The Risk of Capital-Campaign Fatigue

Database: How endowment investments fared at 210 nonprofit groups

Articles: All of the advice and commentary from this special supplement on endowments

Supplement in print: Order print copies of the Endowments supplements from August 2005 and May 2004

Enough. Enough already!” said a capital-campaign donor when the performing-arts center came back seeking a gift for its third campaign in less than five years.

More and more nonprofit organizations are joining the capital-campaign bandwagon. Once the purview primarily of educational institutions and hospitals, capital campaigns are now frequently run by organizations of all sizes and types and in all nonprofit fields. Some organizations seem to be continuously in capital-campaign mode — either preparing for one, in the midst of one, or coming off the last and readying for the next.

What are the effects of these campaigns on the donors, staff members, and volunteers involved? On the organizations themselves? On their communities?

I believe the impact is significant at all levels and that nonprofit organizations are in danger of overusing — even abusing — a traditionally effective fund-raising strategy and alienating donors, staff members, and volunteers. What’s more, some groups get so focused on the campaign that they lose out on opportunities to get some types of big gifts and damage the ability of other groups to raise money.

“I see a wide tide of organizations that view the capital campaign as a tactic cobbled together by a variety of staff members rather than a compelling idea that grew out of a consensus of stakeholders,” says Laura MacDonald, president of Benefactors Counsel, a consulting company in Columbus, Ohio.

Traditionally, capital campaigns were intense efforts to raise significant dollars in a specified time, for the purpose of acquiring, constructing, or renovating a building. The emphasis was on multiyear pledges, with donations received within a three-to-five-year pledge period, according to Stanley Weinstein in Capital Campaigns From the Ground Up (John Wiley & Sons, 2004). Often an endowment drive was attached to the capital campaign, for the programs and upkeep of the new facilities.

But capital campaigns are no longer focused solely on bricks-and-mortar projects. In recent years they have been used to support a wide variety of undertakings. Many campaigns combine solicitation for annual funds, major gifts, special projects, and planned gifts to raise funds concurrently for research, scholarships, continuing education for staff members, professorships, community-outreach programs, building endowments, and so forth.

Capital campaigns can represent authentic and extraordinary opportunities — the big ideas that require board members, donors, and other constituents to step up to the plate. They give an institution something specific to talk about with prospective donors. At their best, they create a new sense of excitement and enthusiasm for major gifts.

But today many organizations have patched together an amalgam of efforts under the umbrella of a capital campaign, hoping that a laundry list of programs will receive funds in a specific time frame. The campaign purposes often seem artificial and contrived. “Endowment campaigns often emerge from fiscal pressure rather than from institutional vision,” says Tracy G. Savage, a senior consultant with Marts & Lundy, a consulting company based in Lyndhurst, N.J.

Even compelling capital campaigns based on well-conceived long-term goals can be risky. The organization may become so focused on achieving the campaign goal that it ignores the donor’s priorities, timetables, and circumstances — and thus misses significant and long-term gifts. Failure to reach the campaign’s financial goal can damage the organization’s reputation and slow development momentum. Further, a campaign that does not have a clear vision, appropriate infrastructure, or thoughtful strategy can leave donors with negative experiences that spill over to the campaigns of other groups.

In the university setting, most comprehensive capital campaigns are two to three years in the planning stage and four to five years in the public phase, according to Joseph O. Bull, director of planned giving at Ohio State University. Once the goal has been reached and the campaign wrapped up, universities generally take a break from a formal campaign for a few years and begin to plan for the next campaign. “Capital campaigns are important to keep the momentum going,” says Chris Yates, Stanford University’s director of planned giving.

However, in most large institutions, universities included, smaller and special fund-raising efforts for particular programs occur even in between the comprehensive campaigns. A hospital may not be in the midst of a formal campaign, but it is still raising major gifts for a new children’s wing, or an oncology laboratory, or an addiction-prevention program, or all three.

Comprehensive campaigns work best when they fold the institution’s highest priorities into one major effort rather than approach donors in piecemeal fashion for a new facility, then landscaping for the building, then programs to be housed in the building, and then an endowment to support the programs and the building in the future. When fund raising continues for a series of mini-projects after victory has been declared, donors sometimes feel that they were misled or that promises (implied or literal) were not taken seriously, according to James E. Gillespie, president of CommonWealth Consulting, in Indianapolis.

Smaller organizations often want to undertake a capital campaign for new or renovated facilities or for endowment. Many, however, do not have the infrastructure to accomplish the task — sufficient donors, board and staff, long-range vision, campaign planning, budget preparation, project identification, and cost analysis.

“There are lots of organizations doing capital campaigns, but for every organization that moves forward with a campaign there are two that decide they are not yet ready,” says A.J. Casey, a senior consultant at Hodge Cramer & Associates, of Dublin, Ohio.

Such organizations are more likely to be successful if they take the time to fully prepare before starting the campaign or limit the scope of their efforts to a specific project that has substantial existing support.

Often, small and midsize organizations raise money for special programs or projects, but purposely do not call the fund-raising efforts capital campaigns to avoid scaring the staff or board members. Instead, the organizations might talk about creating a new scholarship fund, or providing money for new books in the library, or supporting a new program to reach out to underserved youth, or even building a child-and-family center. By not identifying the effort as a capital campaign, the organization can avoid naming a specific dollar goal or a date for completion. Success can be guaranteed by establishing public benchmarks at a later date and measuring gifts as they are received. The organization might establish a goal internally (for example, $1-million) and yet go public with a smaller goal (say, $750,000) to ensure that the goal is attained and surpassed.

Organizations can alienate even enthusiastic, deeply involved donors if fund raisers return to the same wells and don’t take the time to cultivate new patrons.

“I can’t believe they are coming back to us when my wife and I have just paid off the biggest gift we have ever given,” a capital-campaign donor told a consultant conducting a recent feasibility study in Phoenix for a large social-service organization.

Doug Allinger, of Allinger & Company in Columbus, Ohio, says that donors “eagerly support compelling visions presented by well-prepared organizations for causes that they, the donors, value.” However, Allinger notes, some donors feel overwhelmed by the volume and size of requests, and some are disappointed by the cavalier or entitled attitudes, and the lack of vision, expressed by the leadership of some organizations.

“In recent years, we are seeing more unprepared organizations seeking funding for ill-conceived capital campaigns,” says a community-relations director for a Fortune 500 company.

Foundations and corporate-giving programs have become savvy and can spot a trumped-up capital campaign a mile away. Community-relations staff members are wary and weary of pre-campaign studies, in which consultants interview prospective donors to determine the likelihood of success before a campaign is begun and to identify potential campaign leadership. They do not want to spend their limited time reviewing weak proposals. All donors increasingly expect legitimate and compelling reasons and articulated, measurable results for any capital campaign.

Organizations also need to be careful not to burn out their development staff members and volunteers. Capital campaigns can energize or enervate them, depending how the efforts are handled.

The anticipation of a capital campaign can be motivational and exhilarating. “I instinctively worry about exhaustion at the staff level, but I haven’t seen it in reality,” says Yates, of Stanford’s planned-giving office. “Stanford’s capital campaigns force people to sit down every five years and strategically think about the future — and that seems to give the staff and volunteers added energy.”

However, unless nonprofit groups hire additional experienced personnel, a burgeoning campaign can be exhausting and discouraging to staff members expected to continue current assignments (designing and producing direct mail, writing proposals, coordinating volunteers, staging special events, etc.) while taking on the new fund-raising drive. Staff members and volunteers can become jaded and complacent if the campaigns are not well organized and meaningful. Although the organization may experience a short-term bounce from a newly announced campaign, the value may be fleeting if it is not generated by a wellspring of board and staff ideas and enthusiasm.

Even well-planned capital campaigns can be a double-edged sword in terms of an organization’s human resources. For some development officers, involvement in a capital campaign can be a career training ground. A fund raiser who headed a $4.5-million capital campaign for a Girl Scout council says, “When the campaign was successfully completed, I thought, ‘What’s next?’ I didn’t want to go back to writing annual fund letters.” Frequently, staff members leave after a capital campaign, if not because of burnout or boredom, then because they have been recruited by another organization, or desire to apply their new knowledge in another setting.

Capital campaigns can also take a toll on CEO’s, who are expected to continue running the organization effectively, efficiently, and creatively while also spending a large portion of their time meeting with groups of constituents and individual donors. On the other hand, some institutions shrewdly take the timing of executive appointments into consideration, starting capital campaigns in conjunction with the hiring of new presidents, or announcing a relatively low campaign goal so that it can be raised when the new CEO comes on board.

Campaigns can distract organizations and supporters from their missions, becoming ends in themselves rather than means to an end. “Organizations focus on counting gifts rather than developing relationships based on ways in which the organization can help donors achieve their philanthropic goals,” says Christine Isham, executive director of the Lakeview Foundation, the fund-raising arm of a community mental-health center in Pensacola, Fla. “Planned gifts end up being ‘counted’ toward campaign goals instead of being ‘accounted for’ as a future interest of a present donor.”

Capital campaigns used to depend heavily on volunteers to meet directly with prospective donors. Committed leaders got the job done. Today the pool of volunteers is shallower and often younger, less experienced, and not as affluent. I fear that many of the most influential volunteers are exhausted from too many campaigns and turned off by capital campaigns that are neither visionary nor compelling. “The day of the great single chair is over,” said George Brakeley III, at Brakeley Briscoe in New Canaan, Conn. It is now necessary to spread the work and time among two or more campaign leaders.

When organizations realize that traditional sources of income (government funds, foundation grants, corporate support, fees, etc.) are drying up, they sometimes try to start different kinds of development programs at once or in quick succession — an annual operating campaign, fund raising for special projects, a capital campaign, endowment building, a membership program, and numerous special events. That’s a mistake. Organizations need to cultivate prospective donors through continuous annual-giving programs, increased planned-giving options, and carefully timed capital campaigns — and those efforts must be staged over months and years.

Capital campaigns require staff members to meet personally with donors, not simply through direct mail, e-mail, or phone calls. Fund raisers must schedule face-to-face visits with donors and prospective donors, as well as the lawyers, accountants, and financial planners — most of the day. Trained assistants must acknowledge gifts, study potential donors, and take care of administrative work so that the fund raisers aren’t tied to their computers or offices.

When many organizations are beginning back-to-back capital campaigns, that affects the community as a whole.

On one hand, the physical facilities and programs of some organizations will be improved and sometimes even endowed for the future. Annual supporters of local social-service and arts organizations may step up to become major multiyear donors for the first time. Traditional donors may become more focused and selective in their giving. Some will be inspired by the organization’s vision and the campaign’s structure to give at sacrificial levels. The quality of services may be improved in certain segments of the community, permitting government and private support to be used for other intractable issues.

On the other hand, some donors may balk at tight timelines, multiyear pledges, and the competitive pitches of rival campaigns. Prospective donors may become overwhelmed, confused, and turned off by the barrage of solicitations. Relationships between the donor and the organization can become strained as campaign deadlines seem to take precedence over donors’ individual interests. Capital campaigns may lose their attraction, excitement, and mystique through saturation of nonprofit patron lists.

With increasing competition among organizations and inflated capital-campaign goals, nonprofit organizations run the risk of becoming solicitation vehicles, primarily, rather than service providers. I do not mean to suggest that organizations should wait for a window of opportunity to open up before starting an ambitious fund drive; that may never happen. But they must be sure that the case for support is genuine, engaging, and grounded in a vision of the future.

I believe in a philosophy of abundance. The resources exist in the United States and the world to meet the needs of society and to take advantage of future opportunities. We who work and volunteer for nonprofit organizations have the privilege and obligation to clearly articulate our organizations’ visions and to position our organizations to receive support from informed donors. We enable donors to experience the satisfaction and meaning associated with the act of giving. And we have the responsibility to begin capital campaigns only when we can document that the needs of our constituents require comprehensive, major fund-raising campaigns and that our organizations are ready and able to undertake the effort.

Diana S. Newman is the founder and principal of Philanthropic Resource Group, a consulting firm in Columbus, Ohio, and the author of Opening Doors: Pathways to Diverse Donors (Jossey-Bass, 2002) and Non-profit Essentials: Endowment Building (John Wiley & Sons, 2005).

http://philanthropy.com
Section: Endowments
Volume 17, Issue 20, Page B22