Planning for a Capital Appeal

A capital campaign passes through four clear stages. These are: an initial feasibility study to check that the organisation is really ready for a capital appeal and is likely to succeed in raising the funds it needs within a reasonable time; a private phase when, without seeking publicity for the appeal, funds are raised from key individuals and grant-making organisations; a public phase when publicity is sought and money raised from the general public; and lastly a stewardship phase when pledges are called in, promises are honoured and a platform for future fundraising is built. Each of these stages is elaborated in the following chapters.

Feasibility study
This is the least understood but most important part of the appeal. It estimates whether the organisation is right to proceed with an appeal at this stage in its development. Is there really buy-in from the key players? Is the ‘case for support’ clear and unassailable? That is, are the reasons for needing the new asset convincing, especially in terms of how it will impact on the organisations beneficiaries. It may be nice for the staff to have a new building, but can you really convince affluent support to part with large sums when their eyes are firmly on the programme work? The feasibility study tests this by taking the time to see if you are ready. It takes the carefully constructed case for support, and talks it through with the key stakeholders and potential funders; not asking them to give but asking them how they feel about the concept and if they would support the appeal. Internally, the study discusses the same issues with the trustees and others whose backing will be needed to support the appeal.
The feasibility study is often conducted by an external consultant who will also provide a strategy setting out the action plan, the timescale and the cost. This will involve thinking through the staffing of the appeal by the fundraising department, the voluntary appeal committees, the involvement of each part of the organisation and how all this will change from year to year as the appeal progresses.
The feasibility study uses a draft case for support showing just why the organisation needs the building. At this stage this is a draft because it will be shaped by these internal discussions, which often help to develop the phrases used in the final appeal documents. When shown to those close to the organisation this document needs not be a glossy publication, but may bear the marks of a document in transition which the organisation is keen to discuss with its closest allies. Later, when it is shown externally, it is very important that it reflects the professionalism the organisation displays in its programme work.

The private stage
Once the appeal receives the go-ahead from the Board the appeal enters the private or silent phase. In this phase the organisation boosts its own publicity but does not mention the appeal; otherwise its key supporters may read about the appeal in the press, and send in a much smaller donation than they would have done if they were asked properly face to face. Once they have given like this they are said to be ‘inoculated’ against further asks. It does not take many of these donations to jeopardise the entire appeal.
The inoculation concept is worth elaborating as it is sometimes challenged. In major donor development, a supporter may give less than the research may indicate they can but they are gradually cultivated over a number of years to raise their involvement. In capital appeals there is a limited time to raise the funds and usually a very limited number of people who can give the top amounts. These are essential to secure early on in the campaign because they are very difficult to replace by either new donors (who require time to cultivate) or a mass of smaller donations (the top sums are in the order of 10% of the appeal total).
It should be emphasised that much of this work is not step by step but continues in parallel. Major donors are still approached in the public phase and so are grant-making bodies, cultivation in any phase will work towards gifts long after the appeal has closed. This is one of the great advantages of running a capital campaign; that it sets up the organisation to increase its revenue income in future years, and builds toward other capital appeals yet to come. This sometimes allows the organisation to develop a vision of itself in a few years time and to communicate that to its supporters.
One great failing of many organisations is that after a capital appeal they revert to inertia and fail to keep on board and develop the relationship with their key donors. Sometimes this is due to a mistaken belief that once a major gift has been made you cannot ask again, and sometimes short term thinking prevails and to save money the cultivation and relationship building activities are allowed to wither.

Do you need a consultant?

There are three excellent reasons for using a consultant. A consultant brings perspective from outside the organisation, bringing the experience of many other capital appeals to bear on your organisation; with the power of the ‘deus ex machina’ to be listened to by those who would trample on internal opinion. They are vital in conducting the feasibility study, when stakeholders can talk in confidence to consultants in a way that would be impossible if this was an internal exercise. Lastly, capital appeals are rare even for large organisations and it is unusual to find the experience required to orchestrate such a long-term complex programme internally.
A useful book is “Choosing and Using Consultants” Baguley. J (2006) published by Wiremill Publishing Limited – see www.quickguidesonline.com.

Why do capital appeals go wrong?

We rarely hear of capital appeals that do not make it. For obvious reasons they are not publicised and tend to be quickly forgotten, but it maybe that a third of all appeals either fail to get off the ground or take so long that they are abandoned. Sometimes the organisation pulls in funds from reserves, borrows or cancels another operation to complete the appeal. Where appeals take an inordinate number of years to finish the increased costs (especially building costs which often have their own logic) may begin to outrun the additional income, leading to a hopeless situation.
So why does this happen? There are a number of possible causes at each stage of the appeal:
Your donors are likely to include a large number of baby-boomers – inquisitive, demanding and fickle, and your strategy may only depend on committees and ‘asks’ by eminent colleagues.
The appeal may be under-resourced and with inadequate staff not enough time is put into all aspects of the appeal.
It may be because the organisation has not truly ‘bought in’ to the appeal, and senior staff or trustees may be reluctant to allow the appeal the resources it needs. Complete buy in is also essential for an appeal to survive the times when some major donors do not give at the right level and grant-making organisations are being slow with their pledges. Cool heads are then needed to analyse the situation and bring the appeal back on track.
Another key reason for failure is that the Chairperson cannot or will not ask for money. They may mistakenly have thought they were being given an honorary position in which they were not responsible for delivery, or they may find when it comes to it they cannot make the ask or even pick up the phone to call a colleague.
Lastly the feasibility study may have been a sham. Many organisations fully intend to run a capital appeal and do not realise that they are not ready. Often they have either not kept their key donors on board since the last appeal, or have not run a major donor development programme so they may not even have any and sometimes their grant givers are only interested in their programmes.
Of course this is not an exhaustive list, but so common are these five situations that they are worth setting out early on.

The essential pre-appeal preparation
Of course, before an appeal is launched there are certain essential steps to be taken and if these are missed their absence will come back to haunt you when you apply for grants or discuss the project in detail with a major donor.
The Big Lottery Fund lists this work and much more useful information in their online land buildings guide at http://www.biglotteryfund.org.uk
They start with an options appraisal which will help you answer the obvious questions, ‘Why do you need a new building? Why do you need that new building in particular? Can’t you find somewhere cheaper?’ These are not idle questions that can be brushed aside. You will need to produce a well researched appraisal of the options facing your organisation both for alternative ways of carrying out the project and alternative sites. As ever, do not forget to thoroughly research the old and new needs of your beneficiaries that you intend to meet. Can you really prove on paper that they both exist and that this project will make a real enough difference to their lives to convince people to give you huge sums of money, especially when they have alternative causes tugging at their heart strings.
The lottery says:
An options appraisal should give details of all the options you have explored, including leaving things as they are, and should cover the following areas:
the needs that your project aims to meet
the project’s objectives, benefits and outcomes
for each option considered:
an evaluation against your project’s objectives benefits and outcomes and the needs it aims to meet
the estimated costs (capital and revenue costs)
an indication of the timetable for commencement of project delivery
a risk assessment
your preferred option, and an explanation of why you recommend it.
It goes on to look at five useful stages for the project outside of the fundraising process, but essential to take into account if you are to present a professional building programme to potential funders. The lottery says:
This section gives you an overview of the key stages in planning and managing a capital project. However, remember each project is different and the level of detail will vary depending on its size and complexity. We particularly recommend that you read this section if your experience of land and building projects has been limited.

Stages of a capital project.

Initial planning – setting up internal management and co-ordination.
Design – appointing a design team.
Procurement – appointing a building contractor.
Building – monitoring the works.
Completion – maintenance and monitoring use.

Initial planning
Decide how your project will be managed within your organisation (see 4.1)
Establish the need for the project (see 4.2)
Consult and involve key stakeholders
Define the project outcomes and benefits
Do an options appraisal (see 4.3)
Research possible sources of funds.
Decide on the best option for you.
Prepare the project brief (see 4.4)
Design
Talk to relevant regulatory bodies, such as the local authority planning department and HM Revenue and Customs
Hire building professionals (see 4.5)
Do a feasibility study (see 4.6)
Establish the design brief (see 4.7)
Establish project management requirements (see 4.8)
Decide on your procurement strategy (see 4.9)
Instruct the building professionals to develop the design and cost plan
Apply for statutory consents (see 4.10)
Develop a business plan
Apply for and get funding
Procurement
Appoint planning supervisor
Complete the detailed design and write the tender document
Carry out the procurement process
Report to funders on procurement results
Select and appoint contractor(s)
Agree a programme of works
Agree how changes to the project will be managed and controlled
Work with regulatory bodies
Following their steps will give you a rigorous background to your fundraising, and ensure you do not lose much valuable time later undertaking basic work like a survey of needs or developing a business plan which shows how you will fund your increased revenue needs and pay for any interest incurred on borrowings.
All this forms a far greater part of the fundraising process than ever before because the generational cohort holding the bulk of the nation’s liquid wealth are the baby-boomers. Rich, sceptical and inquisitive, they will want to know far more about your project than previous generations, ask awkward questions and expect convincing replies.

Beware the generational shift

We are living through a huge generational shift in wealth from an older generation now retired and those retiring to the ‘baby-boomer’ generation born after WWII. The significance of this is laid out by Judith Nichols in her book “Global Demographics: Fundraising for a New World” (Bonus Books, 1995). Nichols explains the huge difference in thinking between the generations. The older generation, who she characterises as ‘Civics’, fit in with society and work to improve it from the inside. They are careful with money, dutiful and sometimes distrust new technology. Those born just before and during WWII she calls ‘The Silent Generation’ as they were taught to be quiet and ‘seen but not heard’. They grew up in relatively affluent times but with a financial conservative nature.
This radically changed with the boomers who were iconoclastic idealists in their youth. They shape the world rather than adapt to it. Hugely self-interested they look for a personal return for their efforts and have always felt themselves to be special. There are intensely optimistic and if they give then they tend to do so in relatively much larger amounts than previous generations.
Beyond them is generation X, conservative and pessimistic, and generation Y steeped in technology and born into a global world; but as they do not yet have such significant wealth, it is the boomers who are most likely to be the key targets of a major donor campaign.
It is becoming apparent that boomers in general are inquisitive, and want to know details of any charity they ‘invest’ in – a recommendation from a colleague is not enough. They often want to feel involved in some way and expect a degree of personal recognition that the older generations felt was unnecessary. They expect the organisation to approach them professionally and its materials to reflect that professionalism. They will judge the organisation’s ability to deliver its programme on the quality of its delivery to them. So, whereas the older generation may feel ‘glossy’ material was an expensive waste of money that could be better spent on the work, a boomer may well think that they are dealing with an organisation that can ‘get its act together’ and is not ‘run like a jumble sale’. Comfortable with technology they are not, however, as integrated with it as succeeding generations; and the physical impact of seeing the work and talking to charismatic people about it will move them to take part. Keen to be involved ‘boomers’ may appear to be demanding and time consuming donors, but once ‘involved’ they are also generous and will often act to ensure a programme they feel passionate about takes place.
Much of what follows in this book is centred on the needs of the boomers. As a generation they outnumber past and future generations and have always had the lion’s share of publicity, and they expect this to continue.
They will need to be personally sold on the appeal, so you will need to have a set of convincing arguments showing how the sums you are asking for will be spent, and you should be able to explain and defend these figures persuasively. Being fickle, the boomers will think in terms of comparison – why this charity more than another? For maximum effect your case will need to carry both emotional and intellectual logic. Terry Axelrod of “Raising More Money – Step-by-Step Guide to Building Lifelong Donors” (2004) says that “We are emotional donors looking for a logical reason to give”. This is worth bearing in mind throughout your major donor programme as these twin elements should always be present.
A more recent study is discussed in The Harvard Business Review in an article by Neil Howe and William Strauss entitled ‘The Next 20 Years: How Customer and Workforce Attitudes Will Evolve’. Though not specifically written about either capital appeals or fundraising it is an invaluable guide to those changes now rippling through the fundraising world.

Guarding your revenue income

One of the great worries for many organisations facing a capital appeal is whether their usual revenue funding will take a hit during the capital appeal. The simple answer is that it will. You will need, for example, to set aside certain trusts who currently give to you but which are prime targets for a capital appeal and you will most likely need to ask your top donors to make larger donations than they have ever given to you before. You may go wider than this and ask other parts of your donor base to help. Even if you do not ask directly, they are likely to hear about the appeal during the public phase and be excited and want to help with this new and important venture. Indeed, they may worry why you did not approach them in the first place. Your local community too may divert some of its help to the new project.
As a capital appeals usually lasts over a few years, you will be approaching different parts of your support base at different times (see the stages of an appeal below) so spreading the burden. Many people you approach will both maintain their usual gift level and add an extra donation, many will not be moved by ‘bricks and mortar’ preferring to give to revenue. Importantly, the capital appeal research will open up a large number of new donors and institutional givers some of whom will love the organisation, but not be interested in the new building and wish to support its ongoing programme instead.
The heightened publicity for the organisation’s work in the private phase, and the raised awareness in the public phase, also alter the organisation’s financial position giving a boost to most parts of the fundraising programme.
All these factors limit, or eliminate, any negative effect on the revue income; and quite often as the appeal moves on the new donors give again and again. Handling them well raises income, sometimes quite steeply, as the organisation moves into its post-appeal phase ensconced in its much more efficient and effective new building.

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