by Kris Kindelsperger

Several of our clients are in the midst of raising funds for large capital projects.  In all cases the ideal fundraising outcome is to raise 100% of necessary funds in cash.  Seems pretty straightforward.

In reality, the needs and preferences of donors must be factored into the equation. 

• Most donors lack the liquidity to write a check up front for the full amount of their gift. 
• Many donors make multiyear commitments stretching out five or more years. 
• Some gifts may be premised on the sale of a business, property, or other investment, the timing of which may be fluid. 
• Other donors may need to incorporate some form of gift planning that will cause the funds to come to the organization sometime in the future. 

It gets complicated.

One way to address these fundraising realities is to develop, in advance, a Funding Plan, or a road map that takes into account a series of assumptions and contingencies that fit the organization’s needs as well as its tolerances for risk.

Elements of a Funding Plan include:

• Realistic estimates of fundraising that include projected cash flow, the likelihood that major liquidity events (sale of property, for example) will occur in a specific time frame, and calculations on the present as well as future value of planned gifts.

• Determine the cost of building today versus in the future.  Are there significant savings to be had by building today when construction costs are relatively low?  What happens if costs rise, might they eclipse fundraising progress in three years?

• What is the cost of not completing the facility soon?  An academic building that will allow increased enrollment in revenue generating programs has a projected current revenue value as well as a lost opportunity cost.  If construction is delayed three years, how much revenue is lost?

• What is the organization’s ability finance debt? Whether short term construction financing or longer term debt, what is the cost to finance a project in interest and/or bonding costs?

Each of these points requires creating a set of assumptions and making judgments about what will likely happen in the future. Well conceived plans can allow organizations to create flexible funding strategies that can be adjusted as circumstances unfold, but may provide the opportunity to move ahead with construction while fundraising is still underway. 

In today’s economy waiting till all the cash is in the bank, may not be the most cost effective way to fund a new building.

by Angela White

I recently recorded a short video interview on why we advocate feasibility studies at JGA. A feasibility study provides vital answers to help an organization create and run a successful fundraising campaign. By conducting a feasibility study, an organization can receive a third party perspective on the organizations upcoming campaign or project.

Here are some questions a good feasibility study should help you answer.

1. How much money can you expect to raise in a capital campaign?
• What are donors willing to do to aid your organization in achieving its goal?
2. Who are your potential volunteer leaders?
• Who might be able to partner with staff to make the campaign a success?
3. What are the perceptions of your organization among your constituents?
• How do donors connect to the leadership of your organization?
4. Are there underlying issues impacting your organization’s potential for success in a campaign?
• What might be out there that could maximize your giving?
• Are there challenges that could cut back on the amount of gifting you are likely to receive?
• Are there issues impacting your constituency of which you need to be aware?
5. What are the broader questions that need to be asked specific to our organization?
• How can we position this campaign to be successful today and set the stage for long term growth?

A feasibility study can be a valuable tool to help develop a thorough understanding of how successful your campaign may be and where you may encounter problems.

But from my perspective, to get at the broader answers about the campaign you need to tailor the approach specifically to the organization.

Through the years, we have recognized that the feasibility studies that yield the most useful information include the following:

• Detailed, custom plan development specifically to meet your organization’s needs, not a cookie cutter approach
• A tailored selection of questions that allows a feasibility study to take into account your organizations history and current situation
• Face to face interviews with clients which yield more insights and build closer relationship to volunteers and donors
• Enough time for a thorough study of the aspects that could impact your campaign, sometimes up to 90 – 120 days
• Go beyond donors and involve committees, staff, volunteers and other constituents important to your success

Taking this extra step to tailor the questions and the approach to your organizations unique needs allows the feasibility study to answer the bigger question of what do you need to be successful not just today in this campaign but to set the stage for long term philanthropic growth.

By Kris Kindelsperger

August marks the practical beginning of the fundraising year for education institutions and others that are on a fiscal year beginning in June or July.

So what does the coming year look like from a fundraising perspective?

We don’t hear many development staff believing that 2011-2012 is going to be dramatically better. A slower than expected economic recovery, continued high unemployment, and the remaining uncertainty around a whole range of fiscal policy issues don’t do much to suggest that this will be a banner year in fundraising, at least based on donor confidence.

In our observation many annual fund programs have been holding their own and, in some cases, growing modestly.

Donors are not abandoning the organizations that they have funded over time.

Attracting new donors is a challenge, and our research on millennial donors suggests ever more sophisticated strategies will be required to secure them as donors.

Designated giving continues to be popular. Giving online, and the use of social media are all growing though not at the rate some had projected just a few years ago. Most institutions find they need to “do it all” – mail, phonathon, social media, online giving, and personal visitation to get the job done.

Major gifts are a bit trickier. Donor confidence continues to wax and wane, and a gift officers continue to hear some variance of:  “I’m not sure this is the best time; I’m waiting to see if my business recovers; I’m waiting to see what the market will do, My broker is cautioning me to go slow.”

I’m not sure you would define this phenomenon as exactly “stalling techniques” but the decision making that goes into making major gifts -particularly lead and large major gifts – is definitely impacting the timelines of campaigns and other time-sensitive fundraising projects.

Capital fundraising, especially for new buildings, seems to have lost much of its luster with more and more individuals and foundations focusing on programs and endowment.

Planned gifts are an increasing part of the mix of larger commitments.  Extended payment schedules (up to 10 years or more) as well as structured gifts that don’t mature until the donor’s death are frequently negotiated to reach high 6 figure and 7 figure gifts.

These realities do not seem to be dampening the expectations of nonprofit leaders or boards.  The pressure to raise more and more remains strong. 

Our advice is to take a deep breath, plan well, be assertive, try new techniques, and continue to build personal relationships with your organization. 

People and organizations are still giving and still giving generously.  But staff and volunteers alike need to be prepared that minus a “lightening strike,” geometric growth in fundraising results may not be in the cards for 2011-12.

by Angela White

In June, the Association for Healthcare Philanthropy released its annual Report on Giving which held seemingly great news for healthcare fundraisers.  According to the survey of AHP members, giving to hospitals and healthcare systems increased by 8 percent in 2010 and totaled over $8 billion! 

A few days later, one of JGA’s clients, Wishard Hospital Foundation, announced a transformative gift of $40 million from Sydney and Lois Eskenazi that was the largest in the hospital’s history.

So, is it time to pop the champagne and celebrate a renaissance in giving to health organizations?  Not exactly. 

AHP is the premier professional organization for healthcare fundraisers in the country. So a survey of their members tells us that things are improving at a good pace for organization’s committed to fundraising best practices.

This is an important insight, but it doesn’t mean all health organizations should count on 8 percent growth next year.  

In contrast, Giving USA estimates that giving to all healthcare organizations in 2010, including non-AHP members, grew a more modest 1.3 percent. This estimate lines up with what have been historically slow growth rates for healthcare philanthropy following previous recessions.

Also, though the gift to Wishard is among the largest ever given to a public hospital, it is joins a smaller number of extremely generous gifts given to health organizations across the country during and since the Great Recession. 

In 2010 there were 11 announced gifts of over $10 million to health organizations, only a slight change from 9 such gifts announced in 2009 and down from the 22 gifts of that type announced in 2008.

AHP’s findings are encouraging and support the idea that in challenging economic times, as  in any economic environment, institutions that commit to a high standard of professional fundraising are likely to fare better than those that don’t.

by Kris Kindelsperger

In today’s economy, does a major comprehensive campaign make the most sense or is a series of smaller project based campaigns a better approach?

Two commonly used campaign strategies are the comprehensive campaign strategy and the individual project based strategy. Each offers their own advantages and disadvantages.

Comprehensive campaigns offer several advantages:

• One fundraising plan can address a range of important needs
• Their mix of components can better match the varied interests of donors in the campaign
• Their broad scope allows them to address high level strategic initiatives of the institution

While successfully run comprehensive campaigns can be truly transformational for an organization, they also have drawbacks to consider:

• They take longer to plan and complete
• They are more expensive to run
• They can push the limits of donor capacity
• They demand more of staff’s time and endurance

Individual project campaigns, on the other hand, are effective in:

• Achieving goals in a shorter amount of time
• Meeting an obvious and compelling need
• Minimizing the demand on donor capacity
• Lowering the risk of fatiguing staff

But consider where the individual project campaign falls short:

• Its singularity of focus might leave other important needs unmet
• Donors may find the project fails to pique their interest or meet their philanthropic goals

So which is the “better” of the two options? 

In times of transition or uncertainty, a project campaign may represent a good short-term way of staying engaged with your donor population.  Project campaigns can be a good warm up to a larger comprehensive campaign, testing staff and volunteer leadership and building capacity.

If a compelling strategic plan, proven capacity and strong staff and volunteer initiative is in place, a comprehensive campaign is likely the best use of institutional resources and a successful campaign can truly be transformational for the organization.

The best answer for you may not be one or the other, but rather a grouping of components that provide donor choice but at a smaller total goal that better aligns with capacity. 

This approach may offer most of the advantages of a comprehensive campaign while offering the shorter time frame and more focused approach of the project campaign.

by Ted Grossnickle

Sometimes the best conversations in a consulting practice happen when you have a group of colleagues together and a topic arises unexpectedly— and it causes all of us to think about an issue facing a client.

This certainly provides a glimpse into what values drive our practice and it also makes us realize we are often hearing or dealing with the same issues across a wide range of non-profit clients.

Recently at JGA, one of those issues popped up. We have a client near the end of a significant capital campaign. The campaign leadership faces a set of big challenges in terms of building a strong volunteer and staff team and a big goal in terms of dollars to be raised. They also face the challenge of creating a sense of ownership and participation among their constituents and the community.

As they celebrate the success of the campaign and near the dollar goal ahead of schedule, many campaign volunteers have suggested they should immediately “declare victory” and end the campaign early.

After all, they reasoned, “we will have raised the initial dollar goal we set out to achieve, that is what we told everyone for this phase and why should we go on after that?”

There was just one problem. The amount to raise wasn’t the only goal. Another critical goal was to make everyone feel a part of this very public effort — and to help everyone see that they could play a role in making something very important in the region happen. And not everyone had been given a chance to make a gift.

We often make the case to our clients that philanthropy is about more than just raising money – it is an opportunity for us to allow others to become involved and demonstrate support. Donors want to feel that they have a role in accomplishing something for the organization. They want a chance to participate.

Holding true to those values, our counsel to the client was to continue to conduct the campaign and to make clear that everyone should be given an opportunity to make a gift.

Campaigns are about more than a goal; if we believe in the common work we do in philanthropy, we surely believe that gifts at the lower end of the gift table are just as important as those at the top — and that those donors need to express their generosity as well.

I’m proud of my colleagues and proud of our client for upholding those values so well.

By Kris Kindelsperger

The recent announcement of a $23.7 million gift by Lilly Endowment to Ivy Tech Community College in Indianapolis for the purchase of a building which will be renovated into new facilities to house Workforce Development operations bucks the trend of what would seem to be a declining interest among funders in investing in facilities.

Recent experience with comprehensive capital campaigns with three of our clients revealed that funding for new programs and endowment proved far more attractive to donor prospects than did science buildings, student unions and performing arts buildings. 

It wasn’t that many years ago that many fundraising professionals touted the adage that building money was easy to raise, but endowment funding was much more difficult. 

The 2008 CASE Campaign Report provides statistical results that showed a 27  percent decline in donor interest to fund facilities and a 19 percent increase in their desire to fund programs and endowment from 2006 to 2008.

What’s behind these trends? 

Clearly sophisticated donors are gaining an appreciation for the importance and value of endowments.  And, funding to support the introduction of new programs that deal directly with emerging issues and challenges can certainly peak donor interest.

But, it’s less clear why donor interest appears to be leaning away from facilities.  The anecdotal evidence is there, the study evidence is there, but evidence of why this is happening is less clear.

What’s been your experience with funding major facilities?  What works?  What’s not working as well today and what trends do you see?

by Meg Gammage – Tucker

Managing to Repay Debt with Capital Funds

“How can we move ahead and buy or build something and then have our clients repay the debt?”  We have historically, and still regularly do, advise strongly against this strategy. 

We have advised against this strategy for two very important reasons—

1.)     Donors often do not want to fund something that has already been built thus reducing both their financial and personal influence over its development.  This is also why we test the “preliminary” case for support.  And,

2.)    Given the recent recession and its fallout, funding activities through debt is considered by some to be a precarious strategy, at best.

Today, however, it is a reality and one that more and more clients are asking us to address.  It may not be the best way to do our work, but it is a reality with which we must deal and strategies must be devised.

Debt repayment through philanthropy is not easy, and it requires organizations to be extra thoughtful and strategic to make it possible.  It requires the following:

Mission and Program Impact

How has this investment made the world a better place? 

How has it helped achieve our mission? 

What programs have we developed or improved? 

Financial Justification

Clear and sound reasoning as to why the investment was necessary.

Why did you invest first and ask later?  Or, in other words, what did you save and how did the organization benefit financially by buying or building before the dollars were available?

Potential Donors

Knowledgeable and entrepreneurial donors –who are both already committed to your cause and who appreciate and understand that your organization can be entrepreneurial as well.

It is not an easy path—nor one we readily recommend.  But it is one that is part of our philanthropic world and one which requires both thoughtful consideration and action.

“Let Meg know how helpful  Managing to Repay Debt with Capital Funds is for your organization and share your results by posting in the JGA comments section below.