Think Before You Jump
Capital Campaigns Call for Serious Advance Planning

LARRY SOPHIAN, CPA

Does your not-for-profit organization have a big expenditure on its mind? For example, do you see a need in your organization’s future for a new building or large-scale renovation of your current headquarters?

Funds for big-ticket projects generally do not come from routine income sources. Depending on the goal, a capital campaign may be the best approach.

Planning it Out

Committing to a capital campaign is not easy. The fear that people won’t donate in an uncertain economy can cause hesitation to ask for more funds. However, when a dedicated group within your organization grabs on to this opportunity to expand and grow, it is time to start planning.

It is no surprise that a massive effort to raise money for a new building, costly equipment or an endowment is called a “campaign.” Like a succession of military attacks designed to produce a particular result, a capital campaign is a series of efforts aimed at a specific end. And like a military campaign, a capital campaign is more likely to be successful with strategic preparation and skillful execution.

The campaign might span three or more years. Campaign workers typically raise funds through direct mail, e-mail, direct solicitations, special events and other traditional and creative maneuvers.

Finding a Leader

You will need a leader to head the campaign and direct the troops. Look to your current and past board members and the greater community to find someone with the right qualifications. You want to find someone who has a fundraising track record, knows your geographic area and local issues, and most importantly, will be fully committed to the cause and can motivate others.

Targeting Donors

To ensure your staff and volunteers are focusing on the most promising donors, start by identifying a large group to solicit for donations. Draw your list from past donors, area business owners, board members, volunteers and any other likely prospects. Then narrow that list to those with potential for the largest gifts and talk to them first. Secure the large gifts before pursuing anything under $1,000.

Most people do not like asking other people for money, so it will be necessary to train team members on how to tell your story and solicit funds.

Creating Consistent Messages

Make sure that your key constituents are on the same page about the vision for the campaign and the primary strategies for getting there. Break down your overall goal into smaller objectives and celebrate reaching them. Regularly report gifts, track your progress toward reaching each goal and measure the effectiveness of your activities.

Craft your campaign message carefully. Here is where a professional fundraiser, experienced with capital campaigns, might come into play. Potential donors must see your organization as capable and strong, but also as the same group they have championed for years. Additionally, instead of focusing on what donations will do for your organization, show potential donors the impact on the community.

Choosing the Launch Time

Fundraising wisdom holds that you should not go public with your campaign until you have secured a significant amount of “lead gifts” from major donors. The recommended percentage varies, with organizations commonly waiting until 50% to 60% of their fundraising goal is reached before announcing the campaign. As the campaign progresses, publicly recognize your donors.

Three Years or More

Capital campaigns often stretch over three years or more. Making sure that your capital campaign plan has the legs to survive the long haul will help you reach your goal.

Lining Up Manpower For Your Capital Campaign

Volunteers play a major role in capital campaigns. Look to your current and past board members, project leaders and rank-and-file volunteers. Also, be prepared to draw from staff, knowing that you cannot rely on volunteers to do all the work.

As you assess your manpower, you might see a need to hire additional staff, such as a professional fundraiser and administrative personnel. Seek a mix of talents and personal qualities among your volunteers, board members, staff and new hires. Include in the mix energetic individuals with strong people skills.

For more information on how to best plan your not-for-profit’s capital campaign, contact Larry Sophian at 312.670.7444. Visit ORBA.com to learn more about our Not-For-Profit Group.

Not-For-Profit Governance Survey

HARRY FOX, CPA

The 2015 CohnReznick Not-for-Profit Governance Survey was recently released and sheds light on the state of affairs of governance and risk management in the industry.

The results show that while governance and risk management are key concerns for not-for-profit organizations, further steps and monitoring still must be taken by the industry.

Who Was Surveyed?

Responses for this survey came from 470 not-for-profit executives spanning the full range of the industry, including associations, education, health care and social service agencies. In addition, these organizations reflect a wide variety in size, with annual revenues ranging from more than $100 million down to less than $1 million.

What’s the Good News?

As noted, not-for-profit organizations understand the importance of having strong governance and risk management practices in place. Almost 90% of those surveyed have at least one key governance initiative in place, including a formal whistleblower policy, record retention policy and a conflict of interest policy. Almost two-thirds of respondents have audit committees that monitor these whistleblower policies and 94% obtain annual conflict of interest policies from their board members. Additionally, almost three quarters of respondents note that their board members have terms limits, with most limits consisting of three years, which is an industry best practice.

Not-for-profit organizations also understand the need for reviewing risk management. Anticipated spending on IT and data security is up and not-for-profits correctly view IT security as a high priority issue, with more than three quarters of respondents listing cyber security as one of their top 10 risks. The industry is getting the message that this is a key area of concern.

On the Other Hand

While not-for-profit organizations understand that these risks are out there, much still needs to be done to address these risks. While most organizations have a conflict of interest policy in place, only 51% reported that their audit committee monitors disclosed conflicts of interest. Furthermore, only 29% of respondents reported that they obtain conflict of interest statements from all employees, as opposed to 71% who only obtain these policies from senior management and board members.

It is recommended as a best practice that all employees should sign a conflict of interest policy statement annually, which should be actively monitored by the audit committee. Continuing with board recommendations, only 43% of respondents stated their board has conducted a self-assessment within the last three years. It is recommended that the board should prepare a self-assessment at least every three years. This self-assessment should verify that the organization’s governance practices comply with the current laws within the organization’s state and known best governance practices.

Not-for-profit organizations understand that IT security is of the utmost importance; however, many are still not taking adequate steps to monitor this critical area of need. While 80% of those surveyed said that cyber security is a top 10 concern, only 7% said they have a risk or IT committee. It is recommended that a committee of the board should be charged with monitoring IT, which includes an experienced IT professional. Additionally, only 20% of respondents said that risk management was a topic covered in board meetings. A best practice is to have risk management and IT security topics presented and discussed at board meetings. This will help to keep the board educated on these matters and how they may affect the organization.

If you have questions regarding this survey or governance matters, contact Harry Fox at [email protected], or call him at 312.670.7444. Visit ORBA.com to learn more about our Not-For-Profit Group.