Podcast: The Most Important Principle of Capital Campaign Fundraising

Season 5, Episode 16

A core principle shapes the success of every capital campaign, and this conversation clarifies exactly how it works and why it matters. In this episode, co-hosts Amy Eisenstein and Andrea Kihlstedt talk with each other about the strategic order of solicitation and how top gifts drive momentum, confidence, and overall campaign performance.

By the end of the episode, you will understand the structure behind a successful quiet phase and how this approach sets the stage for a strong public launch and stronger fundraising overall.

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Andrea Kihlstedt:
Do you want to know the one most important principle of capital campaign fundraising? Well, hang out with us today because we’re going to tell you.

Amy Eisenstein:
Hi, I’m Amy Eisenstein. I’m here with my colleague and co-founder, Andrea Kihlstetd. And today, we are going to be talking about the most, or one of the most important principles of capital campaign fundraising, and that is a strategic order of solicitation.

Key Campaign Principle: Strategic Order of Solicitation

So Andrea, you talk about this a lot. Why don’t you talk about how you think about it and why it’s so important.

Andrea Kihlstedt:
Yes, so I think in order to understand this principle, you have to understand that capital campaign gifts do not come in in equal amounts. So if you’re going to do, for example, a million-dollar capital campaign, you can’t say, “Well, let’s get 100 gifts of $10,000 each.” It won’t work that way. They simply don’t work that way.

Capital campaigns work by asking people for gifts of uneven amounts, some very big, and then gradually going down to be smaller. And we use what we call a gift table or a gift range chart to help people understand what that order, how gifts are of different sizes for your campaign.

Amy Eisenstein:
Yeah, I think the simplest way for board members to understand it is to talk about the Pareto principle, the 80/20 rule, because a lot of things in the world work this way, right? 20% of the seeds you plant produce 80% of the vegetables you yield, or whatever it is.

Andrea Kihlstedt:
Here’s a good one for that. 20% of the sales force in any department store yields 80% of the sales.

Amy Eisenstein:
Yes. Yes.

Andrea Kihlstedt:
Here’s another one. 20% of the drivers yield 80% of the accidents.

Amy Eisenstein:
Accidents. Yes. For sure. For sure. Right. So people understand that 20% of your donors give 80% of your fundraising revenue, and the other 80% of people give the last 20%. And campaigns work that way, sometimes even more extreme and 90/10. You can talk about a 90/10 rule.

So that’s what we’re talking about here today in terms of the gift range chart and the strategic order of solicitation going to those top 20% or 10% of potential donors first. Okay, keep going.

Andrea Kihlstedt:
Okay. You start by saying, “All right, well, how are we going to start this campaign?” And really, there are two things you need to do. You need to be soliciting the top gifts first.

So let’s say you have a campaign for $1 million, just to make it simple, right? We seldom do campaigns so small, but let’s say you do, and let’s say your top gift is going to be $200,000, 20% of that, right? And let’s say an ideal circumstance, you have two or three prospects for that gift of $200,000.

Well, those are the people you’re going to be approaching first. You’re not going to be going to the people at the bottom who can give you $10,000 to start your campaign. You’re going to be going right to the people at the top who have the capacity and the inclination to perhaps give you that top gift.

Why the Order You Solicit Your Donors is So Crucial

Amy Eisenstein:
And Andrea, talk a little bit about why that’s so important. Who cares? Let’s say you go to the people that are going to give you $500 first or $10,000 first, right? What difference does it make?

Andrea Kihlstedt:
It’s so interesting. Took me a long time to understand this, but capital campaigns are, I don’t mean this derogatorily, but they’re confidence games. They’re based on people having confidence that the organization can actually be successful and can reach their goal.

So if you have a million-dollar campaign, let’s say I’m doing a million-dollar campaign, and I go to Amy right in the beginning of the campaign, as a donor, I said, “Amy, would you give me $5,000 towards my million-dollar goal?” Right? You’re the first person I’m asking. What’s Amy going to say? You’re going to say yes, but then you’re going to think:

“My $5,000 isn’t going to get you very far towards your million dollar goal.”

I’m going to have real questions because the proportion of her $5,000 gift isn’t big enough to… She’s going to say, “Where are you going to get the rest of this money if you’re coming to me?”

Amy Eisenstein:
Right, it’s not going to work. Right?

Andrea Kihlstedt:
It’s not going to work.

Amy Eisenstein:
Am I throwing my $5,000 away?

Andrea Kihlstedt:
Right.

Amy Eisenstein:
Because you can’t possibly get to $1 million if you’re starting with my piddly $5,000.

Andrea Kihlstedt:
Exactly. Exactly. But now let’s flip the script on that. Let’s say I first went to 20 donors and I actually raised all those top gifts, and I have, let’s say, of the million dollars, I’ve raised —

Amy Eisenstein:
700,000.

Andrea Kihlstedt:
700,000. Exactly. Now I go to Amy who I think could give $5,000. I say, “Amy, we’ve raised $700,000 towards our million dollar goal. Would you consider a gift of $5,000 to help us close the gap?” Well, that starts to sound reasonable. She is going to feel like her gift makes a difference because the campaign I’m asking her for now is a $300,000 campaign, right? It’s the bottom part of this campaign. And her gift will make sense in that context.

Now, the people at the top, the biggest donors, let’s go back to the people. Okay, I’m going to someone for $200,000 or $250,000 at the top, they’re going to understand very well that their gift of 200 or $250,000 will make a huge difference to this campaign. It will set the campaign up for success. And people who can give that kind of money understand that, their proportion is right.

Amy Eisenstein:
I think that’s such an important explanation and a visual picture, really a common-sense explanation for why this top-down approach is so important.

Solicit Donors Top-Down and Inside Out

Let’s talk about inside out. So we haven’t said the phrase top down, inside out, but that’s how you talk about these things. So first is top down.

So, starting with the top donors, the top 10%, let’s say, whether that’s 10 donors or 20 donors or 30 donors, we’re looking at the top of the gift range chart. Who are the top 10% of donors that can really move the needle on this campaign? So that’s the top-down part.

Now let’s talk about inside out, what does that mean?

Andrea Kihlstedt:
All right, so inside out means that while you’re talking to the people who are the largest donors, you also want to be talking to people who are the most committed donors, the people who are closest to your organization because their early commitment is going to make a difference. So who might be in that group?

Well, you’re probably going to start with board members, current board members. Those are people who really are, they are managing this organization. They are leading this organization. It’s important that they get to give. Whether their gift is a high gift or a low gift, it’s important that they get to express their commitment.

And sometimes those two overlap. It may be that you have someone on your board who can give that 200 or $250,000 gift. And of course, that’s where you’ll start. Or it’s the same person who is both an insider from the inside out and a top donor, a top-down strategy of solicitation. So when those overlap, that’s where you’re going to begin.

But even if you have board members who can’t give large gifts, and every organization is likely to have those, that doesn’t mean you shouldn’t be asking them early, because you want them to have a chance to express their commitment to the organization. And you want to be able to tell the people that you’re going to for gifts that your board is fully committed to the campaign. That’s important, people look to that. They don’t want a board that’s uncommitted. They want to be able to know that the people on the board who know most about your organization are really stepping up in a big way to do what they can do for this campaign.

So that’s why we have top-down, inside out. And if you imagine sort of a drawing of this, there’s kind of this blurry area in the middle where people are both top toppers and insiders.

Amy Eisenstein:
Right. Those are your first prospects.

Of course. Now, I think this explains perfectly campaign strategy and who you’re going to solicit in the quiet phase of the campaign and really will help board members understand why you can’t go public early. In the quiet phase, you are soliciting these top-down or top and inside. So that’s what the quiet phase is, it’s the top and it’s the inside. All the insiders, your campaign volunteers, your board members, maybe immediate past, former board members.

So all the insiders and all the top people, that’s who you’re soliciting as part of the quiet phase. And until that’s done, you’re not going to go public.

Andrea Kihlstedt:
And when you think about it that way, it makes it so clear what your jobs are when. It makes it clear that here’s what we need to do in the early phase. Here are the people we need to be soliciting. Here’s why we need to be soliciting them now. And then gradually, we’re going to move down on the gift range chart and out in terms of people’s commitment and connection to our organization. So it gives you a very clear graphic or mental visual, how the campaign runs and works.

And you can pin lots of things to that. You can talk about:

• How are we going to staff this?
• Do we have a staff person who handles the top donors?
• Do we have a staff person who handles the people who are closest to us, the inside donors?

You can think about staffing from this way, you can think about the calendar in this way. How many months is it going to take us to do this?

So, it becomes an organizational principle for your entire campaign, which is so reassuring actually. Instead of just flailing around saying, “All right, let’s go ask someone for money,” all of a sudden you have a rhyme or a reason as to why you’re asking people and why you’re asking them now.

A Real-World Campaign Example

Amy Eisenstein:
All right, so let’s talk about this animal shelter that we worked with a couple of years ago where we’re going to not name it for privacy’s sake, but we were working with an animal shelter and they had decided they needed to expand their facilities. And they had a lot of base support, community support. They had a wonderful, robust direct mail program.

So of course, they did what they knew how to do best when they were trying to expand their shelter. And they sent a very heartfelt personal story out to their supporters and asked for campaign gifts in a direct mail fashion. So they didn’t apply these campaign principles, this campaign strategy of inside out, top down. Well, certainly not top down. They went out to everybody. And of course, as you would expect, they got a teeny tiny fraction of what they were hoping to back. So they really had to go back to the drawing board. It was tough for them.

But then they started to work with us, and we really talked about this top down approach, inside out, very specific, very strategic, very personal, and they were able to go over goal. What details do you want to add? I didn’t tell that story very well.

Andrea Kihlstedt:
No, it’s such an interesting story because if I recall, what they did was that they asked everyone through a letter.

Now, these people were very good at communicating, in a compelling way, the story of their organization and the animals that they helped. They pulled at your heartstrings. When I read what they did, it pulled at my heartstrings. This is a great organization, they really know how to tell stories. They really know how to talk about their mission in a way that I want to help them. And when it came, and they raised all of their annual funding this way through direct mail, and they did quite well with that. So these weren’t neophytes, they weren’t fools, they weren’t stupid. This was the pattern of funding that they knew and understood and did very well.

And worked. And worked. So it’s not surprising that when it came to a campaign where all of a sudden they’re not having to raise a half million dollars in a year, but they’re having to raise $3 million in a year for their campaign, that they would think that the same strategy would work.

Amy Eisenstein:
And that their loyal longtime donors would step up in that way.

Andrea Kihlstedt:
Would step up. Would still —

Amy Eisenstein:
Yeah, it made sense. It made sense.

Andrea Kihlstedt:
So as Amy said, they put together this amazing solicitation material, kind of a brochure and a personal letter. And in that letter, if I recall correctly, they asked everybody, each person in that letter to give, to send $10,000.

Amy Eisenstein:
Yes, $10,000.

Andrea Kihlstedt:
$10,000. Now, imagine getting a letter. It makes me laugh, but you can understand it. Imagine getting a letter in the mail from an organization that you generally give $500 to, and all of a sudden, they’re asking you for $10,000 in a letter. Well, the surprising part of the story is that they actually got some $10,000 checks.

Amy Eisenstein:
Two or three.

Andrea Kihlstedt:
Two or three, right? That’s amazing that people, in response to a letter, would send a $10,000 check is amazing. But let’s say they got three, that’s $30,000 on a $3 million campaign, that’s not going to go anywhere. And they were rocked back on their heels. It’s like this didn’t work.

The Wrong Strategy

So it was shocking to them because they were so good at what they did, and they did it so well. And indeed, they did. It was just the wrong strategy.

When we worked with them, what we realized is that they hadn’t done any prospect research, for example. They hadn’t done any donor cultivation. They hadn’t segmented their lists into people who could give more and people who could give less. They didn’t know who the people who might give half million dollars were, though there certainly were some on their list. So they had to start by saying:

“All right, not all donors are created equal. We have donors who can give different amounts. Let us do our research and our homework and find out who our top 20 or 30 donors are.”

And that’s what they did.

Amy Eisenstein:
Instead of 1,000 donors, they focused on 30 donors.

Andrea Kihlstedt:
That’s right. And that, of course, was the top in the top down, to bring this back to our top down strategy. They then could approach each one of these people individually and invite them in to see the place or have conversations with them to find out why they were interested. And in fact, they raised much more money than they ever thought that they could raise and they —

Amy Eisenstein:
They went over goal. They went over goal.

Andrea Kihlstedt:
And not because everybody in the broad base sent the money, but because they focused on this top group of donors and they solicited them. They sort of pretended that they hadn’t solicited anybody in the beginning. They wrote off that first —

Amy Eisenstein:
Right. It was a fresh start.

Andrea Kihlstedt:
Fresh start.

Amy Eisenstein:
We did a fresh start.

Andrea Kihlstedt:
Right, fresh start.

Amy Eisenstein:
A do-over. A do-over.

Andrea Kihlstedt:
Right, exactly. And I think to this day, this was some years ago, and to this day, that approach transformed their fundraising. They now understand what it is to build real relationships with the people who could give them significant gifts, and they keep right on with those relationships.

Amy Eisenstein:
Well, that’s what we see in campaigns all the time. That’s what good campaigns do, is they transform fundraising, departments, offices, capacity, infrastructure, so that organizations, as they grow, can raise more money in an ongoing fashion and build deeper relationships with their donors as well.

So this was great. You talk about top down, inside out all the time, Andrea, and I think it was a great idea to articulate it, break it down, say why it’s important, and so that-

Reality Check: Top-Down is Scary

Andrea Kihlstedt:
Amy, let me say one more thing about top down, which is that it’s scary. I remember the first time I learned that, I learned it from someone, and I had to raise money for a project. And I realized that I had to start by going to my largest donors. And that if they said no, that I was in deep trouble.

So this strategy, while it is critically important, and for sure, what you need to do has the downside of being very anxiety-producing because if you don’t get that top gift or those top gifts, if, for some reason, that doesn’t happen, you are going to be in a position of having your campaign significantly. Right?

These are very high stakes asks that feel more anxiety-producing than if you were just asking everybody for $10,000. That’s easy.

Amy Eisenstein:
Well, the reason they’re high stakes is because you can’t make up for those gifts at the bottom of the pyramid.

Andrea Kihlstedt:
That’s right.

Amy Eisenstein:
At the base, in the public phase. You can’t. So you do wind up adjusting your campaign goal down. But to set you up for success, you’re going to do a feasibility study. And the way that we have people do feasibility studies is that the leaders of your organization go and have these strategic conversations so that you have a better sense of it and you have a better chance for success because you’re engaging people from the beginning. So on that note-

Andrea Kihlstedt:
No, good topic, Amy. I just didn’t want to leave out the anxiety part because it is real.

Amy Eisenstein:
Yes, I think it’s super important. This is what we help our clients with every day. So if you’re thinking about a campaign and you want to learn more about this strategy and make sure you set your campaign up for success, do visit the Capital Campaign Pro website and sign up to talk to us and see how we could help you with your campaign.

All right. Andrea, thanks, as always, for sharing your wisdom and we’ll see you next time.