Traditional capital campaigns, those that raise money for a new building, often do more harm than good in the nonprofit sector. If nonprofits considering a capital campaign instead launched a "capacity capital" campaign, they could create much more social impact.
In a previous article on About.com, I discussed the idea of capacity capital, an incredibly exciting new funding vehicle for nonprofit organizations. Capacity capital is the money that nonprofits so desperately need to build strong, effective, sustainable organizations that can create more social change. It is a one-time investment of money to add new technology, an evaluation system, a new revenue function--ultimately money to grow or strengthen the organization. And it is infinitely more effective at achieving social impact than a traditional bricks and mortar capital campaign.
There are many perceived benefits to a bricks and mortar capital campaign. They can be a vehicle for asking for bigger gifts, a way to get in front of the community and be "noticed," and a method for energizing the board and giving them something to do.
But there are often huge downsides to these campaigns. Often the cherished new building has much higher ongoing maintenance costs that were not factored into the campaign. A capital campaign can also cannibalize regular annual donors. And most detrimental, a new building often does not increase the nonprofit's ability to create more social change. Does an in-school mentoring program really need a big, new headquarters? Do the costs for a nicer, larger office space directly result in more children being mentored or mentored more effectively?
What if instead of raising millions of dollars for a new building, a nonprofit raised that much money, through a capacity capital campaign, for the things they really need to create more social change:
- New technology
- New online fundraising software
- A new donor database
- Highly skilled and experienced development staff
- A program evaluation study
- A more effective program-delivery system
If those organization-building elements were in place, a nonprofit could start:
- Doing a better job of delivering the program
- Raising more revenue annually through a more effective fundraising function
- Securing more external support because they can prove program results
Instead of depleting the organization through cannibalized donors and increased on-going maintenance costs (as a traditional capital campaign does), a capacity capital campaign actually strengthens the organization and allows it to achieve more social impact, more effectively.
Before your organization decides to embark on a traditional capital campaign, take a big step back and ask your staff and board some hard questions:
- What are we hoping to gain from this capital campaign?
- Will this new building contribute to an increase in outputs (services) or outcomes (changes to our clients' lives)?
- Are there other items we need more than a new building in order to effectively do our work?
Nonprofits need to stop raising millions of dollars on physical monuments such as buildings, annexes, and new wings and instead start raising millions of dollars for the capacity elements that will actually help them create more social change. That would be revolutionary.
Learn more about financing, not fundraising and the new normal that is breaking down, reassembling and transforming older fundraising methods into new ones more suitable to a fast moving, digital, and results-oriented 21st century.