Podcast: Capital vs. Capacity vs. Comprehensive Campaigns: What’s the Difference?

Season 6, Episode 1

Capital campaign terminology can be surprisingly confusing—and choosing the wrong campaign structure could make it harder for your board, donors, and staff to understand exactly what you are raising money for.

In this episode, Amy Eisenstein and Andrea Kihlstedt untangle the differences among capital campaigns, capacity campaigns, combined campaigns, comprehensive campaigns, building campaigns, and endowment campaigns. They explain what these commonly used fundraising terms actually mean — and why the distinction matters when your nonprofit begins planning a transformational fundraising initiative.

This episode will help nonprofit executives, development directors, board members, and campaign leaders establish a shared vocabulary, select the right campaign structure, and communicate their funding needs clearly and confidently.

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Amy Eisenstein:
Comprehensive campaigns, capital campaigns, capacity campaigns. Oh, my. There’s a lot of language and terminology around campaigns, and it can be confusing.

Hi, I’m Amy Eisenstein. I’m here with my colleague and co-founder, Andrea Kihlstedt. And today we’re going to talk about the confusing terminology around campaigns. Andrea, we’re going to talk about capacity campaigns and comprehensive campaigns and capital campaigns and endowment campaigns. Get us started.

Andrea Kihlstedt:
Yes. All right, Amy. This is, you know, this is a topic that it has taken me years to sort through and to figure out. So I’m not surprised that other people are confused by it right when this language gets bandied around. But let’s start right at the top. What do we mean by the phrase capital campaign? Now, even that’s not so simple because generally we speak about capital campaigns as an umbrella. It’s an umbrella term that covers a wide variety of campaigns that all follow a particular kind of fundraising.

That is leadership fundraising, top-heavy fundraising, where the bulk of the money comes from a fairly small group of wealthy people. Now, okay.

The Many Different Kinds of Nonprofit Campaigns

Then you might say, well, don’t you mean building campaign when you talk about capital campaigns? Well, one way to think about that is that the word capital might mean building, but it also might mean money.

Amy Eisenstein:
Right, assets.

Andrea Kihlstedt:
Assets, right? So it’s a matter of which side of those you’re thinking about. But understand that when we talk about are you going to have a capital campaign, Just the general question. We are using an umbrella term that covers all different kinds of campaigns, and we’re going to dive into those now.

Amy Eisenstein:
All right. So let me just add all kinds of campaigns that are once in a while transformational, transformative, I was going to say, transformational and transformative for organizations. And it’s not usually or always, and we’re going to talk about when it is and when it isn’t, inclusive of your annual operating funds. So I’m sure you have much more to say on that topic, but I just want to put out there that it’s for a special project. It’s for over and above usually your annual operating funds. It’s once in a while.

Andrea Kihlstedt:
Go ahead. It’s that kind of fundraising, right? The general phrase capital campaigns refers to a particular kind of fundraising where the money raised can be used for a variety of topics. And what’s included is what determines the sub-genre, what kind of a campaign it is. So let’s just run those through.

Capital Campaigns for Buildings

So the simplest is, and the most common perhaps, is when an organization is going to build a new building. or expand their building. That’s using the word capital in the sense of expanding your infrastructure, that kind of capital. And very often, organizations decide they’re going to do a campaign because They’ve run out of space because their building has been knocked over by a tornado, because their building no longer suits their needs.

So they do a strategic plan and the plan says, yes, we need a new facility. And then someone says, well, OK, let’s do a capital campaign, meaning let’s do a building campaign.

Amy Eisenstein:
And let’s just add that. Capital campaigns, when they include a building, also include program startup and often endowment and maintenance funds and rainy-day funds and all sorts of other things. So it’s not to the exclusion of other pots of money. It’s not just the building itself that you’re raising money for in a capital campaign. Lots of things are often included. I get that question a lot.

Andrea Kihlstedt:
Yeah, well, what I was going to say is that often it starts by people thinking that they need a new building. And then they say, well, what else might we tuck into this campaign, right? What else might we include? So the kinds of things that are put into this campaign generally grows and increases. and increases. And that’s when we start using the terminology differently.

Combined Campaigns

So when we have a building campaign and a combined with program funds, let’s say for growth in your program over the next three years, combined with maybe money for your endowment, we often call those combined campaigns.

It is a capital campaign in the broad sense, But it is a combined campaign in the sense that you have put together several things that are all going to be counted in your campaign goal. And that’s, in some sense, if you were to look for the right language for this, you would say this is all stuff that increases your capacity. So if we were trying to be accurate, we would say, well, overall, all of these campaigns are capacity-building campaigns. Their capacity campaigns. And if I were to create the language from scratch, that’s probably the language I’d use.

But I didn’t create the language from scratch, nor did Amy. So we’re stuck with the terminology we have, which is capital campaigns in the umbrella sense, then capital campaign in the sense that it is a building, just a building campaign, and then a combined campaign, which puts various things together under one rubric and you’re raising money for all of that.

What About the Annual Fund?

What we haven’t yet talked about is where your annual fundraising lives, where the money you raise annually during your campaign period, how that fits into your campaign or if it does. And honestly, this is where there is the most confusion. Pretty much every organization that is going into a capital campaign has an annual operating budget. and raises philanthropic money every year towards that budget, right? Your annual operating fund, right? And you probably every year have a standard set of things you do to raise that money. Everyone is nervous about whether their campaign is going to cannibalize that that fund.

So some people decide what they’re going to do is they’re just going to include that annual fundraising right into their campaign. And they’re going to increase the goal of their campaign by the amount they anticipate bringing in through annual fundraising during the period of the campaign.

Amy Eisenstein:
And most universities do that.

Andrea Kihlstedt:
Yes.

A Comprehensive Campaign: A Real-World Example

So a university might say, for example, we’re going to have a capital campaign for Big Red, right? Big Red, right? They’re going to ask all of their alumni to give the campaign is going, universities tend to have long campaigns. So let’s say the campaign is going to take 10 years, which is long. A billion-dollar campaign, right? $20 billion. dollars right over 10 years. And what they do is that they add all of the money that they’re going to bring in over those 10 years, including annual fund, which is going to go up year by year by year.

And they add all of that money and then they add it to their campaign goal, which also includes some buildings and some new program support and some scholarships, right?

Named faculty positions. I mean, all kinds of things. They lump it all together and they have what is called a comprehensive campaign, right? Now that works quite well for universities. And that’s why they do it. When you are not a university and you’re an organization that has a specific mission, the mission is to save the wildlife, to feed the children, to make sick people healthier, to put on theater, to whatever your mission is, it may make a little less sense to lump everything together, right? Because you don’t have the kind of alumni loyalty that Big Red does, right?

When Big Red alumni give to their campaign, they’re not giving really to this or to that. They’re giving to their institution to which they feel loyalty and identity, and they want the institution to do well and to do better, and they want to be part of it. So the ability to actually articulate the specifics of a campaign are less important than they are in these smaller organizations that have targeted missions. Now, what that says is that, okay, let’s say, let’s stick with one of these. Let’s talk about feed the hungry, feed the, you know, a soup kitchen in your community for the sake of discussion. And you need a new expanded kitchen.

I mean, we all know that soup kitchens are, in fact, going to be more important coming up because funding has been cut for people. And the need has risen. The need has risen. So you need an expanded kitchen. You need better equipment. You need resources. More space, more freezers, more refrigerators, everything. That’s right. And you need that because you want to be able to accommodate twice the number of people in your community than you can currently accommodate. Right now, you too have an annual fund. Let’s say you raise $100,000 a year regularly and you have a group of loyal donors who give you year after year.

But you want to go back in your campaign, you’re going to go back to those donors and you’re going to ask them for significantly higher gifts to expand your facilities so that they can do more.

For you, it probably doesn’t make sense to lump the annual fund into your campaign. You want to still keep going back to those donors year after year after year, and you want to be asking them for a special gift. To do something that is going to make a big difference, a big specific difference in their community. You are probably going to want to do a combined campaign that’s going to include the renovations to your kitchen, new equipment, perhaps new programming, perhaps additional staff for your two or three years of growth, perhaps endowments so you can support the facility for the future. But your annual fundraising is going to be separate.

So you’re not going to have a comprehensive campaign. You’re going to have a combined campaign and you’re going to keep your annual funding going year after year, just like you always do.

Amy Eisenstein:
And one of the important reasons to keep it separate is because it really helps clarify things for donors. You can explain to them, that you need, first and foremost, them to continue their ongoing annual support to feed the people in the community as they always have, as you always have.

And you’re asking for a one-time special gift over and above that annual amount to support this one-time growth need. And so it’s very clear to you at the organization and to your donors and the community what you’re doing with the money, what you’re asking for, what the ongoing needs are. And it’s just, it’s really clear to people.

And I think it’s important, certainly when we’re working with clients, we try to make sure that everybody can articulate the difference between the ongoing needs and the one-time special campaign effort so that donors understand. And, you know, being able to explain that if donors just simply transfer their annual support to the campaign, that doesn’t work for an organization. We often use an analogy of a house, right? When you need a new roof, you can’t stop buying groceries or paying the electric bill or paying your sanitation.

Those are the annual operating needs of your house. and you still need to put a roof on. And so that’s sort of a good analogy to use with board members or donors who are questioning, you know, why can’t they just switch their giving from one to the other?

It doesn’t work that way.

Andrea Kihlstedt:
Yeah, you know, and people, as I said, people do worry about losing their annual operating funds, their philanthropic funds during a campaign. We actually see just the opposite. We see that when an organization is in campaign mode and they’re doing a great job of communicating with their donors and they are talking to their donors about both their annual gift and their campaign gift, that the donors are perfectly happy to continue and even increase their annual gift during the campaign. We see that again and again, that annual fundraising actually goes up during the campaign period and not down.

And the very same donors give two gifts, often in great multiples of what they usually give in their annual fundraising.

Amy Eisenstein:
And here’s why. Here’s one of many reasons why. You’re clarifying your outreach, you’re increasing your communication, you’re articulating better. There’s more activity. There’s better branding and outreach. There’s just more communication, more events, more activities during various stages and parts of a campaign.

And so people are often confused about why the annual fund would go up during a campaign when you’re already asking your donors to give significantly increased gifts, but that’s why. There’s buzz. People are talking about your organization. You’re out in the community more. You’re talking to more people.

So that’s why we often see an increase in the annual fund in addition to the campaign dollars that come in.

Andrea Kihlstedt:
Amy, let me see if I can clarify where people usually get confused. The question is not whether you can talk to your donors about both annual and capital gifts. You do and can and should be talking to those donors about both kinds of gifts. The question is whether you include the amount of money you’re going to raise in your annual fund in your campaign goal or whether you keep the goals separate. And that’s what confuses people. In a university-style comprehensive campaign, everything is included in these great big campaign goals.

When You Don’t Include An Annual Goal With Your Campaign

In a local campaign, we’re at a more targeted campaign, while we talk to our donors about both kinds of giving and wanting both gifts from them, we keep the goals separate, capital campaign goal and the annual goal.

So those are not comprehensive campaigns because we’re not lumping the goals together. It’s not that we’re not talking about them. It’s that just we’re not including the annual fundraising in our campaign goal.

Amy Eisenstein:
Excellent. Important differences because. When you’re talking about a campaign with your board members early on with your leadership team, there is a lot of confusion around capacity campaigns.

• Are we doing a capital campaign?
• Are we doing a comprehensive campaign?

And so… clarifying the language, establishing what you’re doing and how you’re going to be talking about it, I think is important upfront.

So feel free to share this podcast with your team, send it to your board chair, your leadership team, your executive director. Andrea, I think you’re putting a clear framework around how to think about these massive fundraising efforts is so important. And I appreciate, once again, you sharing your wisdom with us.

Andrea Kihlstedt:
Thanks, Amy.

Amy Eisenstein:
All right. Thanks for listening, and we’ll see you next time.