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Transcript of Launch a Capacity Capital Campaign - Social Velocity · PDF file Create a Capacity Building...

  • Launch a Capacity Capital Campaign

    A Social Velocity Step-By-Step Guide

    N e l l E d g i n g t o n

    No. 6

  • Launch a Capacity Capital Campaign

    Nell Edgington

    A Social Velocity Step-By-Step Guide, No. 6

    Social Velocity | P.O. Box 300543, Austin, TX 78703 | (512) 694-7235 | www.socialvelocity.net

    2013 © Social Velocity. This guide is copyrighted by Social Velocity and may not be reproduced, duplicated, or distributed.

  • Why Raise Capacity Capital? “Capacity capital” (or “philanthropic equity”) is just a fancy term for the money so many nonprofit organizations desperately need. It is a one-time infusion of significant money that can be used to strengthen or grow a nonprofit organization. But before you can understand capacity properly, you must understand a critical distinction between two kinds of money in the nonprofit sector:

    • Revenue is the day-to-day money required to run programs. For a homeless shelter, revenue buys meals, beds, sheets, job training programs, staff time.

    • Capital is the one-time infusion of money that builds or grows an organization. For a homeless shelter, capital purchases a better system for gathering data on clients, a donor database, a Development Director.

    Capacity capital is NOT the day-to-day operating money nonprofits are used to raising and employing. Rather, capacity capital is money to build a stronger, more sustainable organization. Capacity capital is a one-time infusion of significant money to fundamentally and positively change the functioning of the organization. A nonprofit could use capacity capital in many ways, for example to:

    • Plan and execute a program evaluation • Plan and launch an earned income stream • Create a strategic financing plan • Hire a seasoned Development Director, or other revenue-generating staff • Purchase a new donor database • Improve program service delivery • Upgrade website, email marketing, and/or social media efforts • Launch a major gifts campaign

    But raising capacity capital is not like traditional fundraising. It involves determining how much capacity capital you need, creating a compelling pitch, deciding which prospective funders to approach, and educating those prospects about the power of capacity capital. This guide will show you how.

    1

  • Social Velocity | P.O. Box 300543, Austin, TX 78703 I (512) 694-7235 I www.socialvelocity.net 2013 © Social Velocity. This guide is copyrighted by Social Velocity and may not be reproduced, duplicated, or distributed.

    2

    How to Use This Guide This guide is organized into 7 sections. Each section will require you to do some thinking, writing and planning. As you work your way through this guide you will be creating your capacity capital campaign.

    Your nonpro!t’s capacity capital campaign cannot be developed in just a day or two, by a couple of people. You will need to get feedback and insight from sta" and board. You also will need to gather some information for certain sections. This work will take time, so it may be a few weeks or months before you have a !nal capacity capital campaign plan that you can start executing.

    Sections This guide is broken down into the 7 sections of a capacity capital campaign as follows:

    1. Create a Capacity Building Plan 2. Determine a Capacity Capital Dollar Goal 3. Break the Goal into Investment Levels 4. Create a Prospect List 5. Develop a Capacity Capital Ask 6. Demonstrate the Return On Investment 7. Next Steps

  • Social Velocity | P.O. Box 300543, Austin, TX 78703 I (512) 694-7235 I www.socialvelocity.net 2013 © Social Velocity. This guide is copyrighted by Social Velocity and may not be reproduced, duplicated, or distributed.

    3

    Section 1: Create a Capacity Building Plan

    You cannot raise money without a plan for how you will spend it. Funders need to be convinced that you did your homework and have a clear, actionable, measurable plan for how you will invest capacity capital dollars to result in a stronger organization that can deliver more impact.

    To get there, start by answering these questions:

    1. What is holding our nonpro!t back from doing more and being more e"ective? 2. What could we purchase to overcome these hurdle(s)? 3. If we were able to purchase these items how would we use them and over what time frame? 4. What can we reasonably expect to be the changes in our e"ectiveness and/or impact because of these

    things we purchased and implemented?

    With your answers to these questions, put together a plan.

    Start by creating 1-3 goals around the hurdles you identi!ed in #1 above. For example, you may have identi!ed in #1 that you don’t have adequate sta" to raise enough money to achieve your mission. So your capacity plan goals might be:

    1. Create an overall money strategy to raise $450,000 per year. 2. Hire a Development Director to implement the plan. 3. Secure the technology and materials necessary to raise this money (database, website, etc.)

    Or, if you are a much smaller nonpro!t, your goals might be more modest:

    1. Create an overall money strategy to raise $100,000 per year. 2. Train the board on their role in fundraising. 3. Upgrade our website to attract online donations.

    Once you’ve developed your goals, make a laundry list of activities and purchases necessary to make each goal a reality. In some cases you may need outside help to determine how to get there. For example, you may not know how to put together an overall money strategy to raise $450,000, so you may have to hire a fundraising consultant to help you create that strategy. Also note roughly how long each activity will take.

    So, your list of activities with a timeline for each might look something like this:

    Goal 2: Train the board on their role in fundraising Discuss and get buy-in from board on a fundraising training (October) Find a date/location (October) Research fundraising trainers (November-December) Hire a trainer (January) Hold training (February) Follow up with each individual board member on the next steps resulting from the training (March- April)

  • Social Velocity | P.O. Box 300543, Austin, TX 78703 I (512) 694-7235 I www.socialvelocity.net 2013 © Social Velocity. This guide is copyrighted by Social Velocity and may not be reproduced, duplicated, or distributed.

    4

    Once you’ve listed all of the activities to achieve each goal of your capacity plan, highlight activities that would require new purchases. Research a ballpark !gure for what each one would cost and then attach that !gure to those highlighted items, like this:

    Goal 2: Train the board on their role in fundraising Discuss and get buy-in from board on a fundraising training (October) Find a date/location (October) [$50 for a meeting room for 2 hours] Research fundraising trainers (November-December) Hire a trainer (January) [$1,000-3,000 for trainer fee] Hold training (February) [$400 for food and handouts] Follow up with each individual board member on next steps from training (March-April)

    List and research costs for every activity within every goal of your capacity capital plan. This will form the basis of your capacity capital dollar goal, which is the next step of the process.

  • Social Velocity | P.O. Box 300543, Austin, TX 78703 I (512) 694-7235 I www.socialvelocity.net 2013 © Social Velocity. This guide is copyrighted by Social Velocity and may not be reproduced, duplicated, or distributed.

    5

    Section 2: Determine a Capacity Capital Dollar Goal

    Now pull all of your dollar estimates from the activities and goals of your capacity capital plan. Use them to create an expense budget. Start to combine expense items into categories, such as:

    Sta! & Bene"ts Consultants or Contractors Technology (hardware, software) Marketing (web site, materials) Systems (an evaluation study) Space (rent for additional o#ce space or other)

    Create your capacity capital budget by plotting these expenses out over the time frame in which you need to purchase them. For example, if one of your items is a Development Director, you wouldn’t need to fund their salary for years and years. Rather, because theirs is a revenue-generating sta! position, you only need to fund their position for the 12-18 months it takes for them to start generating enough money to cover their salary and then some. So, you might include the full cost of salary and bene"ts for a Development Director for the "rst year, and then half of their salary and bene"ts for the second year because by then they will be bringing in the other half of their salary (and hopefully much more!).

    So, if your capacity capital plan involved hiring a fundraising consultant to develop an overall money strategy and then hiring a Development Director, revamping your website, and purchasing a donor database, your pro- jected capacity capital plan budget might look like this:

    Therefore, in order to implement your capacity capital plan you need to raise $111,000 of capacity capital over three years ($22,500 in year 1, $63,500 in year 2, and $25,000 in year 3). So your capacity capital dollar goal is $111,000 over three years.

    So let’s talk about how you raise that.

    FY 2013 FY 2014 FY 2015 TOTAL Fundraising Consultant $10,000 Development Director

    (salary & bene"ts) $63,500 $25,000

    Donor Database $7,500 Upgraded Website $5,000

    Total Capacity Plan Expenses $22,500 $63,500 $25,000 $111,000