Planning for Success: Capital Campaign Budget

Are you concerned about the fundraising costs associated with launching a transformational capital or endowment campaign? While planning, executing, and sustaining an impactful campaign requires additional staff time and outside expertise, the costs associated with a major capital or endowment campaign are constructive because they help fund the vision that serves your organization’s mission. You will get a greater overall return on investment when you plan well and manage a capital campaign budget.

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Creating a capital campaign budget is an invaluable step in the early planning stages of a significant capital or endowment campaign. Many organizations miss this step and find themselves in the unenviable position of realizing midway during a campaign that they need more funds or must pull funds from operating dollars to cover internal expenses. Budgeting keeps internal expenses in check and helps avoid depleting the dollars needed to fund your vision. A capital campaign budget is also a useful tool for ensuring development staff and volunteers are aligned on campaign costs and are comfortable talking about them if a prospect inquires. 

CFA recommends building capital campaign expenses directly into your fundraising goal. For example, if your goal is to fundraise $1 million for a new building and you plan to collect pledge payments over a five-year period, then building in an additional 10 percent campaign expense budget makes your total fundraising goal $1.1 million. 

How much capital campaign operations cost

In development, we must keep our eyes on the fundraising goal and internal expenses to operate a practical and successful development operation. Careful budget planning is critical. If you project too much money toward expenses, you may raise concerns that not enough money is going towards the mission, but if you project too low, then you run the risk of under-resourcing the campaign and your staff. 

A good place to start is to assume that the internal expenses of running a capital campaign will cost your organization roughly 8 to 10 percent of the fundraising goal. Then, fine-tune from there. Budgeting less than 15 percent of the fundraising goal is considered acceptable; less than 10 percent is considered efficient.. If your organization is new, or your fundraising goal is less than $10 million, then internal expenses will require a larger slice of the pie.

Be prepared to tell prospects

Some prospects may wish to know what’s behind the sales pitch in the campaign. While more experienced donors, including most foundations, know that hiring consultants and strengthening your development staff during a campaign is prudent, many prospects will ask what portion of dollars raised will go directly toward supporting the mission. With a well-reasoned budget, your team will be prepared and can confidently share the percentage of the dollars raised that are directly supporting the project.

Some foundations will cover the expense of campaign feasibility studies and planning. Check out my colleague Jake’s article about feasibility studies to learn more.

What to include in a capital campaign budget

Expense budgeting involves making assumptions so build in contingency to account for variables. Consider your organization’s culture too: whether your organization is known for black-tie dinners or outdoor picnics makes a difference in how you will conduct a campaign and what the budget requirements are to do so. For budget planning purposes, consider the format and locations where you will host events and gatherings, travel to meet prospects, and launch the campaign publicly. 

There are several key line items most organizations will need to include in their campaign expense budget. Fundraising consulting firms charge fees for a development assessment, feasibility study, database analysis, and ongoing campaign consulting. Your campaign may also need additional writers, graphic designers, and printing and/or digital expertise for the case for support. Campaign videos are more common in today’s fundraising environment and they can be very effective, but also costly. Lastly, don’t forget to include donor recognition and stewardship. It’s never too early to think about what type of donor recognition will work best for your organization, and importantly, how you will keep in touch with your donors once the campaign concludes. After all, a well-stewarded gift is key to the next gift. 

To hire or not to hire more staff

During our feasibility study process, CFA analyzes department structure and capacity and, depending on the scenario, may recommend staffing additions or restructuring to successfully plan and launch a major campaign. Many organizations have an understaffed development team, and running a campaign on top of the annual fund and other projects can be daunting. Having another person on the development team is beneficial for managing your prospect pipeline and the solicitation process, keeping materials and communications up to date, ensuring solicitors have what they need to feel comfortable asking for support, and serving as a liaison with your fundraising consultant.

If the ideal candidate to manage the campaign is already on staff, consider hiring a new person or adding a major gifts officer to backfill and manage the annual fund. If your department is not adequately supported, you run the risk of burnout once the capital campaign is launched. When organizations can’t add a dedicated campaign staffer, campaign counsel can assist with managing the campaign. 

Capital Campaign budget practices to avoid

  1. DON’T put off the budget for later. Start drafting a budget as soon as your board is seriously discussing a campaign.
  1. DON’T wait to determine your donor recognition strategy. Recognizing donors shows them gratitude and also signals to your prospects the importance of philanthropy within your organization. Start strategizing how you will recognize donors during your campaign pre-planning phase. Discuss with your staff, development committee, architect, etc. whether you envision donor recognition as names on the website, in an annual report, on a plaque or permanent donor wall, and budget the required funds accordingly. 
  1. DON’T draft a budget and leave it untouched. It’s important to regularly update your campaign budget and continue to fine-tune your assumptions. Set up monthly or quarterly meetings to review the budget with your team. 

I hope these ideas have helped you with budgeting for your campaign and I wish you the best in bringing your vision to reality! 

If CFA can help you along the way, please reach out to us.

Author: Joanne Curry is Vice President of Client Services focusing on campaign management, prospect development, and membership and annual giving programs. Joanne came to CFA with over ten years of non-profit experience in operations management, development, and accounting. Before joining CFA, Joanne served as Head of Revenue and Interim Head of Development at the McNay Art Museum in San Antonio, TX, managed fundraising operations and communications with Missouri Contemporary Ballet and Owen/Cox Dance Group, and worked with nonprofits as a Certified QuickBooks ProAdvisor Accountant with Support Kansas City. A native of Port Jefferson, NY, Joanne holds a BFA in Ballet Performance and Teaching from the University of Utah.