Many organizations gear up every few years for a capital campaign with the purpose of raising money to acquire or improve a physical asset. A capital campaign can be useful to organizations as donors are drawn to what they can see and feel. As you’re planning and executing your next capital campaign, keep these four areas in mind:
1. Be realistic in setting the goal
The scope of any capital project should be based on the ability and willingness of your donors to contribute to the item or improvement you’ve chosen. When identifying the project and the goal needed to accomplish it, consider the giving potential of board members, individual gifts, corporate, and foundation gifts. Also determine whether in-kind gifts will be included in the campaign goal.
2. Consider ongoing maintenance costs
In addition to the initial costs of your improvements or building, those assets will also need to be maintained. It’s also safe to assume that an organization’s operating expenses will increase once the new assets are in service. It would be wise to work these into the goal of the capital campaign. If maintenance costs are intended to be included in the appeal, be sure to disclose that in the campaign literature (see #3 below).
3. Explicitly identify all intended (and possible) uses
Donors need to know what their funds will be used for. In addition, accounting standards require donor-restricted funds to be accounted for separately from operating funds. The capital campaign may raise more (it happens more than you may think!) than the amount needed to construct or acquire the building or asset, and the campaign literature should discuss the use of any additional funds, such as maintenance, equipment, operations, endowment, and/or campaign consultant fees. Without identifying other uses, the organization would be required gain donor approval to allow those excess funds be used for other purposes.
4. Be Mindful of Accounting Restrictions
By identifying all uses, donors will be aware of how their gift will be used. As the money is pledged and collected, track the restrictions and then release the accounting restriction when the donor’s restrictions are met. Training the employees who handle contribution recording is essential in capturing all donor restrictions and reflecting them in the accounting records. Tracking donor restrictions can be done in some fundraising or accounting software suites, but is often accomplished by a spreadsheet maintained by the accounting staff.
While there are plenty of other considerations in starting and conducting a capital campaign, the above are the ones that could cause problems later if they are overlooked. Please contact us at TDT with any questions you may have when planning and implementing your capital campaign!