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Mounting a Successful Capital Campaign During a Recession: A Case Study & Lessons Learned

This is the first of a two-part series on nonprofit fundraising in a recessionary period. The first article describes the techniques that ensured the success of one nonprofit's capital campaign. The second article, Fundraising In The Teeth Of The Recession: Learn What Our Clients Have To Say, is based on interviews with staff at 18 past and present client organizations and focuses on how a range of nonprofits have coped in this extraordinarily challenging time.

By Bob Zimmerman (ZimNotes Vol 13 #3 May 2010)

If your nonprofit has been considering launching a capital campaign but you've convinced yourself this is not the right time, think again! The United States is awash in philanthropic contributions even in a recession, and capital campaigns are particularly attractive to many prospective donors. As this case study reveals, a campaign that combines sound planning with enthusiastic volunteers and staff will succeed. The lessons learned in the campaign described here also apply to annual fund and endowment campaigns in tough times.

Zimmerman Lehman readily acknowledges that the recession brings certain challenges with it, but these are not enough to derail your campaign. The most important issue is time: in a difficult period, prospective donors may be reluctant to make commitments immediately. They may prefer to defer their gifts until the following year or to make pledges which ease their immediate financial burden. Thus your campaign will succeed, but it may take longer than originally anticipated.

Case Study: Davis Street Family Resource Center Capital Campaign
From July, 2008 to early 2010, Zimmerman Lehman served as counsel to the Davis Street Family Resource Center's capital campaign. Davis Street is a multi-purpose social service agency serving low-income people and "the working poor" in and around San Leandro, California, a city which is located about 30 miles southeast of San Francisco. Davis Street services include a health clinic, food and clothing programs, child care, job placement, utility and housing assistance, economic literacy classes and mental health programs. Davis Street recently celebrated its 40th anniversary.

In 2007, the staff and board of directors at Davis Street decided that it was costly and inefficient to continue to pay rent at its headquarters building. It was costing Davis Street $250,000 a year to rent its site. If they could purchase the building, the organization could reduce its monthly overhead and the savings would go directly to expanding services to clients. The building owners were supportive of Davis Street's thinking and their intention to purchase.

In 2008, Davis Street initiated a $3.5 million capital campaign with $2.5 million for the purchase of the land and structure, and $1 million for capital improvements plus a reserve for deferred maintenance.

Capital Campaign Committee
In concert with the Executive Director, Development Director and Board Chair, Zimmerman Lehman began the campaign by organizing a capital campaign committee made up of board members, community representatives, and businesspeople in and around San Leandro. In addition to providing overall campaign oversight, committee members were expected to make capacity gifts to the campaign, solicit friends and colleagues for gifts, and accompany Davis Street staff to meet with major gift prospects and foundation program officers. One committee member invited friends and relations to her 50th birthday party and, in lieu of gifts, asked them to donate to the campaign!

The committee was ably staffed by the Director of Development, who kept the committee apprised of recent donations and grants, prepared proposals to prospective grantors, and took care of the details of campaign special events.

Campaign Counsel
As campaign counsel, Zimmerman Lehman had a variety of responsibilities, including preparing a campaign plan and case statement, training committee members in major gift solicitation techniques and conducting research on prospective grantors. The case statement summarized Davis Street's exciting work, showed the impact of the rental money saved on the lives of clients, and provided specific information on how people might make financial contributions. The training included an exercise specific to the recession: Trainees learned how to respond to prospects who were reluctant to make financial contributions in difficult economic times.

The campaign was aimed at solicitation of grants and contributions from both private and public sources. While diversification of funding sources is always a good idea, it was vitally important to the Davis Street campaign in a recessionary period. Zimmerman Lehman and the Davis Street Development Director unearthed a wealth of potential donors, including current and lapsed donors, foundations, corporations and small businesses, and friends and colleagues of capital campaign committee members.

Results
To date (May 2010), the campaign has raised over $2.6 million. About three-quarters of these funds came from private sources and one-quarter from public sources. The money raised is more than enough to purchase the building. Meanwhile, Davis Street is continuing to raise funds to pay for capital improvements and a reserve for deferred maintenance.

Lessons Learned
What are the factors that led to the success of the Davis Street capital campaign?

1) First and foremost, the campaign benefited from the complementary activities of board members, other volunteers, staff and counsel. Board members and other volunteers stood ready to ask for donations and spread the word about the Davis Street campaign in and around San Leandro. The volunteers depended on staff and counsel to provide them with the written materials and training to ensure their ability to ask for gifts with confidence.

By the same token, the Executive Director and the Director of Development understood Davis Street's mission and programs, as well as the importance of the capital campaign to ensuring the best in service for clients. What they lacked was connections to folks in the community who had the ability to make substantial donations. They therefore depended on the board and other volunteers for those connections, and on counsel to make sure that the campaign "covered the waterfront" and that every prospective donor or grantor was approached in a timely and effective manner. Even those prospects who were unwilling to make commitments immediately asked to be kept "in the loop" with campaign developments.

2) Second, everyone involved with the Davis Street campaign believed that it would be successful. This might seem obvious and a "given," but trust us-it is not. In a recession, many nonprofits fall victim to the mistaken belief that it's impossible to succeed with fundraising because (a) there isn't a great deal of philanthropic money available and (b) we shouldn't "bother" people during a difficult economic time. We believe both that there is a great deal of money available and that, recession or no, people continue to want to make a difference in their communities by supporting organizations that are doing important work.

All the "players" in the Davis Street campaign were steadfast in their belief that there were individuals and businesses in the San Leandro area that wanted Davis Street to succeed and were therefore willing to pony up the funds necessary to ensure that the campaign reached its goal. Zimmerman Lehman built on this confidence by teaching committee members how to ask for gifts and by supplying them with case statements and other "tools of the trade," but the confidence came first.

3) Third, Davis Street board and staff members understood that, far from impeding the organization's annual fund efforts, the capital campaign actually enhanced Davis Street's ability to solicit operating and program funds. Many nonprofits worry that capital campaigns will make it difficult or impossible for them to raise money for particular projects and general operations. What Davis Street found was that certain donors and grantors preferred not to make capital gifts, but were happy to make annual fund contributions. The money raised for the capital campaign, then, was augmented by annual fund gifts that were made in lieu of capital campaign contributions. In fundraising, one hand does indeed wash the other.

Conclusion
In sum, the Davis Street capital campaign succeeded because staff members, board members and other volunteers brought their passion and commitment to the table and ignored the "recession nay-sayers." With the assistance of counsel, this commitment was translated into solicitations and proposals that made the case for capital gifts in a compelling fashion and that always kept the spotlight on the people who would most benefit from the campaign: Davis Street's clients.

If you would like to discuss how Zimmerman Lehman might assist your nonprofit to do well in this challenging economic time, please don't hesitate to contact us.

©
2010 Zimmerman Lehman

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