Linda Lysakowski, ACFRE
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.
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
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.