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Reinventing the Nonprofit Capital Campaign

By Nell Edgington



Note: This post originally appeared on the About.com Nonprofit blog.

In a previous article on About.com, I discussed the idea of capacity capital, an incredibly exciting new funding vehicle for nonprofit organizations. Capacity capital is the money that nonprofits so desperately need to build strong, effective, sustainable organizations that can create more social change. It is a one-time investment of money to add new technology, an evaluation system, a new revenue function–ultimately money to grow or strengthen the organization. And it is infinitely more effective at achieving social impact than a traditional bricks and mortar capital campaign.

There are many perceived benefits to a bricks and mortar capital campaign. They can be a vehicle for asking for bigger gifts, a way to get in front of the community and be “noticed,” and a method for energizing the board and giving them something to do.

But there are often huge downsides to these campaigns. Often the cherished new building has much higher ongoing maintenance costs that were not factored into the campaign. A capital campaign can also cannibalize regular annual donors. And most detrimental, a new building often does not increase the nonprofit’s ability to create more social change. Does an in-school mentoring program really need a big, new headquarters? Do the costs for a nicer, larger office space directly result in more children being mentored or mentored more effectively?

What if instead of raising millions of dollars for a new building, a nonprofit raised that much money, through a capacity capital campaign, for the things they really need to create more social change:

  • New technology
  • New online fundraising software
  • A new donor database
  • Highly skilled and experienced development staff
  • A program evaluation study
  • A more effective program-delivery system

If those organization-building elements were in place, a nonprofit could start:

  1. Doing a better job of delivering the program
  2. Raising more revenue annually through a more effective fundraising function
  3. Securing more external support because they can prove program results

Instead of depleting the organization through cannibalized donors and increased on-going maintenance costs (as a traditional capital campaign does), a capacity capital campaign actually strengthens the organization and allows it to achieve more social impact, more effectively.

Before your organization decides to embark on a traditional capital campaign, take a big step back and ask your staff and board some hard questions:

  • What are we hoping to gain from this capital campaign?
  • Will this new building contribute to an increase in outputs (services) or outcomes (changes to our clients’ lives)?
  • Are there other items we need more than a new building in order to effectively do our work?

Nonprofits need to stop raising millions of dollars on physical monuments such as buildings, annexes, and new wings and instead start raising millions of dollars for the capacity elements that will actually help them create more social change. That would be revolutionary.

Learn more about financing, not fundraising and the new normal that is transforming older fundraising methods into new ones more suitable to a fast moving, digital, and results-oriented 21st century.

Photo Credit: Glyn Lowe Photoworks

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About the Author: Nell Edgington is President of Social Velocity (www.socialvelocity.net), a management consulting firm leading nonprofits to greater social impact and financial sustainability. Social Velocity helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. For more information, check out Social Velocity consulting services and clients.


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6 Comments to Reinventing the Nonprofit Capital Campaign

[...] Yesterday I wrote a post at the About.com Nonprofit blog about how nonprofits launching a capital campaign should consider a capacity capital campaign instead. You can read the whole post here.  [...]

[...] Instead of launching a capital campaign to build a new building, nonprofits should consider a capacity capital campaign to raise money strengthen their organization.  [...]

Clay Myers-Bowman
July 12, 2012

Nell,
I’d like to “guest post” this article on my blog. Would you be open to that?

Clay

This is excellent information, my hat’s off to Nell Edington and everyone at Social Velocity. This information is priceless!!! This is the type of capital that FADD is searching for as I write this message and I am encouraging our grant writer to create a new platform in direct relation to raising capacity capital. This is what FADD needs right now! The capital to grow our Designated Driver network, to hire professional staff, to obtain solid infrastructure, to bring in new technology, and to obtain new corporate sponsors.

Nell Edgington
July 27, 2012

Robert, I’m so glad to hear that this concept is helpful and that you are already working towards raising capacity capital. Good for you! Let me know if you have questions as your capacity capital plan evolves.

[...] other, better ways to build your brand, rally the board and donors, and raise big dollars, like a growth or capacity capital campaign, which can actually result in more social impact and financial sustainability over the long [...]

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