million dollars or $100,000. But you do need some regular bigger givers because one of the questions we’re going to ask you is:

If you’re trying to raise $5 million, $10 million, $50 million, do you have a list of, I don’t know, 20 donors that you could imagine may make a six or even a seven-figure gift?

And if you can’t even imagine who’s on that list, it is going to be very hard, if not impossible, for you to make your goal. You have to have some sense of where some of those bigger gifts, six and seven-figure gifts are coming from.

A Real-World Story

Andrea Kihlstedt:
So, Amy, I’ve got a story covering a number of these things that someone told me some time ago. I was always struck by it. There was a small town in a Midwestern community, and there’s a nice-sized private college in that town. And one of the largest donors in that community had been a steady donor to that college and then developed a very strong and great relationship with the president of the college. And this donor gave to one campaign after another. A big gift, six-figure gifts, seven-figure gifts. It was every expectation that this donor was going to be the largest donor to their next campaign which was coming down the road.

And the president had started talking to this donor about there’s going to be another campaign, and they just been having general conversations. Well, in the same town, there’s a small arts organization, never done a capital campaign before, and they had a passing relationship with this donor. And they knew that the donor had some interest in the arts that they did, but they certainly never have been a major donor to them. I mean, they really didn’t have anyone who had ever given them a million dollars before.

Amy Eisenstein:
They probably never even asked for $25,000 before, right?

Andrea Kihlstedt:
Yeah. So this small organization, they had a couple of meetings with this donor just telling them what it was they were thinking about doing and getting this guy’s opinion. Well, fast-forward, and the president of the college who’s getting ready for his campaign gets the local morning newspaper, opens it up.

Lo and behold, the headline of the paper says that a wealthy donor has pledged a million dollars to the small arts organization. The president of the college just about dropped his teeth. He was getting ready to ask, and his donor had just given a very big gift to this other little organization that was totally astonishing. So like a good president, he calls up the donor because they were friends. He said:

“Joe, would you sit and have coffee with me? I see that you’ve given a big gift to this. I really want to understand it.”

So they go out for coffee, president says to the guy:

“I got to say, I was surprised to see that you had given such a big gift, and I’m getting ready to ask you for a big gift, and how come you did that?”

And the president says:

“Well, I have to tell you, they just had a million-dollar idea and you had presented me with a million-dollar idea.”

Amy Eisenstein:
Yes. Well, it’s so interesting. I mean, a lot of times big donors do feel like they’re a little fish in a big pond. Even though this guy maybe was one of the bigger fish in that college pond. The college had lots of donors and the arts organization, he could really, really stand out. So that’s super interesting. And we see that all the time.

I don’t want the takeaway to be that just because someone gives to the arts organization doesn’t also mean they won’t give a million dollars to the college. It’s highly likely that they will continue to do that as well. It’s not an either/or most of the time. It may be delayed. The next gift to the college may wait a year or two, but it doesn’t mean that that next gift isn’t coming to the college. So I’m not too worried about them. I don’t think that should be the takeaway. The takeaway is that the arts organization that had never raised anywhere close to that amount was able to secure that kind of gift. And we do see that every single day.

Andrea Kihlstedt:
Right, we really do. I mean, organization after organization are surprised by the amount of money they can raise in capital campaigns if they have a compelling idea, if they have some qualified prospective donors in their community, and if their board is fully engaged. I mean, it really is remarkable. Again and again, we work with organizations that raise, let’s say half a million dollars a year, and lo and behold, they raise 10 or $15 million through a capital campaign.

Amy Eisenstein:
That’s right.

Andrea Kihlstedt:
It’s stunning.

Amy Eisenstein:
Yeah, it is stunning. And we see it regularly. I mean, that’s what our clients do, which is so fun and inspirational and just motivational. It just feels so great when it happens.

The Devi’s in the Details with Campaigns

One other thing I want to point out in terms of being ready, you talked about organized development, office development systems, and infrastructure. Ideally, you have a development director and are thinking about an additional development staff member. The devil’s in the details with campaigns. There are a lot of details. There’s a lot of work that goes into campaigns in terms of being organized, data entry, meeting scheduling, event planning, all sorts of research, all sorts of things. And so really thinking about:

• Are we prepared to hire staff?
• Do we have development staff?
• Can we delegate things?
• Can we move things around?

I mean, [that’s] such a key component.

To be ready is to not assume that your existing staff can not only double your fundraising, triple, quadruple, 10 times your fundraising, which is really what your goal is. So in addition to thinking about hiring expertise, one of the many things we bring to the table is the expertise, the strategy, the plans, we also need to work with people at the organization that are going to help with implementation. Such a key component of success.

Andrea Kihlstedt:
Amy, there’s one other thing I’d like to discuss before we end this readiness topic, and that is that when you start thinking about a capital campaign and you realize that you’re not ready. The process of getting ready is often so powerful and such an effective way to build just the kinds of relationships you need to have a successful campaign. At Capital Campaign Pro, we often refer to that phase as pre-campaign planning. We really see it as the first phase of your campaign, even though you’re not yet asking for money.

This whole process of shaping your case for support, of developing the ideas clearly, of bringing your board along, of looking at and making sure that your development systems are effective and that you have at least some of the donors you’re going to need, figuring all of that out with a campaign in mind is really what you need to be doing in the early phase of your campaign planning. And if you do it well, that really helps you succeed.

Amy Eisenstein:
I am so glad you brought that up because the truth is, we work with clients 6 to 12 months sometimes before they are… Whatever it means to be ready for a campaign before they do a feasibility study. I mean sometimes we’re working with people on getting ready for a campaign, pre-campaign planning we call it, for like I said, 3, 6, or sometimes 12 months as they get ready for a campaign.

So don’t panic if you’re not ready yet, you will be. You may need some strategic planning and expertise and campaign strategy to get you moving in the right direction. And if you are thinking about it, of course, we do hope you’ll talk to us and consider working with us.

So visit capitalcampaignpro.com and sign up for a strategy session. It’s free, no obligation, and you’ll be talking to me or one of our colleagues, and we’ll talk to you about getting ready for a campaign.

So Andrea, great topic today. Thank you so much for all of your wisdom and expertise. We’ll see you next time.