Sarah led the meeting, as she should in her capacity as Development Director. In attendance were some major donors who sit on both the board and the development committee.
This nonprofit has two major sources of revenue: a raffle and a Fund-A-Need. Their Fund-A-Need started out generating around $250k when I began working with them and we’ve managed to increase that by about 10% each year. Their event is relatively small, maybe 200 people, and they have an amazing participation level. About 98% of their attendees make a gift at the event, including a number of major donors.
During the meeting, Sarah explained that they would like to use this year’s Fund-A-Need to launch and complete a capital campaign.
If you are unfamiliar, capital campaigns focus on raising large amounts of money for a specific purpose: new buildings, major renovations, etc. During a capital campaign, you approach your major donors and ask for large donations specifically to fund these projects.
When Sarah introduced this idea, I was stunned. Their goal of raising $3 million with this capital campaign was way above our annual 10% increase and very difficult to meet with an event of this size. As we dug into this idea, it became clear that Sarah wanted to make a huge splash in her first year and this was how she chose to do it. Unfortunately, they hadn’t completely thought things through.
However, they thought their plan was solid for a couple of really good reasons. They had a need that they felt was immediate and would have an impact. Immediate is good. Impactful is good. To run a successful capital campaign your need must be both immediate and impactful, the problem is making a capital campaign ask at a live event.
Why Not to Launch a Capital Campaign at a Live Event
Regardless of what level they give at, most donors who have the capacity to give don’t make giving decisions on the spot. Giving decisions require conversations with spouses or partners. Depending on the amount asked for, these decisions may necessitate a conversation with a financial advisor. These decisions certainly require a conversation with the nonprofit. When people do raise their hand for a spur-of-the-moment donation, it’s never a large amount. No one donates $100k impulsively unless they are a billionaire.
This fundraising event is how this nonprofit closes their annual gifts. Donors come to the event with the understanding that they are making whatever their annual gift is at the event, whether that is $500, $1,000, or $5,000. Running a capital campaign at this same event would mean soliciting attendees twice, once for their annual gift and once for a donation toward the capital campaign. With a goal of $3 million, these aren’t going to be small asks. It’s easy to see how this would make donors feel bad about the event and the nonprofit. Major asks, such as those required by a campaign of this size, should always be done privately and in person, not at an event.
At fundraising events, 20% of the guests make 80% of the donations, the remaining 80% of the guests make 20% of the donations. It’s important to think about how it will make your donors feel if you suddenly start asking people to raise their paddles to make a $250k donation to a capital campaign. It’s going to make 80% of the people in the room feel like their donations are inconsequential, that’s the exact opposite of how you want them to feel.
Additionally, most capital campaigns come with naming opportunities. Think about all the names on the buildings where you live. It’s likely that many of them are there because that person, or their family, made a large donation towards that building. If you are running a capital campaign at an event, how do you deal with the naming opportunity? Does the honor go only to the person who makes the largest donation? How will that make your other donors feel? Do you have a plaque made with the names of everyone who made a donation that night?
Capital campaigns require a lot of planning and work. You can’t throw a successful one together quickly. Campaigns of this magnitude require every department working together to achieve success. And your whole budget changes. Say your nonprofit has ten major donor families who always buy a table at the event. Do you solicit them for a capital campaign contribution, and then ask them to buy a table on top of that? What does this campaign mean for sponsorship? What effect might it have on your smaller donors? How does it change your budget for the year? Before launching a campaign of this magnitude, you really need your ducks in a row.
So, How’d it Turn Out?
Ultimately, the committee heard me out and decided they would separate the capital campaign from their Fund-A-Need. They’ve decided to approach their major donors privately and ask them to contribute to the capital campaign funding their project. At the Fund-A-Need, we’ll call attention to the campaign and the generous donations by those families, but we won’t be asking for donations to the campaign at the event itself.
I still think they will need to adjust their fundraising expectations for the event. The Fund-A-Need is probably not going to do as well because the donors that normally generate 80% of their revenue will have already been approached to make a donation to the capital campaign. They may not want, or be able, to give again.
This isn’t meant to scare anyone away from running a capital campaign. These campaigns are important and certainly have their purpose. But, you do need to make sure you take into account the major asks you will be making throughout the year, when it comes time to planning your fundraising event. Hold events specifically for those donors who aren’t asked to contribute to the capital campaign. Or perhaps make the decision not to hold an event in the same year as a capital campaign, communicate this with your donors and set their expectations for the solicitations they will receive. Just please, don’t run a capital campaign at a live event.