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How much money should you have pledged before you go live with your crowdfunding or capital campaign?

13 September 2016

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 September 13, 2016
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Flat Donor Pyramid

This is part two of our interview with Andrea Kihlstedt, a national expert on Capital Campaigns, and co-founder of Capital Campaign Masters. Before you do a feasibility study, here are 4 things you need to have in place. She will be teaching at our online Nonprofit Leadership Summit on September 27th-29th. That’s just 13 days away! Learn more here.

Mazarine Treyz:  I’ve heard that it’s important to at least have the money pledged before going live with a capital campaign. Have you heard that as well?

Andrea Kihlstedt: Yes. Well, these days I actually recommend to people that in many cases, they have at least 60% or even 70% of their gifts pledged before they go public. But the bulk of capital campaign fundraising comes in in large gifts, and if you start your campaign, if you are very outspoken about your campaign and you start your campaign by asking for and receiving small gifts, you don’t build the confidence you need to have a successful campaign.

So in what we often call the quiet phase of a campaign, that’s the whole first long section of the campaign, we set about raising the largest gifts. It’s really what we call inside out, the top down and the inside out. We start by going to the largest donors and securing pledges, and at the same time we go to the people who are closest to the organization. The board, the advisory board, key staff members. Once we’ve solicited all of the largest gifts and the people closest to the organization, only then will we be ready to announce the capital campaign. So that’s tried and true campaign methodology.

What it does is that it builds a head of steam. So that by the time you go to the community, where the chances are you’re only going to be getting smaller gifts, they feel like there’s real momentum. They have no more fear about whether you’re going to succeed. Because honestly, no one wants to give a small gift to a campaign where they don’t think it’s going to be successful.

MT: That reminds me of crowdfunding, actually. Have you ever seen a nonprofit successfully crowd fund a capital campaign?

AK: No. If you really look at a lot of the successful crowdfunding campaigns, what you find is that many of them are shaped in the model of capital campaigns. The people who know what they’re doing quietly solicit gifts from people long before they put up their crowdfunding platform. Then they get people early on to make their commitments online, and early on in that crowdfunding period, you all of a sudden get a lot of large gifts. That builds a head of steam. That’s right out of the capital campaign playbook.

Now, what is the role of crowdfunding in a capital campaign? At the very end of the campaign, you might want to do some crowdfunding. But not until you get to the very tail end of it. So I often hear from organizations, particularly inexperienced organizations, that they always want to flatten the donor pyramid. They want to say, well, we have to raise $1 million. Why don’t we just get 100 $1,000 gifts?

MT: No problem, right?

AK: A thousand $1,000 gifts would be $1 million. Why don’t we get a thousand $1,000 gifts, right? No problem. You can do that. It’s not the way it works. But it’s amazing how many people do that. They sort of divide the number of gifts evenly and that’s the way they think they can raise the money.

donor pyramid-you're not going to get 1000 $1K gifts!

MT: That leads me to what are the phases of a capital campaign? If you can’t just raise 1,000 $1,000 gifts, what do you do?

AK: Well, we have several important phases of a capital campaign. The way I look at it these days is this way. You have this whole pre-campaign phase where you’re working on

The Pre-campaign work includes:

  1. Getting ready,
  2. Developing a plan,
  3. Identifying and cultivating your largest donors and engaging your donors,
  4. Getting your board ready.

Next, the Campaign work consists of:

  1. Hiring a consultant to do a feasibility study,
  2. The consultant does the feasibility study then they recommend a preliminary goal to you.
  3. Next you go through the process of actually developing a campaign plan, and the consultant will help you do that.
  4. Then you go into this quiet phase of the campaign, where you’re soliciting the largest gifts and the people on the inside.
  5. Finally, when you’ve raised perhaps 60% or 70% of your campaign goal, you’re going to have a kickoff.

That’s when you actually go public with your campaign. That’s when you have a party. You have a press release. You’re clear about what your final goal is going to be, and after you kick off then you’re in the public phase of the campaign, in which you’re going much more broad based. If you want to have a crowd source part of your campaign, that’s where it would tuck in.

Want to learn more from Andrea? Come to her session at the Nonprofit Leadership Summit, and Read the next part of the interview on September 14th and learn why you can’t run capital campaigns like universities!

Nonprofit Leadership Summit

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