Many capital appeals fail and this is often because the organisation just was not ready to launch such a long term, demanding and unusual fundraising programme. Starting with a feasibility study (often called a ‘research study’) will give you the best indication whether your organisation is ready to undertake such a massive venture. If the study gives a strong indication that you can succeed, the work done will not be wasted as it would nearly all have been required were you to have gone straight ahead with the appeal.
You will discover if the money is likely to be there. If your organisation is entirely behind the appeal, prepared for the long haul and fully understanding the level of commitment. The study will culminate in putting the strategy in place and setting out the resources needed, the tasks to be done and the schedule for the next few years.
If you do not undertake a feasibility study the risks to your organisation are huge. Launching a capital appeal in public and failing will lower your reputation and may seriously damage your income from the public and key donors. A perception that you cannot handle your finances can put a sharp break on income, and importantly your major donors who may have contributed large sums will be less than impressed. You will have to decide whether to return the money and if so how to cover your additional expenses. Capital appeals usually cost about 10% of the total to be raised – this is conventionally estimated to be somewhere between 8% and 12%. If you were trying to raise say, £5m you may need to cover expenditure of up to £500,000 all of which could detract from your programme work.
So, jumping in at the deep end should be avoided and is quite unnecessary.
Where will the money come from? Capital appeals draw on your usual sources of funds, however they initially tap only those capable of giving very large sums. The research study will tell you how many trusts, foundations and other grant making agencies are capable of giving to a capital appeal for your cause, how much they could give and estimate if they are likely to give. This estimate can be improved by discussion with any friendly trust officials and trustees. Similarly government sources can be assessed.
Major donors usually make up a large proportion of the income required. The study should devote time to learning how close they are to the organisation and how willing to give. Will they consider this appeal really that important? Lastly companies are considered, though they tend to be minor funders of capital appeals and not prone to giving large sums unless there is a sole owner who is passionate about your organisation. Business people, on the other hand, can be the top donors.
Of course ordinary supporters, local groups and the general public are taken into consideration. Though they are approached only during the ‘public phase’ after half to two thirds of the money has been raised.
Major donors can be the key factor in capital appeals. It is essential that the feasibility study maps out, not just if they are possible to reach, but their ability to give and closeness to the appeal – do they love the idea? They are going to make a huge personal sacrifice so will they be enthusiastic? Talking to these people is an essential part of the research phase.
Fish rot from the head down and capital appeals often disintegrate because key players in the organisation have never really supported them, undermine their effectiveness by denying them the necessary level of resources or by de-motivating important participants. Finding out if key players, such as trustees, harbour serious doubts about the appeal can be as important as talking to potential donors. Maintaining everyone’s momentum, enthusiasm and passion over the years will be one of your key tasks. Interviews with key players in the organisation will show just how easy or difficult this may become.
The first step
The first step is to draft The Case for Support (CFS). Your CFS is the fundamental document that unites everyone and sells the appeal. It should be strong enough to convince people that this is not only the right course of action but that they should contribute personally. The case for support often starts off as a photocopied document when shown to insiders but will become a well designed, copy-written, bound and printed object by the time outsiders see it, as outsiders may well judge the professionalism of your organisation by the professionalism of your materials. This is especially true of the baby-boomer generation who now hold much of each country’s wealth.
The draft CFS is shown to the key stakeholders to ascertain that they support the appeal, that they think others are in support and that the funds can be raised. As well as beginning to learn about their connections and if there is anything else they can do to help the appeal.
Crucially the giving chart is used to check with major donors and others if the level of gifts required is likely to be achieved. This is an estimation based on their response and the number of suspects, prospects and likely final donors. 4 to 6 ‘suspects’ leads to one prospect and four to six prospects leads to one major donor. So you may need a very large number of leads to acquire your key gifts, though 10 of these may cover half or more of your requirements – this includes trusts etc. Though the gift chart is very useful in showing to major donors to elicit their reactions, they are expressly not asked for money during the feasibility study.
As outlined in the previous chapter, it also contains key messages about why you are undertaking this appeal, what is the real need, the criteria for acceptance of funds and what will happen to the funds if too much or too little is raised. Discussing all this widely helps to refine the messages, but also starts people thinking along the right lines.
These will vary slightly depending on the person you are talking to. A trustee of your organisation will have internal knowledge a donor is unlikely to possess and a Finance Director may have information no one else knows. These questions break down into a range of subjects covering the following areas:
Length of time the person has been associated with the organisation.
The part they have played – if not entirely obvious.
How familiar is the person with the organisation: mission – activities – leadership – staff etc
How familiar are they with the work: activities – need – beneficiaries – visits etc.
The organisation: Strengths, weaknesses, opportunities, threats.
Showing them the CFS and talking it through:
How do they view the need for the project : Priority – very high, high, medium, low, very low.
How do they view the way the case is made.
Which other influential people should we ask to give their name to the appeal.
Showing the gift table and taking it through:
Do they think the sums are likely to be achieved.
Who do they think should be called upon for funds (both currently known people and those not current donors)
Do they know of any competing appeals.
What other problems might occur.
Talking through the role of the Chairperson:
Who do they think might fulfil that role.
What links do they or others have to that person.
Do they personally support the appeal.
How would they consider helping (do not ask for or accept donations).
Any other observations.
Any questions about the appeal.
These are the kinds of questions you will ask over an interview of about an hour. Do also probe their knowledge of the likely donor constituency and its response. By the way, you will need to make a judgement about where the interviewee is on the scale of optimism to pessimism.
Take seriously negative responses from the Board or senior staff. If a major donor says they will not give, check why, whether they think others will and if they can help in other ways. Internal realisation of the extent of the appeal schedule and strategy is an important component of ensuring everyone is behind the necessary activity. The cost and time required to run a capital appeal is often underestimated by those not directly concerned with fundraising. An appeal will cost about 8-12% of the appeal target for staff, materials, consultancy, events etc. An appeal can rarely be undertaken without additional staff, and the first year’s appeal expenditure should be securely in that year’s budget before the appeal starts.
Take time to arrange interviews with the people you really need to reach. Ensure you talk to the Chair of the Trustees, the Hon Treasurer, the CEO, the head of fundraising and the finance officer. Undoubtedly they will not be available on the same day and you may need to make the effort to go to their offices or homes, but if you are to really find out what the key people think and understand the dynamics of the organisation and its current funding then these are some of the key people you should talk to. Of course, you must also talk to current donors especially those who have made the highest level of donations – if they are not enthusiastic you might not be able to reach the others.
Give yourself plenty of time for the interviews. You will need at least an hour and some people will arrive late or leave early. Make this take place away from distractions and do turn off all mobile phones. The questions should be a mixture of closed questions to find out their views directly and open questions to let them discuss why they may have negative thoughts. These often come out in discourse rather than a direct question which might elicit an answer they feel they should give. Some interviewers start with the open questions and then nail down the discussion with tighter direct questions towards the end of the interview. It is a good idea to tape interviews so you have a record of exactly what was said, though this can be off putting it is better than illegible notes.
Do write up the interview the same day or you may lose important snippets of information and some of the nuances of the conversation. Remember the organisation is probably about to embark of the largest fundraising programme it may ever undertake and should know if it is really ready and if there are any unforeseen problems lurking beneath the surface. Interviews are confidential and you should be careful in feeding back the responses.
Grant making agencies
A great deal of the work of a capital appeal goes into securing large donations, but it must not be forgotten that a large part of the income is likely to arise from applications to various grant-making agencies, including government, organisations like Livery companies and company trusts. All these must be carefully included in the research for the feasibility study.
Take time to assess the potential market. Many organisations will not give to capital appeals, others may give to your capital appeal but have not given to your revenue needs. These organisations may change their criteria for applications and their objectives from year to year so rely only on current sources of information. Do think through the many ways the need and the project can be expressed – you may find you can really open up the grant-application side by placing the need in a new category.
Once you know the extent of possible giving you will need an estimate of likelihood of giving, which is one of the many judgement calls you will be required to make throughout any capital appeal. Look at your current track record and talk to as many current institutional donors as possible, you may well find they can open many doors for you.
The feasibility study is the foundation upon which your new building will be built and should not be skipped or half done. A professional job at this stage will reap rewards for you as the appeal progresses.
The diagram below shows the use of a scoping chart to plan the time required for the research. Think about your organisation, the number of people you really should talk to and the time you will need for each task. Are you doing all this yourself or will others help you? If you are using a consultancy talk this through with them and plan as many meetings for the same day as possible.
Table 3.1 here
The contents of the feasibility study report
A typical report would have enough information to convince your Board that the appeal will succeed, fail or is in the balance. If it might fail or is in the balance you or your consultants should present a plan to develop the resources you require to a level where they can meet the need. In some cases of course the appeal target is just too high for the foreseeable future and the organisation will need to grow over the years before returning to such an appeal or cut its target dramatically. The report usually lists:
A summary giving a clear indication of the situation and recommendations.
The research on grant-making agencies.
The research into government and international grant-making.
The research on prospective individual donors.
The research into company prospects.
A summary of the interviews. These are usually confidential so will not be reproduced verbatim, but typical quotes may be used (with permission) to highlight attitudes.
Other relevant information used in drawing up the conclusion e.g. conflicting appeals, community relations and reactions.
The conclusion with reasons for any recommendation.
Depending on the study brief the report may also contain:
The capital appeal strategy – usually in a set of clear stages.
An annual action plan.
The staffing structure year by year (possibly with sample job descriptions).
The schedule of activity.
The estimated income and expenditure to reach the target.
If the target cannot be reached
Sometimes the target is just too ambitious or a distinct part of the work is unlikely to be funded. In which case it maybe that a financial resource can be developed over the next few years.
As grant makers usually have set objectives, and are less easily influenced than individuals, it may take some time to really build this form of income. Individuals can, however, be cultivated and brought on board through a major donor development programme. This therefore is often the organisation’s next two or three years work before turning its attention once more to a capital appeal.