In the life cycle of nonprofits there often comes a time
when you need to expand your brick-and-mortar footprint. Maybe you need a
larger administration building, or you want to build or renovate a structure to
house clients, or expand your capacity by adding a larger warehouse. None of
these things are free, so you may think that your first need is funding…lots
and lots of funding.
New or inexperienced nonprofits typically think that because
the need is so obvious the money will just magically arrive on time, and too
often, that time frame is stated in weeks or months. In reality it can take
years, and the process can resemble a military campaign.
Some nonprofits immediately start to look for grants to
finance the construction or purchase. In reality, that's almost the last step.
After you establish a clear need and define the impact, most
grantors want to see that your community monetarily supports the project, so
making grants your first step is going to be pretty futile. In general,
grantors do not want to provide more than fifty percent of the cost. The
exception to that may be asking for funding for a feasibility study and
sometimes for a planning document or architectural plans. So, if getting grants
for the construction or purchase isn't first, how do you move forward with a capital
campaign ?
1. Define the need.
Why does your organization want to do this and what will the
community or your clients get out of it?
Why doesn't your current building inventory meet that need? While you may feel that your organization
"deserves" nicer quarters, unless that contributes to mission
accomplishment, your funding appeals are going nowhere.
2. Demonstrate the benefits to the community or to your core
mission.
What will the new building do to help your core clients? For
instance if you are a food bank, adding a cold storage warehouse will allow you
to improve the diets of your clients by adding fresh produce to your food
inventory. This is your case statement or statement of need. What will be the
positive impact of the expansion?
3. Set a budget goal.
For this you will need to some preliminary research on actual
costs. At this stage, you might be able to get by simply researching what
similar buildings and/or land costs in your area have been historically. You
might call a few builders and architects and see if they will give you
hypothetical per square foot building costs, or you may be able to research
construction permits for similar buildings in the recent past. Check with your
county clerk to see if you can research the permits. If your county keeps a
record of land sales (not taxable value) you can look those over if you are
contemplating purchasing land, or consult several real estate firms to see what
comparable sites have brought in the recent past. You are looking for a
ballpark amount for now, but you will have to pay to firm up the costs and
planning at some point.
4. Establish your organizational capability to accomplish
the capacity growth.
When establishing a preliminary goal, don't forget that you
may need to increase staff to support mission expansion. Donors want to know
that after the building phase is complete there will be staff or other
resources on hand to attain the service objectives you have outlined in your
statement of need. You will not include this cost in a capital campaign, but it
is a question that comes up with some regularity on applications and onsite
interviews. Organizational readiness and capability are definitely considered
by donors.
5.Is the project feasible?
Determine if there is any monetary community support for
the project. At this point you aren't looking for a full-blown
feasibility study, just a feel for
whether this project is something the community will donate to accomplish.
Grantors often don't even consider funding until you have raised fifty percent
of the funds locally or at least regionally. Note: whatever your budget
guesstimate is at present, be aware that inflation and rising costs will have a
significant effect by the time you actually start construction or close a
purchase deal. That is because it takes time to raise money, and prices
typically do not go down over time. A rule of thumb is to add in at least 5% a
year, or more if there are significant inflationary pressures.
6. Establish a timeline for fundraising.
Larger capital building campaigns take at least two years
and often five years or more before everything comes together and you can break
ground and actually construct the building. Outright purchases of existing
space will have a shorter timeline for acquisition, but of course while you are
raising money, the property could be sold to someone else. It is much better to
have the funds on hand before moving forward. Break your project timeline into
stages so that you can fund raise in phases. For instance you may want to raise
ten or fifteen percent of the total for a feasibility study and architectural
plans. Donors can relate to visuals, i.e. plans much better than they can to a
general description.
7. Create a fundraising strategy.
Most capital projects receive their seed money from one or a
few major local donors. Local individual contributions are helpful, but usually
don't contribute enough money fast enough to accomplish the whole project on
schedule. When you can see that you are at or approaching pledges or actual
donations of 50% of the total cost then you can approach foundations,
corporations and even the government for the balance from grants. You should
have already researched the best prospective grantors, and perhaps even started
to create a dialogue with them if they are local. At the very least find out
when they typically open their grant cycle, and what their giving history has
been in the past.
8. Think about loans.
Everyone wants to think that they can fund raise for all of
the costs, but at least consider loans. If your nonprofit has a reasonably
steady income from fees or services, this could be your fastest route to success.
Donations are not usually considered as good collateral, since they can vary
considerably year over year. If you typically have excess funds at the end of
the year that can be committed to servicing the loan, this could the route for
you. Again, if you have 50% of the cost covered by donations or pledges, loans
become much easier to secure.
9 . Formalize your planning.
If you have gotten this far, it is probably time to move to
funding a formal feasibility study, case statement and building plans or quotes
for the structure. This is one area that you may be able to find grant funding
to provide financing. The cost is less than the whole project, and grantors
would rather see that you are doing your due diligence than throw money at a
dream. If you have a well designed project, good preliminary cost projections,
a clear need and a provable future benefit, there may be grantors willing to
provide seed money to formalize your
planning.
10. Be prepared to pay for professional assistance.
While the director of development or even the ED may be
willing to assume this responsibility, formal feasibility studies are more
readily accepted if they are done by objective third parties. These firms will
conduct extensive interviews of past and present board members, staff, donors
and even vendors to prove (and in some cases disprove) the feasibility of going
forward with the project. Architects do not provide plans for free. By doing the first nine things above well,
you may considerably shorten the amount of professional time necessary to
create the formal documents. Conversely, you may want to turn it over to the
pros in the beginning, simply to free up staff time.
Constructing and implementing a capital campaign is labor
intensive, but like most things in life, you will get out of it what you put
into it.
No comments:
Post a Comment