Revitalizing the Capital Campaign AHP Webinar March 3, 2011 J.B. Michael Farrell FAHP Principal .

Revitalizing the Capital Campaign

AHP WebinarMarch 3, 2011

J.B. Michael Farrell FAHPPrincipal

www.philanthropycoach.ca


Session Outline

Positioning your institution and your board for success.

Revisiting case development…Is it urgent…does it matter?

Case studies and observations on fundraising that works in good and bad times

A look at a “New Normal” for the Campaign Model.


What we Learned in Recession

Our weaknesses were exposedHealthcare demand was constant

relative to some other businessesSome urgent capital projects weren’tSome urgent capital projects were put on

hold anyway…fearWe didn’t have the relationships we

needed to weather the storm


Where we were vulnerable

Leadership…rubber stamp or stagnant board

A routine case

Top-up equipment

Goal by subtractionTactics…Annual Giving and special

event driven programs


Donor Relationships are the key in bad times…John Hope Bryant

“In this difficult period that began in 2008 …I have had to call on supporters to ask for their help… at a time when they are having to restructure and lay off people. And everyone I’ve called has been helpful. I haven’t had one person tell me no. They haven’t always given me the answers I wanted but they have given me the best answer they can give me. That is the result of relationships.”

Love Leadership pg 157-158


View from the Board Chair

Revenue is fallingCosts are staying the same or going upIn all likelihood he/she has been stung

by recession too.He/she has to answer to a board and

wants to be seen as doing something


Keeping the Board’s focus on raising more money rather than cutting costs

85% of costs in a service industry are people. Growth by subtraction won’t work.

Board members are often not the same profile as the major gift donors. We start making decisions for “them”… them being your cohort of major gift prospects.

Keep the dialogue with major gift prospects open. Get direct input from “them” and involve volunteers in these discussions.


Making the Case for Campaign Investment ROI vs. Cost Per dollar raised

If you invest $1 million dollars with me and I promise to return $1.5 million at the end of the year? Would you take the deal?

What if I could return $3m over 5 years?Expectations for fundraising are out of

sync with businessMargins in grocery retail are 3-4%


Give the Board Context for Decision Making

Growth needs investmentPresent the campaign budget in a

tangible 5 year growth chart.


Present 5 yr. Campaign Income/Expense Projection

Income 2011 2012 2013 2014 2015 2016 5 yr total

Direct Mail Program 250,000$ 276,250$ 298,250$ 314,438$ 326,429$ 1,465,367$

IMO 40,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 250,000$

Special Events 200,000$ 150,000$ 150,000$ 150,000$ 150,000$ 150,000$ 750,000$

Major/Planned Gifts 15,000$ 2,000,000$ 3,500,000$ 4,500,000$ 3,500,000$ 2,000,000$ 15,500,000$

Estate Gifts 10,000$ 10,000$ 200,000$ 300,000$ 500,000$ 500,000$ 1,510,000$

Interest 10,000$ 30,000$ 40,000$ 50,000$ 75,000$ 100,000$ 295,000$

Total 275,000$ 2,490,000$ 4,216,250$ 5,348,250$ 4,589,438$ 3,126,429$

5yr. Total 19,770,367$

Expenses

Salaries 70,000$ 260,000$ 278,200$ 297,674$ 318,511$ 340,807$

Benefits 15,400$ 57,200$ 61,204$ 65,488$ 70,072$ 74,978$

Major Gift Officers 160,000$ 160,000$ 180,000$ 180,000$ 190,000$

Contract services 75,000$ 25,000$ 15,000$ 15,000$ 2,000$

Printing 300$ 10,000$ 10,000$ 10,000$ 10,000$ 10,000$

Direct mail 43,000$ 40,713$ 43,236$ 44,094$ 44,726$

It upgrade/Maintenance 1,200$ 20,000$ 5,000$ 5,000$ 5,000$ 5,000$

Foundation Newsletter 25,000$ 25,000$ 25,000$ 25,000$ 25,000$

Board/Staff Development 12,000$ 13,000$ 13,000$ 13,000$ 13,000$

Comm Promotion/Website 45,000$ 45,000$ 25,000$ 25,000$ 25,000$

Meetings 1,200$ 4,000$ 2,000$ 2,000$ 2,000$ 2,000$

Postage (general office) 400$ 10,000$ 12,000$ 12,000$ 12,000$ 12,000$

Staff mileage 1,500$ 1,500$ 1,500$ 1,500$ 1,500$

Donor/Volunteer Rec. 50,000$ 50,000$ 50,000$ 50,000$ 10,000$

Audit 4,000$ 4,000$ 4,000$ 4,000$ 4,000$

Bank Charges 1,000$ 1,000$ 1,000$ 1,000$ 1,000$

Miscellaneous 5,000$ 5,000$ 5,000$ 5,000$ 5,000$

Total 88,500$ 782,700$ 738,617$ 754,898$ 781,178$ 766,010$

Exp. as % of revenue 32.2% 31.4% 17.5% 14.1% 17.0% 24.5%

Net Revenue 186,500$ 1,707,300$ 3,477,633$ 4,593,352$ 3,808,260$ 2,360,419$ 15,946,964

Campaign Period Operating Plan Ilustration


Strategic Resource Deployment

Universe

First gift

Repeat Gift

Major Gift

Legacy

ResourceAllocation

If you have to cut, make the cuts strategic.


A Look in the Mirror

The economic down turn paralyzed our offices.

Are we making the recession a good reason not to ask and not to give.

We have to have expectations of success or no one else will.


CDOs as Leaders

Your staff are vulnerable to the “sky is falling message”

Keep true to activity based goals…Make the calls.

You must lead. The staff and volunteers are watching. If you lose faith they will.


What About Our Case?

The Case is really the conversation that you will have with donors.

Now, more than ever, it is not about the statistics or buildings it is about hope…

Move the discussion from money to your mission and you will get more meetings


Paradox of Need in the Case

Need can be paralyzingNeed is universalSolutions set your organization apartYou must be the right organization…a

champion, to right the wrong, cure the disease, relieve the suffering


Your case hasn’t diminished. In all likelihood it has become more urgent. Find your Big Idea

Saving lives Changing livesCreating hopeEasing painCalming fearRestoring dignity

“Honor thy father and thy mother.”

Shalom Village, Hamilton, Ontario a Long Term Care Facility


Big Ideas

“Many believed angioplasty would never be available here. Others made it sure it was… The journey ahead will be distinguished by achievements that will save lives and change forever the way we provide healthcare”Thunder Bay Regional Health Sciences Foundation …


There are still resources available …but

The economy has certainly been tough but for the best gift prospects the sky, is in fact, not falling

Recession Hangover…we aren’t in the clear yet. They are not poor but feel vulnerable for the first time.

Home values…the biggest investment of a middle class family is devalued


Dealing with Donor Angst

“I won’t live long enough to recover my losses”…She did and she has.

Astute investors are back to, or even ahead of where they were before the recession.

We need to have conversations about our mission…about the people and lives we are saving…about hope.

In an uncertain world we know we are making a difference.

Case Studies


A Campaign Reboot

A $8m is stuck at $6m Did a mini study to re-engage volunteers and

community.... talked to donors and prospects Revisit what was a comprehensive case…

build a new plan around specific case elements…it’s a do over.

Re-focus on major gifts. When campaigns stall good volunteers seek activity. They want to do something so they go after smaller gifts. You can’t raise $2m with $5,000 gifts…


New energy…

Kept context of $8m campaign but in reality the new campaign is for $2m

The campaign proposal was focused on the new case element

The Volunteers were reenergized and the project got back on track.

When staff and volunteers believe in any plan it takes on new life.

“Don’t mistake activity for achievement” John Wooden


Hitting the wall on a $30m Campaign for a small Midwest facility …An "insider's perspective"

$30 million campaign declared with no study (Heart Centre, Maternity and Hospice)

Annual foundation revenue under $1 million A $7 million injection from a partner hospital plus $8

million in low hanging fruit to $15m Economy hit the wall…Campaign hit the wall. Staff hit

the road. Best prospects had been asked and many donors were

tied up in 10 year pledges

A Case Study


An "insider's response"

New foundation leadership reboots the campaign

Critical to keep the public face of the campaign positive

Hospital CEO is loved and respected “we engaged him successfully on gift calls ranging from $100-$500,000”

Direct Marketed the Planned Giving program # of confirmed gifts up from 10 to over 50 ($9.9m pledged)


An "insider's response"

Ramped up a golf event from a $300,000 to $951,000 to close the Campaign. (Strategic use of some Campaign gift announcements)

Introduced a new event that raised $260,000 and helped replenish the Major Gift prospect pool

Closed out at $33.8m

Strategic Use of Special Events

Advice


Doug Dillon…Panas, Linzy & Partners

Those organizations that moved forward have been rewarded, in part, because so many decided to "wait".

A clients voice message : "Here at the Boston YMCA, our mission is NOT in recession!“

Some donors have reduced their giving--it is a fact. But, with some major donors, they have increased their giving. They are more attuned and sensitive to those in need--and to the few who are bold enough to ask.


Doug Dillon…Panas, Linzy & Partners

Campaigns are taking longer to complete. I didn't say: "taking longer to start"! It is on average taking 3 to 5 months longer

Either the need of the community is important and urgent or it's not! We are in the business of saving and changing lives. URGENCY is the key--has always been and will continue to be what motivates our constituency.


Jim DeLauro PHD, DeLauro & Associates Consulting

The CEO and fundraising staff believe in the project

An external study provides a 3rd party professional validation of the case and spreads the optimism

Optimism and confidence driven by the urgency and importance of the case is the common denominator in campaign success

“Generosity is a function of Optimism”


Jim DeLauro PHD, DeLauro & Associates Consulting

There is a penalty for procrastination. Those that have delayed having these conversations with donors will now find themselves in a crowded market place

If you didn’t have the building blocks in place the recession was a tough time to start

Organizations that haven’t been stewarding donors have a smaller list of leadership prospects and have to spend time warming up old relationships

“Stewardship is the key to everything”


Strategies for Securing the Gift

In a perfect environment what would you like to do?

The Good Samaritan approach…those with assets are the only ones that can help.

Matching gifts as campaign incentive10 year gift agreements with a revisit

clause


The Gift Agreement (attached)

In this example there is a 7 year pledge but with a commitment to revisit

The power to vary purpose clause The reputation clauseMoney management clause


Cautions

Tying your best donors into 10 pledges means they will still be tied up when the economy is rolling again

Pushing too hard can be seen as “hitting them when they are down”

On balance there is more risk to your case in not asking

Discussions have to be mission based…the case is not in recession


Cautions (2)

An elderly benefactor told us to "go ahead" and build a hospice. He would wrote a promissory note for $1.6 million. In the fall of 2008 when his bank stock plummeted, he covered only $600,000. We wrote off $1 million


The New Normal in Campaigns

This new normal for campaigns isn’t exclusively the outcome of the recession.

The old model was a function of a “prospect rich environment”

New normal is good prospects but fewer prospects

More donor involvement and more gifts for specific purpose…and the resulting need for stewardship

The planning study is more essential than ever.


The Planning Study…New Normal

It is more than “How much can we raise?” Crafting the right questionnaire…can you

make the case resonate, can you find heroes? Trying too hard to be objective is a waste of an

important prospect visit. The case is the solution.

The activity surrounding the Study call can be powerful and is often the first and the most interaction the prospect will have with your organization.


7 Points of Contact

1. A respectful letter from senior volunteer outlining a new direction and asking that he/she meet with an expert.

2. Development Assistant calls to make the appointment

3. Thank you letter with case summary sent in advance of call by senior volunteer

4. Development Assistant confirms visits on day before.


Process…Points of contact (2)

5. Expert makes call6. Immediate thank you card sent to

Prospect by expert (interviewer)7. Summary report is mailed to prospect

by senior volunteer

You need to be very particular about what is in the questionnaire and who is making those calls.


The New Normal in Campaign Management

Much smaller, tighter campaign organizations driven by an absolute focus on leadership gifts.

Shorter leadership terms and use of joint leadership roles…co-chairs even leadership by committee

More staff making solicitation callsHeightened competition…this is no

time to snooze

Thank you

Questions


Acknowledgements

Doug Dillon, CFRESenior Partner,Jerold Panas Linzy & [email protected]

James DeLauro, Ph.D.PrincipalDeLauro & Associates [email protected]

Love Leadership, John Hope BryantPublished by Jossey-Bass

Revitalizing the Capital Campaign AHP Webinar March 3, 2011 J.B. Michael Farrell FAHP Principal .

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Transcript of Revitalizing the Capital Campaign AHP Webinar March 3, 2011 J.B. Michael Farrell FAHP Principal .