Capital Campaign Killed the Annual Fund

I have the song “Video killed the radio star” buzzing through my head right now. It seems appropriate for the title of this blog: Capital Campaign Killed the Annual Fund.

When preparing for a capital campaign, one of the poignant discussions is how the capital campaign will cannibalize the annual fund. Often, I will advise clients that they may want to look at holding their annual fund goal the same for the five years of the campaign or even reduce it by 10%. Sometimes we will build in an additional 10% into the campaign budget to cover the loss of annual fund.

Frank Pisch, President of Compass Group says, “With coordinated planning, your annual fund should increase during your campaign period. You will be adding new donors, upgrading current ones and asking many of them to make a capital gift as well. Be clear and definitive and use this campaign time to educate your donors as to what it takes to sustain your organization. Both annual and capital needs are important. Pursue them assertively.”

And then I was introduced to a new way of thinking with Colorado Rocky Mountain Schools. They put in place an aggressive plan for increasing the annual fund each year while raising $10 million through a capital campaign. Lisa Raleigh, Director of Development, shared with me her numbers and thoughts on the annual fund within a capital campaign.

  • 2008/2009: Annual Fund raised $448,000
  • 2009/2010: Annual Fund raised $498,000
  • 2010/2011: Annual Fund raised $525,000 (year capital campaign kicked off)
  • 2011/2012: Annual Fund raised $512,000
  • 2012/2013: Annual Fund Goal $530,000

Although they saw a slight decrease in the annual funds raised this past school year, they still had an increase in their annual fund since they started the capital campaign.

The benefits of the capital campaign to the annual fund:

  • When a donor committed to a campaign 5-year pledge, they were also asked to make an annual fund 5-year pledge. This ensured that the donor did not reduce their annual fund gifts in favor of making a campaign gift. AND the development team started each school year with a nice round number of pledged annual funds towards their total goal
  • Reaching out to donors through the auspice of the campaign, opened the door to re-engage lapsed annual fund donors.
  • When a donor wasn’t interested in making a campaign gift, often they made an annual fund gift instead.
  • “Increased our confidence in asking donors for what we need.”

The challenges of the capital campaign to the annual fund:

  • “While the five-year pledges have been wonderful to have confirmed years in advance, we have found that donors of all levels often choose one fund and decide not to give to the other, and in many cases it seems that the Annual Fund suffers more than the capital campaign, though we work hard to protect the Annual Fund.”

 

As you can see, there are a number of ways that a capital campaign can enhance – and even increase! – your annual fund. The added bonus is that the capital campaign significantly increases donor’s gifts and provides the opportunity for increased donations after the campaign finishes.

“Once the capital campaign is done, we will be in a position to really go after the Annual Fund in a larger,

more aggressive way, given our newfound confidence in making asks in general, and in asking for larger amounts.”

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