Podcast: Dispelling Myths: Insights from the 2024-25 Capital Campaigns Benchmark Report

Season 4, Episode 14

Amy Eisenstein and Andrea Kihlstedt dive into the much-anticipated findings from the second annual State of Capital Campaigns Benchmark Report. This essential research, conducted by Capital Campaign Pro, unveils key insights into the capital campaign process, providing data-driven answers to questions that have lingered in the fundraising world for years.

Tune in to gain insights, bust myths, and learn best practices that will strengthen your campaign strategy. Be sure to download the full research report here.

Listen Now:

Andrea Kihlstedt:
We have evidence, real hard evidence that the capital campaign model that we use works.

Amy Eisenstein:
Hi, I’m Amy Eisenstein. I’m here with my colleague and co-founder Andrea Kihlstedt, and we are super excited that Capital Campaign Pro has just released the second annual benchmark study of capital campaigns, the State of Capital Campaigns.

And the data is in, the results have been tabulated and we’re so excited to be bringing you the results of this year’s study, which you can download in full at capitalcampaignpro.com/research. And so you can have all the results, but we’re going to highlight a few of the most exciting results today.

Capital Campaign’s Do Not Cannibalize Annual Funds

So Andrea, what is one data point that made you super excited?

Andrea Kihlstedt:
I guess the one that I just loved seeing evidence for is to see that capital campaigns do not cannibalize the annual fund. I mean, if there’s one question we get again and again and again, it is when we go into a capital campaign, will our annual fundraising fall off the map? Fall off the table? Will our operating funds just go away? And we have said, I have said for many years:

“No, no, no, it’s not what’s going to happen. They will at least stay the same and they may even go up during a capital campaign.”

Now I’ve known that from my own experience to be the case, but honestly a piece of me always thought it would be great if I had a bigger slice of organizations to look at.

So I could say definitively that what I already knew personally to be the case was the case more broadly. And this study actually dispels the myth that your annual fund is going to be cannibalized during a capital campaign. In fact, more than three quarters of the organizations that we surveyed report that their annual funds either stayed the same or increased during their campaigns.

Amy Eisenstein:
During and after their campaigns. So let me just back up for a minute. We didn’t say anything about the study to set the stage. So this year in the data is around 500 organizations and we surveyed three categories. One is organizations that are getting ready for campaigns. We asked them a certain set of questions, one another set of questions went to organizations that are in the middle of their capital campaigns and a third set of questions went to those organizations that have recently, within the last two years completed campaigns. And as you pointed to, nearly three quarters of organizations said that their annual fund during and after a campaign either stayed the same or increased.

And we’re just thrilled about that because I think that that’s a number one fear of so many organizations. And there are strategies certainly that we work with our clients on to make sure that their annual fund at least stays the same or grows. But really after a campaign, what we’re seeing is that organizations, their annual fund increases. And to me, you kind of really have to ignore your annual fund in order for it to decrease. And so there are strategies that can be used. It’s really good news. It’s really good news, this data.

Andrea Kihlstedt:
Amy, I believe that the organizations that had their annual funds fall off during or after a campaign are exactly what you just pointed to, are the organizations that simply didn’t attend to their annual fund. If you don’t do the fundraising, you don’t raise funds. So those that just totally focused on their capital campaign and decided they were afraid to continue to ask people for annual fund, they didn’t have that experience. But those that actually kept right on going with their annual fund found that the annual funds were either stable or increased.

And after the campaigns, the annual funds, of course they had donors who were more excited. A lot of the annual funds increased. So that was great. I knew it to be true and it’s great to be able to point to evidence.

Amy Eisenstein:
I think the only other thing that I want to say about it is we talked to all of our clients about talking to their donors about the importance of both, their annual fund and their capital campaign. And they’re really focused on asking for gifts to their annual fund and one-time special gifts that are over and above their annual fund contributions to the campaign. And that really makes sure that every donor understands the value and importance and the distinction between the two funds.

And so that’s how organizations can successfully protect their annual operating funds, which are running their ongoing programs and services. During and certainly after a campaign, we actually expect the annual fund to increase and it mostly does. So that’s great news.

Feasibility Studies Matter, Big Time

Andrea Kihlstedt:
Let’s move on to another really important point. Our study points to the fact that feasibility studies matter, that they prove their worth as the study says, right? That they can continue… Organizations that do feasibility studies, they conduct feasibility studies early on or before their campaigns show that those organizations were twice as likely to report increased effectiveness among the development staff, better fundraising systems and stronger relationships with their major donors, right? That’s a big deal.

Amy Eisenstein:
That us a big deal.

Andrea Kihlstedt:
A whole ton of stuff gets better. And guess what happens when that stuff gets better? Your organization raises more money. So it’s important.

Amy Eisenstein:
Well, we always talk about campaigns as opportunities to build capacity for your programs and services, but also for operations and effectiveness. And that includes fundraising. And what this data really points to is that going through the campaign process, doing a feasibility study and proper campaign planning increases the output of your fundraising systems and your infrastructure and the effectiveness of your development staff.

And as you said to me, the most importantly, stronger relationships with donors, which is really what we’re focused on here at Capital Campaign Pro. So we’re super excited to see that report.

Andrea Kihlstedt:
All right, you ready for another one, Amy?

Amy Eisenstein:
I am so excited about the next one. Go ahead.

Andrea Kihlstedt:
All right, so you don’t need a wealthy board to have a successful capital campaign. Now that’s very cool, right? Again, this is something I have known for the years of my long consulting career, but it’s hard for people to imagine that. I mean, often people say to us:

“Well, our board isn’t wealthy. We don’t have a fundraising board. Can we do a capital campaign?”

This study shows that you don’t need a wealthy board, you don’t need a “fundraising board” to be successful. Board giving accounts on average for about 15% of campaign goals. Now, that’s important, but you don’t need a board that’s going to give you 50% of your campaign goal for your campaign to be successful.

If your organization is constituted with a board that is a working board, that is a board that perhaps reflects your mission and your population more than any big fundraising board would, you should keep right on going in that direction because it’s appropriate for your organization. And what you do is you put together a steering committee of people in the community who are more wealthy to be in charge of or work seriously on the capital campaign.

The board is involved, the board gives to your campaign, but the board is not the only driving force for your campaign. So you don’t need a wealthy board to have a successful campaign.

Amy Eisenstein:
Well, I think that the reason that’s so important, this data point, is because it busts a myth. So many nonprofits that we talk to are trying to decide and debate whether or not they need to wait to recruit better, I’m using air quotes here, “better board members,” whether they need to wait to have a campaign until they have a stronger board. And well, increasing, improving, enhancing the board members, the board is an ongoing process and something that most organizations are probably working on. It’s not an excuse not to have a campaign. Whatever board you’ve got, the improvements you’ve made, the recruitment you’ve done, if they’re excited about the mission and the vision and the project and the plans, then that’s the board that you’re going to do a campaign with.

And what the data tells us is that really organizations don’t need big money boards to lead successful capital campaigns. So that’s why we’re really excited about that one.

Now I want to pause for just a second Andrea because I want to give a shout-out and kudos to Steven Shattuck on our team who really… He leads the charge on this research every year and we would not be able to do it without him. So I want to give him a little shout-out and remind listeners that if you want to see all of the research results, you can go to capitalcampaignpro.com/research, and download all the results for yourself.

On Average, Top 20 Gifts Account for 70% of Campaign Goal

All right, let’s talk about another data point that we found that is actually really cool. I think we know this again from experience and we talk about it a lot, but now we have data that points to it.

Andrea Kihlstedt:
Why don’t you start this one, Amy?

Amy Eisenstein:
All right, I’m going to start this one. So this one talks about the Pareto principle, or you may know it as the 80-20 rule. And that says that 20% of your donors are likely to give 80% of your dollars. And we always talk about this as being even more true in capital campaigns. Maybe the 90-10 rule, 10% of your donors give 90% of your dollars. And what the data showed is that the top 20 gifts to campaigns typically account for 70% of the total campaign goal, which is unbelievable. It really reinforces that the importance of focusing on those leadership level donors in the early stages of the campaign.

It’s so interesting and fun to see the best practices and the strategies that we know and implement come to life with this data.

Andrea Kihlstedt:
Amy, this particular point should give everyone ammunition for the board member who says, “Listen, it’s going to be much better if we raise money in even increments. If we want to raise a million dollars, let’s get a hundred gifts of a thousand dollars a piece.” I think if we do the math, I think it’s a million dollars, right?

Amy Eisenstein:
A hundred gifts of 10,000 each.

Andrea Kihlstedt:
I don’t know what the numbers are.

Amy Eisenstein:
Even increments.

Andrea Kihlstedt:
Even increments, right? Let’s just go and get that. Let’s make it a hundred thousand dollars. That’s a hundred gifts of a thousand dollars, right? It’s a hundred, a hundred thousand dollars. So just to make it simple, but the fact is that to get that many gifts of a thousand dollars is very difficult for most every organization. To get a hundred gifts of $10,000 is even more difficult. Really quite impossible for most organizations. Capital campaigns just don’t work that way. They are very top-heavy. That’s the reason they’re successful. The top gift to a capital campaign needs to be at least 20% of the goal.

So if you’re going to have a million dollar campaign, the top gift needs to be at least 200,000 or $250,000. And when a board member says, “Well, we’re just going to raise it in equal increments.” You can now say, “Well, there’s fantastic report, recent report on capital campaigns that show that that’s simply not true.” So it gives you fodder when your board member steps up and is afraid of major gifts and wants to raise a lot of money in thousand dollars or $10,000 gifts.

Amy Eisenstein:
That’s so exciting. So important. All right, so the last thing I want to mention is that we asked every organization that was completing a campaign or had completed a campaign recently, if they would say that their campaign was successful, whatever that meant to them. And a whopping 96% of organizations that did campaigns, that recently completed campaigns said that their campaign was a success. So we found that most organizations were raising an average of 106% of their campaign goal. So going over goal. And even in the organizations that were raising just under their campaign goal, they were still able to accomplish their project.

And I think that that’s an important point to consider and to think about because every organization is worried at the beginning about whether or not they can be successful. And to me, it’s really about how do you define success? And we often talk about campaign success here as raising the most money you can at the time for a specific project. And if you’re able to accomplish that project, even if you raise slightly less or find some alternative revenue sources than you originally thought.

Final Thoughts

At the end of the day, if you can do that project and raise more money than you ever thought possible, to me, that’s a successful campaign. How do you define success when you think about campaigns, Andrea?

Andrea Kihlstedt:
I think you got it just right, Amy. I think a successful campaign is a campaign where you raise as much money as is possible at a particular time for a specific plan, a specific project or compilation of projects. And I think what’s important about that is that that would not include, let’s say you have a project in a community and you set out to raise a million dollars, but in fact you probably could have raised $3 million for it because donors would’ve been willing to give more. You just weren’t assertive enough. You weren’t confident enough. To me, even though you had raised your million dollars, that would not have been successful, you would’ve left too much money on the table.

So you talked about it from the other perspective, Amy. I think that’s an interesting definition of success because it pushes you to say, “Well, success really is having the courage to go for a goal that is high so that you’re raising as much money as is possible and having as big a project as is possible in the current environment for your project at this time.” So I’ve thought about that definition of success as being different from just reaching your goal, right? The goal is set too low, was a super easy goal and you reached it. To me, it doesn’t feel successful. Feels like you wimped out in that way.

Amy Eisenstein:
Right? So to me, I think it’s thinking about did the needle move on your organization? Were you able to make that leap? Did you change the capacity in what you’re able to do and those you’re able to serve? Does your community look different at the end of a campaign? I mean, I think there’s lots of ways to think about success, and of course, raising a ton of money is part of that success and leads to that success. But if you raise 98% of your goal, does that mean your campaign’s a failure?

No, of course not. And I’m thrilled that the people taking the survey really almost unanimously said that their campaigns were successful. So what does that tell me? That tells me that if you take the time to think about a plan, a campaign, strategize, have a big vision, implement it, work hard, you are going to be successful. And to me, that’s what matters.

Andrea Kihlstedt:
It’s such a great kind of fundraising, capital campaigns. It breathes fresh life and spirit into an organization to be able to think big, to be able to think, “Well, what do we want to do to take our organization to the next level? And now let’s do a campaign that’s going to get us there.” Instead of thinking, “All right, last year we raised this much money and this year we’re going to raise a little more.” There’s such a different energy in those two approaches. I guess that’s why I’ve been in capital campaign fundraising this whole time.

Amy Eisenstein:
All right, so let’s talk about something that’s super interesting. We are recording this podcast on election day. Of course it will air after we know the results of the presidential election in the United States. And my guess is that regardless of who wins, some organizations are going to say, “Maybe we shouldn’t do a campaign this year.”

For whatever reason, the candidate they love didn’t win, the economy. They’re worried about something or other. There’s a natural disaster, something happens. And what we see in this report and what we know from experience is that regardless of the economy, regardless of the political climate, regardless of the natural disasters, regardless of a pandemic.

That organizations that have good plans and have strong cases for support and have big visions, lead successful campaigns. I think that the most telling examples we have of this is that organizations that decided, “There’s a pandemic, but we’re going to do our campaign anyways because our case for support is strong and we need this.” They’re long done with their campaigns, they’ve had successful campaigns. And the organizations that got nervous and got spooked by the pandemic, they’re still talking about getting started.

And so whatever happens this week, we’re recording on election day, so we don’t know what’s going to happen tomorrow and the coming weeks, but when this episode airs, I’m guessing we’ll know and people will be spooked no matter what happens. And I want to say, don’t be spooked. The data says, “Don’t be spooked. Keep planning. Plan well. Call us and we’re going to coach you through it.”

Andrea Kihlstedt:
I like that, Amy. And it’s just after Halloween, so don’t be spooked is a…

Amy Eisenstein:
Don’t be spooked. All right, great. So that leads me to just remind listeners, we’re here to help you and your team lead a successful campaign. So I would love it if you would visit capitalcampaignpro.com and sign up to talk to us about your campaign, what’s going on, and see if we can help support and coach you through a successful capital campaign.

So thanks for listening, and we’ll see you next time.