October 3, 2012

Annual and Capital Campaigns Together

2623005Can annual and capital campaign giving successfully co-exist and should they?

Yes and yes! They typically do exist together very well and they should, hands-down, play crucial collaborative roles in supporting the mission of the agency or organization. In fact, it is not uncommon for annual support campaigns to not only flourish but significantly grow toward the middle-end of the capital campaign period. And for sure, we often witness a healthy “lift’ in annual giving post-campaign due to increased organizational awareness, new community and donor relationships, and a greater and more focused need for annual lifeblood dollars for the agency.

The trick, as noted below, is how the organization, its board, its development committee, and its capital campaign steering committee structure the two campaigns and their working relationship.

How does the annual campaign approach differ from the capital campaign approach?

The best answer to this question lies in the similarities of both areas. Relationship development, the key to all good fundraising, is the same regardless of the dollar magnitude of the gift level or the purpose of the investment. And typically from a donor’s standpoint, even though annual dollars will be put to use differently than major gifts, capital campaign donations, endowment investment, and planned/bequest gifts, the mission of the organization and the value of the relationship is still primary.

That being said, there are differences—some major and some minor—mostly internal and external. Internal (to the organization) differences lie in the fact that annual campaigns are asked for frequently, are primarily used to fund operations and fiscal budgets, and use less of a personal, face-to-face approach. Internally, annual giving programs generally ask for smaller amounts and use direct mail, phonathons, special events, and online giving methods to solicit for gifts.

The internal mechanisms driving capital campaigns are much different, take much more long-term planning, incorporate the use of volunteers who may bring new and unique relationships to the organization, and have a longer gift cultivation and solicitation horizon. Most major capital gifts are strategically approached using face-to-face methods with written proposals and more detailed explanations of where the investment is going, how it will be used, and what types of naming opportunities might be available.

Externally both annual and capital giving are different as well. They are promoted differently, as annual gifts are typically referred to using such words and phrases as “sustaining”, “operational”, and “annual gift membership levels”. On the other hand, capital campaigns tend to promote their campaign using terms and phrases such as “long-term capital investment”, “bricks and mortar”, “leaving a legacy for future generations”, and “leadership giving”. Then there is always the old definition that annual gifts are written from the checkbook, that is to say the donor’s household budget or discretionary funds; and larger, major gifts are given from assets, stocks and bonds, or other holdings that are necessitate more consideration and planning.

In addition, capital gifts are often pledged over a 3-5 year period, whereas annual gifts are pledged over a 3-5 month period, closing at the end of the year. Research also shows that when a solicitor increases the size of the ask amount to capital campaign sizes, and the magnitude grows, the following occurs:

It takes longer for the prospect’s needs and motives to develop.
The number of inputs influencing the outcome increases.
The discussion becomes increasingly rational but the decision becomes increasingly emotional.
The consequences of a poor decision increases

One critical thinking in the not-for-profit management world reflects upon the differences and terms annual gifts as “sustainable gifts that are solicited and given frequently and are used to continue the daily operations and effectiveness of the organization.” This same sage writes that major or special gifts are “stop and think contributions that are typified by infrequency and is often given at the threshold of ten times the annual gift.” He further spells out the capital or planned gift as the “ultimate gift resulting in a long-term relationship that is a once-in-a-lifetime expression of support and is often 1,000 to 2,000 times the size of the annual gift.”

These, of course, are simplified definitions but they offer a good birds-eye perspective of how each program is similar and different.

How do we set this up so that annual giving can flourish and successfully co-exist during our active capital campaigning?

There is not a simple or easy answer to this question, but there is a classic logic that pertains to creating the right mix for the right organization that is entering a capital campaign. Some general rules exist:

Set forth, from the outset, an organization-wide expectation, starting from the board of directors and the executive director that both annual and capital will flourish and be successful during the same period. Success begins with this specific understanding that both can and should exist and be successful at the same time.
Make sure that the development plan and marketing plan is built around both campaigns co-existing, ensuring that messages are focused, themed, and specific; that volunteers are trained in both sets of solicitation techniques; that you don’t separate the annual giving/development staff and volunteers from the capital campaign planning and execution; and that you have laid the groundwork for both campaigns to share information and work in tandem. Do not split the fundraising mechanism by not communicating.
Prior to the more actively “public” capital campaign season, ramp up your annual giving program by preparing your annual giving donors for the capital campaign public solicitation phase and their regular annual campaign gift. You might settle for a flat (same as last year) annual gift in addition to a modest capital campaign donation, but more often than not, successful organizations seek a healthy capital campaign donation in addition to an increased sustaining gift.
Be prolific with your communications. Cross market, cross communicate, and cross-pollinate. Spell out clearly the need for capital expansion and growth along side the critical operational requirements necessary to fulfill the everyday mission delivery components of your organization.
Bundle your asks! Don’t be shy, when appropriate, to ask for both a major capital campaign investment and an increased (or brand new) annual gift. Most donors actually appreciate the chance to bundle their donations and wisely see the prudent nature of your solicitations. After all, they more than anyone else know the value of maintaining a strong operation during the capital improvement process.
During a challenging capital campaign solicitation, if a prospect respectfully declines to participate at that time in the capital campaign, don’t be shy to ask for an annual gift. More likely than not, you’ll get a healthy increased annual gift.

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