What’s the Cost of Hiring a Capital Campaign Consultant?
The decision to launch a capital campaign is often accompanied by a crucial question: What does it cost to hire a capital campaign consultant? This strategic investment in your organization’s future will be considerable, but it should bring a sizable and significant return that advances your organization’s mission and impact in your community.
The actual costs can vary widely based on your campaign goal, your specific circumstances and the type of consulting firm with whom you choose to work. Nonprofits typically include the costs of managing their campaign in the campaign goal. Ultimately, the right consultant can help you navigate the complexities of fundraising, potentially leading to a more efficient and fruitful campaign.
There are three basic categories of costs you’ll need to consider: the campaign planning study, campaign management fees, and campaign expenses. Let’s look at each of them.
What are the Cost of Planning a Capital Campaign?
Before you begin a campaign, there's a vital phase that should precede it: the campaign planning study. Sometimes called a feasibility study, this effort involves assessing the organization's readiness for a capital campaign and gauging the potential success of the campaign through interviews with current donors, potential donors, community leaders and philanthropists.
A professional campaign planning study may take your consultant three to six months to complete. Look for the cost of a campaign planning study to range from $20,000 to $50,000-plus, which will include your consultant’s fee. Per diem or travel expenses may be charged in addition to the fee.
When hiring a consultant to conduct your campaign feasibility study, assess several firms to find one that is a good fit for you and your organization. At CampaignCounsel.org, our feasibility studies include unlimited and non-confidential interviews. Other consultants may limit the number of interviews they conduct and may insist on conducting confidential interviews, the specific results of which are not shared with the nonprofit prior to entering a campaign. We believe not placing a limit on the number of interviews we conduct and providing a high level of transparency around what we learn is important to providing our clients with the best service possible.
A campaign planning study should present the opportunity to give your entire board and administrative staff a solid understanding of what to expect during a capital campaign. It should also highlight any adjustments you may need to make in staffing and software to support the campaign.
A campaign planning study should allow your donors, prospective donors and community leaders to learn about your project, offer feedback on your project and your campaign, and identify many of the lead gifts that will make your campaign a success. This process that will help you establish a realistic goal for your campaign is vital. Without it, you run the risk of assuming too much and launching a campaign that you can’t complete.
What are the Costs of Managing a Capital Campaign?
A seasoned consultant will bring their knowledge, expertise and support to your organization and your campaign. This expertise does come with a price tag. To hire a consultant to manage, direct and lead a campaign, a good place to start estimating costs is 10 percent of the total campaign goal. This percentage may vary higher or lower than 10 percent based on factors such as the size of your goal, the complexity and length of your campaign, the type of consultant you hire, and the scope of services they provide.
While the fees you are charged should never be tied to a percentage of what you raise, using 10 percent as a guide is an effective way to estimate your costs, prepare your organization and board for the expense, and judge if the fees you are being quoted are reasonable.
Most consulting firms charge a flat fee based on the time and service provided. The more service required, the higher the fee. The fee typically is spread out over the expected time frame of your campaign (typically two to three years) and charged monthly.
Again, although the range of fees to consider is expressed as a percentage of your goal, professional consultants will not charge you based on a percentage of the funds raised as it violates ethics guidelines and is not in the client’s best interest. Your fees shouldn’t go up if your campaign is more successful! (Read here to learn more about the pitfalls of charges based on a percentage of funds raised.)
Your fees will be based in some part on the type of firm you choose to hire. All consultants will provide campaign planning and management strategies. But how much of the work will they do? For example, will they schedule interviews or solicitations? Will they train the campaign committee on how to make a professional solicitation? Will they actually make solicitations? In simplest terms, there are three levels of consulting support available: in-house counsel, DIY council and hybrid counsel.
With in-house counsel, the consultant essentially moves in with the nonprofit. This consultant will be onsite several if not every day of the week executing the campaign strategy. This is the highest level of support and is the most expensive.
DIY counsel occurs when the consultant provides only campaign strategy. This consultant may never be onsite with the nonprofit and, therefore, provide little-to-no execution. This is the lowest level of support and may be less expensive.
With hybrid counsel, the consultant provides expertise and strategy, may be on-site periodically, and helps the nonprofit with some but not all of the work. CampaignCounsel.org falls into this category. For example, we draft materials, and provide onsite solicitation training and support for your committee’s solicitors, but we do not participate in the scheduling or soliciting of prospects. This is the most common level of support, especially for nonprofits without deep pockets or much capital campaign experience.
Consulting fees generally are paid monthly over the course of your campaign. If the consultant is traveling from another city, you also may pay travel expenses or a per diem for each day the consultant is on-site and traveling to or from your city. Those costs will depend upon the distance and the consultant.
Consulting firms work to teach, train, motivate, and orient organizations to succeed in fundraising. Like any consulting arrangement, volunteer and staff leaders must be very involved and active in the campaign to succeed. Judge consultants on their ability to potentially accelerate your fundraising efforts. A well-chosen consultant can enhance your campaign strategy, help you qualify your donor base, and improve overall efficiency, making your campaign more successful in terms of time spent and money raised.
What Other Capital Campaign Expenses Should I Expect?
Beyond the consulting fees, your campaign will generate other expenses. These are costs that are incurred whether counsel is used or not and include such things as printing, postage, video production, meeting space, administrative support and events. Campaign marketing and outreach, additional staffing, technology and software, and donor recognition and stewardship might also be a part of your campaign expenses.
A successful capital campaign requires effective communication with your stakeholders. Your campaign communication and solicitation materials may include a video, a brochure, and a monthly newsletter and bring associated costs to design, produce and distribute these pieces. These numbers can vary considerably based upon the city and the nonprofit’s desires. For example, a super-slick brochure with specialized graphics, die cuts and paper will be more expensive than a simpler marketing piece. Also, be aware that some of these expenses can be donated to the project via in-kind contributions.
You’ll also consider the additional workload your existing staff will bear during the campaign. For some nonprofits, a campaign could require hiring temporary staff or reallocating current staff roles. Budgeting for these extra personnel costs, including salaries and benefits, is essential and can be included in your total fundraising goal.
A capital campaign will require investing in technology that can help with donor management. A customer relationship management (CRM) tool should be used to track pledges, generate pledge reminders and produce thank you letters. Also, recognizing and stewarding your donors is vital for the long-term relationships your campaign should create for you. Budget for events, plaques, or other donor recognition items. Your consultant can help you strategize on how best to steward and recognize donors.
Finally, be aware that the amount you spend to raise the funds for your project, can be included in your campaign goal. If the consulting fees and campaign expenses for your $3 million campaign are estimated to be $300,000, consider increasing your goal to $3,300,000 with the intention of raising the funds during the campaign to cover the cost of capital. Include the costs in your project budget shared with donor prospects. Generally, total 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).
Counting the Costs
While the costs associated with a capital campaign are substantial, viewing them as strategic investments in your organization's future is crucial. Careful planning, considering each element of the campaign, and understanding the potential returns can position your nonprofit for success.
Remember, the actual costs can vary widely based on your organization's size, campaign goals, and specific circumstances. Speak with multiple consultants about your project, get their proposals for the work they will do and their fees, and engage your board in the decision-making process. (Here are seven questions to ask consultants when you reach out to them.) Don’t only consider the least expensive option; select a consultant with whom you are willing and happy to potentially spend multiple years working. Ultimately, the right consultant can help you navigate the complexities of fundraising, potentially leading to a more efficient and fruitful campaign.
If you’d like to learn more about how a consultant can help with your nonprofit’s capital campaign, contact us. We’re happy to share resources or even a free workshop on capital campaigns for your board.
Melissa Sais is a CampaignCounsel.org vice president and partner.
