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Capital Campaign Budget (Part 2)

There are two budget areas that must be considered when embarking on a capital campaign—the project budget and the capital campaign budget.

In a Nutshell

This is Part 2 of a multiweek series on conducting capital campaigns by Linda Lysakowski, ACFRE. This series follows Linda’s Capital Campaign Readiness Series, which focuses on making sure the organization is ready for a capital campaign. In today’s installment, Linda discusses the capital campaign budget. Linda is the author of two popular books on capital campaigns published by CharityChannel Press, Are You Ready for a Capital Campaign? Assessing Your Nonprofit’s Ability to Run a Major Fundraising Campaign and Capital Campaigns: Everything You NEED to Know.

What a Typical Capital Campaign Budget Will Include

If, of course, the project does not involve construction, the budget will be very different for the project itself, but if the project does involve construction, the architect or construction manager will generally help develop the budget for the building project itself. This budget will include items such as:

  • Construction costs (sometimes called hard costs, soft costs being areas like fees and permits)
  • Architectural fees (usually a percentage of the project)
  • Architectural renderings (these need to be done before the project is started and these costs will need to be funded up front, because these drawings will be important in presenting the case)
  • Engineering and contractor fees
  • Fees and permits required by local municipalities
  • Environmental impact studies (and historical impact studies if the building involves a historical structure)
  • Possible environmental clean-up if issues are found such as asbestos removal, soil remediation
  • FF&E (Furniture, fixtures and equipment)
  • Communication systems (telephone, internet)
  • Computer systems, including wiring
  • Possibly rental for office space during construction phase
  • Loans interest for construction or bridge loan while pledges are being paid
  • Inflation—the longer the project is delayed, the higher expenses will be
  • Contingency for unexpected expenses

Want to Learn More?

Learn more about capital campaign budget. Pick up a copy of Capital Campaigns: Everything You NEED to Know, by Linda LysakowskiLinda goes into much more detail on the capital campaign budget in her book, Capital Campaigns: Everything You NEED to Know, published by CharityChannel Press. You can order it from the CharityChannel Press bookstore, Amazon.com, Barnes & Noble bookstore, or at a bookstore near you.

Capital Campaign Expense Category

Campaign expenses are in a separate category and are usually funded through the campaign itself. For some organizations, if their operating budget allows for covering campaign expenses, the entire campaign dollars raised can go directly into the project. However, in most cases, these expenses will be folded into the overall goal for the campaign. Fundraising costs are dependent on many factors, such as the size of the campaign, the duration of the campaign, the geographic scope of the campaign, the amount of time required from a consultant, and the existing fundraising structure in place within the organization. However, as a general rule of thumb these costs will run somewhere between 5 and 15 percent of the total campaign goal, and usually the larger the campaign, the lower this percentage will be.

These campaign costs include:

  • Personnel—if your organization needs to hire extra staff to manage the campaign, you will need to budget for salaries, benefits, and employment taxes for this person or persons.
  • Professional counsel—may include a campaign consultant, a grant writer, a public relations consultant, and outside bookkeeping services. Travel expense must also be considered if engaging counsel from outside your local area. You should be sure that proposals from consultants include all anticipated expenses. Does the consultant require housing while on-site? Will there be rental cars, airfare, mileage expenses? You should check with their state regulatory authorities to make sure the consultant contract complies with state laws and that the counsel being engaged is registered in your state if registration is required.
  • Marketing expense will include graphic design, photography, printing of brochures, letterhead an envelopes, website, campaign video. If your organization is planning to use a telephone fundraising firm, these expenses also need to be included in marketing expense. A word of caution on engaging telephone consulting firms, you should look for firms that work on a flat fee basis, not a percentage based fees, which is unethical according to AFP standards, and in many states, firms are required to disclose their fee if they work on a percentage basis.
  • Donor recognition items and events also need to be budgeted for and planned early in the campaign so donors can be advised of what type of recognition they will receive.
  • Campaign events, including cultivation events, kickoff event, report meetings, groundbreaking, and dedication events. Event expenses will generally include facility rental (unless you are using your own facility), food, entertainment, equipment rental supplies and possibly an event director (this fee may be included in professional counsel)
  • Support Systems—if you need to purchase software this can be done through the campaign or through the general operating budget, since the system will be used for ongoing development operations. Other systems expenses will include telephone, fax, and Internet expenses directly related to the campaign, postage and office supplies are also charged to the campaign.
  • Travel expenses may also be a factor if the campaign is regional or national in scope, or if trips to national or regional foundations are required.

Develop the Capital Campaign Budget During the Planning Phase

The campaign budget should be developed during the campaign planning phase and monitored on a monthly basis.

Linda Lysakowski, ACFRE

About the Contributor: Linda Lysakowski, ACFRE

Linda serves as Acquisitions Editor for CharityChannel Press and For the GENIUS Press. In this role she has edited dozens of books.

In addition to her role as editor, she is an accomplished author. Linda is the author of:

Recruiting and Training Fundraising Volunteers
The Development Plan
Fundraising as a Career: What, Are You Crazy?
Capital Campaigns: Everything You NEED to Know
Are You Ready for a Capital Campaign workbook
Raise More Money from Your Business Community
Raise More Money from Your Business Community—The Workbook
Fundraising for the GENIUS, 1st and 2nd editions
The Matriarch (a novel).

She is also a contributing author to:

The Fundraising Feasibility Study—It’s Not About the Money

YOU and Your Nonprofit Board

 

Co-editor of:

YOU and Your Nonprofit and The Nonprofit Consulting Handbook

The Nonprofit Consulting Playbook

 

And co-author of:

The Essential Nonprofit Fundraising Handbook
The Leaky Bucket: What’s Wrong With Your Fundraising…And How You Can Fix It

The New Donor

Nonprofit Strategic Planning

Quick Guide to Developing Your Case for Support

 

A graduate of Alvernia University and AFP’s Faculty Training Academy, she is a Master Teacher. Linda is one of slightly more than one hundred professionals worldwide to hold the Advanced Certified Fund Raising Executive designation. She is president of Linda Lysakowski, LLC, dedicated to inspiring creativity and philanthropy. In her thirty plus years in nonprofit work, Linda has managed capital campaigns, helped hundreds of nonprofit organizations achieve their development goals, and trained more than 30,000 development professionals in Canada, Mexico, Bermuda, Egypt, and most of the fifty United States.

 

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