Aug 16

Aug 16 Budgeting for a Capital Campaign

What does a capital campaign cost?

If your organization has decided to consider a capital campaign, your next step is to setup a budget. Budgeting for a capital campaign is always a challenge, but we’re here to help. The budgets and costs outlined in this article should be a guide only and careful thought should go into developing one for your specific situation.

Most nonprofits mistakenly only include the obvious costs, like construction. Your capital campaign project budget should include cost estimates for the expenses that follow.

Budgeting for Infrastructure

Bring in professionals to ensure that the infrastructure you hope to acquire or build meets the needs of your nonprofit and service area. Potential donors are going to ask, “How do you know this is the right size facility to meet your organization’s current and future needs?” Make sure your answer is more than just a rough estimate.

Don’t let your acquisition or construction estimates get outdated. We recommend working with numbers that are less than one year old. You also will want an idea of when these payments will become due, so you can carefully plan your cash flow during the project.

Acquisition/construction costs
All testing, zoning and permitting fees
Design fees
FFE (furnishings, fixtures, equipment)

Capital Campaign Budgeting

There are typically two-steps to a capital campaign. Step one is campaign planning, or the feasibility study. It typically lasts 3-4 months. The next step is campaign management, in which your consultant will lead you through the fundraising process. Your consultant will be with your organization for a long time – at least one year and sometimes as many as three.

Fees vary greatly depending upon the consultant’s experience, the level of service they are providing, and your geographic location. Resident consultants move to your community and spend nearly every day in your office. This is the most expensive form. The cheapest is the consultant who never comes onsite. He or she strategizes with the nonprofit electronically. This is the least expensive. There are many more consultants who provide services somewhere between these two examples, visiting the nonprofit in person when needed and working remotely.

The costs below are conservative capital campaign consulting estimates.

Campaign Planning (feasibility study): $20,000-$40,000
Campaign Management: estimate 10% of goal. This should include campaign materials (video, brochure, etc.) and monthly service fees for the consultant.

Total capital campaign costs of less than 15 percent of the campaign goal will be considered acceptable to most donors; less than 10 percent is considered very efficient. Include the cost of the campaign in your total campaign goal. If you are raising $5 million in a capital campaign you can make the goal $5.5 million so that funds raised can pay for the cost of the campaign. Larger campaigns can have a smaller percentage. For example, if your goal is $10,000,000 the cost of your campaign will likely be in the 6-8% range.

What are the costs of a nonprofit capital campaign?

DIRECT COSTS OF A CAPITAL CAMPAIGN

Consulting fees vary from a few hundred or thousand dollars a month up to $30,000 or more per month for full-service, on-site campaign management. Smaller campaigns ($2-5 million) generally take 12-16 months to conduct. Larger campaigns ($10 million plus) are 2-3-year investments.

If the consultant is traveling from another city, add $1,000 per month to the direct costs.

INDIRECT COSTS OF A CAPITAL CAMPAIGN

Below is a sample budget for a campaign’s indirect costs. These numbers can vary considerably based upon the city and the nonprofit’s desires. For example, a brochure with specialized graphics, die cuts and paper will be more expensive. Be aware that some of these expenses can be donated to the project via in-kind contributions.

Chart of Accounts Estimate
Printing
Campaign Brochures and Prospectuses $6,000

Promotional
Campaign Video $8,000
Public Relations Expense $3,000
Newsletters $8,000
Data Processing and Mailing $3,000
Events/Receptions/Meals $3,000

Postage
In Addition to Current Budget $6,000

Contingency $2,000