Capital Campaigns

October 1, 2005       Craig Causer      

When the Truman Medical Center Charitable Foundation (TMC) set out to conduct its current comprehensive capital campaign it did so as a relative newbie. The first and only capital campaign in its history had previously gathered $20 million. Armed with that knowledge, the organization set an initial goal of $28.5 million and rapidly passed that figure in the silent phase of the campaign alone.

This past November, the nonprofit’s board voted to increase the goal to $36.5 million. With the silent phase still ongoing, TMC has raised $34 million and plans to revisit its goal once again, this coming October, to reevaluate its goal.

“Nobody would’ve anticipated that we would do that well (raise the initial goal of $28.5 million in the silent phase alone),” admitted Terry Snapp CFRE, executive director of the Kansas City, Mo.-based foundation. “What’s astonishing is that we’ve had success relatively quickly that we’ve had to adjust the goal. It was a goal that seemed reasonable at the time, since it was a higher number than the previous campaign had achieved. But our preliminary assessments and the feasibility study suggested that we could do better than that. I think our board felt more comfortable with the $28.5 million figure.”

The campaign began in 2001 and the five-year effort is the first for Snapp with the organization. The goal is to raise money for three categories, which is fairly typical for a comprehensive campaign, Snapp said. Some 60 percent of the goal will be allocated for various capital projects, programs are slotted at 20 percent and the endowment fund is another 20 percent, he added.

During the silent phase TMC has made an effort to renew the donors who were a part of the first campaign success. That category consisted predominantly of local foundations and companies, with some individuals. The second initiative was to broaden its base of donors and to concentrate specifically on seeking major gifts from individuals. For TMC, that was a new emphasis.

Snapp said that he found it very effective to use the organization’s board. As the silent phase was ongoing, TMC expanded its board, which has proven to be a good strategy to identify new donor prospects, Snapp added.

New prospects have been treated to individualized tours to meet TMC’s chief executive officer and visit the hospital, particularly the projects the nonprofit is attempting to fund. One significant example has been the expansion of its emergency room. Visits are followed up with individually-tailored proposals.

TMC also tapped into the second of its two campuses to launch a distinct fundraising effort. “One of our locations never had a fundraising initiative unique to its own campus,” Snapp explained. “Now we have done that. We have blended in to this campaign, a major project at that campus. We have created a separate group of volunteers for the eastern part of the county for philanthropy. That has uncovered new prospects and broadened our database as well.”

With only $2.5 million to go until it reaches its increased goal, TMC will decide when to go public in November. Snapp said that he expects a consensus to agree upon early 2006. At the same time, the board will choose a final goal, which may be closer to $40 million, Snapp predicted.

The organization has been wise in prolonging its silent phases and holding off on a public announcement of the campaign. Had it gone public it might have had to settle for less money raised than what it has currently rung up, Snapp said.

Being the major public hospital for the Kansas City area, Snapp described as “especially sweet” the silent phase’s tally. “Given that we’re the main safety net and tax supported institution in town for healthcare makes it remarkable because we don’t have a history of raising a lot of money. We have a relatively young philanthropic program here and we didn’t really raise money until about seven or eight years ago.”

Blinding me with silence

“I think the words ‘silent phase’ conjure up something that is at best inadequate, at worst, misleading,” said Bob Hartsook, chairman and chief executive officer at Hartsook Companies, Inc. in Wichita, Kan. “Unless they’re sophisticated in capital campaign activities, they hear the words ‘silent phase’ and they think that they can’t talk about their campaign. They can’t talk about gifts. Everything has to be silent.”

That concept is a real mistake, he said, “because the value of the silent phase is to assemble the leadership gifts that are necessary to give your volunteers and staff confidence that the public phase of the campaign is going to be successful. It’s good to talk about the projects in the campaign, celebrate the gifts as they come in and recognize the donors.”

Hartsook, who helped Truman Medical Center exceed its original campaign goal, advised nonprofits to communicate its silent phase success by dripping information into materials and publications, without actually announcing a campaign. For example, a hospital that is renovating its emergency room should begin laying out to its constituency the plans and the value of the project.

There should be no rush to make that public announcement. Public announcements generally fail to generate the kind of attraction that most people think. Hartsook recounted how people watch telethons and want to believe that all of the money happened right then when a lot of prior work has gone into it. It’s the same with campaigning and that’s what the silent phase is doing in leading up to that public unveiling.

Constituents’ tolerance for long public phases of campaigns has diminished in the past decade, according to Hartsook. For a community of 300,000 to 1 million people, a public phase should not exceed six months to a year. National and international organizations can conduct a two or three-year public phase since their constituencies are not interacting with them every day, he added.

In each instance, a tentative deadline of when you want to announce the campaign should be set. For instance, the announcement for a two or three-year community campaign should come anywhere from six months to a year from the end of the campaign, Hartsook said.

Most of Hartsook’s clients have approximately 70 percent of their money raised before they go public. “The goal ought to be — what is the dollar value of gifts that would give you confidence? If you read the textbooks, in some cases that’s going to be 50 percent. I’ve come to prefer a higher percentage because I’m more concerned about what the remainder is. Have we used up all of our prospects to get to the 50 percent? If that’s true, then having this goal of what you want to raise during the silent phase isn’t a good strategy because you’ve already extended your campaign.”

Melody of money

The San Francisco Conservatory of Music did not decide on a silent phase goal when it began its $65 million campaign, the largest in the organization’s history. The conservatory purchased a facility that had two buildings, one was historically significant and targeted for renovation while the second was to be demolished and rebuilt. Fundraising began in late 2000 to ensure the project’s success.

“Conservatories aren’t like the opera or ballet,” said Melissa Post, director of capital campaigns at the conservatory. “It’s an educational institution and not a performing arts center. They tend to be a little lower on people’s radar screens. So it was important to get the word out that we are moving.”

The silent phase for the conservatory has been comprised of a leadership gifts phase as well as a major gifts phase, which is still ongoing. As of September 1, $50 million total has been raised in those two phases. Challenge grants have totaled $25 million including $10 from an anonymous donor, $3.5 million from individual donor Phyllis Wattis and $3.5 million from the Ann and Gordon Getty Foundation. The nonprofit has met all of the challenge grants that its received either on, or ahead of schedule, according to Post.

Although the organization has not yet unleashed its public phase for gifts, it has been in a public mode in describing what’s been going on with the campaign. After all, a busy construction site tends to generate quite a bit of interest from the public.

“We expect the next part of the campaign to bring in a number of people who we haven’t approached before because we were looking at higher level gifts,” Post said. “We’re currently in a suburban area and there’s a tremendous amount of support for us to be in the civic center area. In already raising $50 million, we think that will give people the confidence to continue to invest in the conservatory.”

A moment of silence

When the terrorist attack on September 11, 2001 toppled the Twin Towers and claimed thousands of lives, it sent a glut of people rushing to nonprofits looking to help. During the ensuing months, The Trustees of Reservations was like many non-relief organizations, in a holding phase and thus delaying its record $50 million Landscapes & Landmarks capital campaign. The Sharon, Mass.-based environmental nonprofit waited patiently for nearly six months before it re-ignited testing of the feasibility of the campaign.

Now firmly on track, The Trustees raised $45 million for the campaign, the largest capital campaign for a conservation organization in Massachusetts’s history. The $50 million goal is earmarked for three broad categories, according to Andrew Kendall, executive director. Approximately half will be used to accelerate the rate that The Trustees and its partners conserve land. One-quarter will go toward major capital improvements and investments at properties it already owns. The last quarter is scheduled for expanding its programs and educational activities across its properties.

The Trustees geared much of its silent phase toward corralling major donors at the $1 million level. It received between 15 and 20 gifts at the seven-figure level, with the largest ringing up at $5 million. Previous donors presented many of the seven-figure gifts.

“Our last campaign was done about 13 years ago and it was a $10 million campaign,” recounted Kendall. “We raised that money on a membership base of approximately 5,000. We now have 45,000 members. There’s no linear relationship but we had a sense that we were going to be able to raise more.”

The first $45 million was raised by approximately 2,000 donors — 2,000 gifts, Kendall said. The Trustees plans to raise the last $5 million from an additional 5,000 gifts. Kendall cited the inverted pyramid fundraising design where the last $5 million was raised by almost three times the number of gifts. The public phase to raise that money began on June 1.

“It’s my understanding that typically, organizations will focus on the people that know you best regardless of their capacity to give,” Kendall explained. “They then work out from there in larger concentric circles. We identified the people with the greatest potential for support — the top of the pyramid, the largest donors. We were working on seven-figure donors first with the understanding that in a campaign like this, 80 to 90 percent of the funds come from about 20 percent of the donors. So if we could identify those gifts and secure the commitments from as many of that 20 percent that has the capacity to make a seven-figure gift, then that would not only give us the confidence to succeed but the best running head start.”

The Kresge Foundation awarded the organization a $1.5 million challenge grant that, Kendall said, really forced the organization to lay out a detailed plan for setting a goal for the silent phase and then using the public phase to broaden the campaign in terms of number of donors. While many organizations decide to go public with a much lower percentage of their campaign goal raised, Kendall wanted the Landscapes & Landmarks public phase to be more about broadening the engagement and support of as many donors as possible without having to reach enormous financial goals at the same time.

Without advertising the campaign, The Trustees consistently communicated its major organizational priorities to the public. At the time that the public phase was announced, it really was not a surprise, Kendall said. With all of its communications and publications the organization talked about mission impact and clearly the announcement of the campaign helped to tie a nice ribbon around all of that, he added.

Dancing a different tune

The $54 million capital campaign directed by the Alvin Ailey Dance Foundation, Inc. (AADF), was revealed to the public in a more brisk fashion. In the spring of 1999 the nonprofit’s board held a meeting and decided that it was going to buy a building to permanently house the Alvin Ailey American Dance Theater. From the spring to the fall of 1999 it conducted a feasibility study to get an idea of how much money it could raise. In the summer of 2000 it received its first leadership gift and has gone on to reap over $72 million.

The AADF surpassed its goal by a wide margin, astonishing some since the September 11 terrorist attacks occurred during the organization’s silent phase.

“September 11 affected us greatly since our home is in New York City,” explained Sharon Gersten Luckman, executive director at AADF. “We didn’t stop the campaign. Much to our surprise, we got such positive feedback — ‘Now more than ever you have to build this building and build it in New York City.’ People were saying, ‘We need to see Ailey this year. It’s a very uplifting company.’ It was obvious that we were important to the city.”

The silent phase of the “A Soaring Spirit — The Campaign for Ailey” lasted a year-and-a-half. The organization reached 66 percent of its campaign goal at the beginning of the public phase, which began with an announcement at the opening night of its theater season in the beginning of December 2001. The silent phase focused on the large, major, what we call leadership gifts, Gersten Luckman said. The AADF received gifts from New York, major grants, and plenty of gifts from the “inner circle,” which were mostly board members at the time.

The new home of the Alvin Ailey American Dance Theater is located in Manhattan’s Special Clinton District at 9 th avenue and 55 th Street. The 8-floor, 77,000 square foot facility includes 12 dance studios, a 5,000 square foot performance space that seats 295, a library, costume shop, physical therapy facilities, lounges and administrative offices. It will house the performing company as well as all AADF programs.

In addition to a snappy new facility, all funds raised exceeding the $54 million goal will be allocated to the organization’s first endowment.

“It was the first and obviously largest capital campaign for us,” Gersten Luckman said. “We’re calling it complete and we’re calling it a success. Although what we’ve done is to continue to fundraise for the endowment.”

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