Tag Archives: Capital & Endowment Campaign

Is Analyzing Year-End Numbers For Your Nonprofit Just A Distraction?

This is another strange January. Just as we thought we were out of the worst of the pandemic we are living with more cases of Coronavirus in our lives. We are all impacted by the surge whether it is in our immediate family (I hope you and yours are all well) or simply that buildings are closed, and we are back to days filled with Zoom meetings.

I find that it is sometimes hard to set aside blocks of time to concentrate on higher level projects. I think of Dug, the dog in the Pixar movie, UP, that gets distracted mid-sentence by squirrels. For me, the “squirrels” (read: calls/emails/kids/Apple Watch alert/dog/noise outside/truck passing 3 streets over/idea that I may have to reorder coffee/etc.) that I used to be able to ignore, now grab my attention faster than I can blink. But I still need to get things done. Things like analyzing year-end numbers before the end of January.

Here are some statistics to create for your nonprofit if you are analyzing year-end numbers.  And something to return to when you realize you have spent too long looking out the window at the squirrels.

Understanding annual fund trends are essential when planning for the next year. How can you create realistic goals or targets for segments if you don’t know where you currently stand. Now is a good time to calculate:

  1. Your month over month for 2020 vs 2021. Yes, 2021 was unusual. But so was 2020. It’s unclear when we will have the next “normal” year. It is time to plan for the unexpected each and every year. And you should start with your actual data.
  2. What percentage of your donations came in during December? I think it is a valuable data point when analyzing year-end numbers.
  3. Your basic donor statistics including: * If you are unsure how to do this get in touch
    • Percent of donor retention
    • Number of donors who increased their gift
    • Number of donors who decreased their gift
  4. How did your letters, emails, phone calls, social media posts, etc. impact your donations? Was one letter more successful than another? Did one topic or aspect of your end-of-year campaign attract a higher response? Has your social media affected your site traffic?
  5. Your major donors year-over-year including:
    • How many major donors did you retain? You want it to be higher than your average donor retention rate since you are spending more time focused on this group.
    • How you interacted with each donor to upgrade/ retain the gift and whether it had an impact (a good contrast is to pick someone who didn’t get the same love and attention without judgements. It’s hard to reach everyone with limited time and resources)
    • What you should plan for this year based on what provided a great return on your time/energy investment and what did not. Be honest. You may have loved your social media reminders but did they help increase results?
  6. What big projects you want to accomplish in 2022.
    • Are you thinking about a capital/endowment campaign?
    • Was your annual fund all it needed to be in 2021?
    • Do you need to talk to MJA about your needs (I thought I would throw that in here since it is our blog)

If to you, this blog was another squirrel, as a distraction from doing something else, it can be justified. Use it to help you analyze your year-end results.

If you want a real distraction, here is the first scene from the Pixar movie, UP, that started the squirrel meme.

Should You Raise Money to Pay Off Your Nonprofit’s Mortgage?

We have had 3 similar inquiries in the past few weeks that sound like this: a board member suggests that your organization eliminates your $5.1 million mortgage. ​​Everyone is excited by the idea. They call us to talk about the possibilities. Sounds great, doesn’t it? In theory yes.

​​In practice, it might not be the best way to use $5 million dollars. What could you do with that money besides pay off your nonprofit’s mortgage?

Option A – Raise $5.1 million and eliminate the mortgage and save the $275,000 a year in debt service.

Option B – Raise $5.1 million, put the money into an endowment, and use the proceeds to service the mortgage.

Option C – Raise $7.6 million dollars, put it all into an endowment, use the proceeds to pay the mortgage, and increase programming.

Option D – Do nothing because that sounds like a lot of money and we can’t raise that much.

There is no right answer. Instead, there are a lot of factors to decide if you should pay off your nonprofit’s mortgage. Here are 7 considerations:

  1. Is now the right time for you to raise money? Do you have the volunteers, staff, infrastructure, and know how to run a successful campaign?
  2. What are the terms of your mortgage? If you have a low fixed rate, the decision may be different than a short-term variable rate.
  3. How comfortable are you with debt? There are people that live in huge houses and drive luxury cars but are heavily leveraged. Others have no home mortgage and buy cars outright. Neither is right or wrong, but each board member’s personal preference will influence their opinion.
  4. Do you understand your current donors? Do you know what potential you have within your donor base?
  5. Do you have a culture of asking? Of course, you want a culture of giving, but that starts with a culture of asking. And if you have not asked them for anything in the past, a big ask is a hard place to start.
  6. Can you raise that much money just to pay off the mortgage? From a fundraising perspective, it is a hard sell for many people. Especially if they, personally, live with a mortgage. If you add programming or other capital needs into the fundraising plan it offers people a clearer vision of what you want to achieve with their donation.
  7. There is a difference between practical/realistic and negative perspectives. If most of your board assumes you cannot achieve the goal, you will not achieve the goal.

Wondering if you have what it will take to raise money? Click here to schedule a complimentary consultation and we can help you think through the possibilities.

Want to learn more about our Capital and Endowment Campaign services?

For more blog articles, click here. For general information, click here.

The Pros and Cons of Fundraising Campaigns to Reduce Debt

by Kerry Olitzky

Among the challenges that many nonprofits increasingly face are budget deficits and a rising amount of debt. This is especially true for membership institutions. To strengthen their financial position, many of these institutions mount campaigns as a way of mitigating their debt load.

There are usually two reasons why institutions undertake campaigns to reduce debt: a deficit budget that is hard to balance; and/or debt service (usually in the form of a mortgage).

In both cases, debt often overwhelms the operating budget and the ability to maintain vital programs and services. Not to mention the need to develop new programs as organizations evolve. If you are considering a fundraising campaign to reduce debt, here are some things to consider:

Cons (Common negative reactions to a campaign to reduce debt)

  1. Potential donors want to invest in a vision for the future, not just fix the past.
  2. Potential donors fear the slippery slope of debt (sometimes called “kicking the can down the road”) and may be reluctant to make an investment in an institution that is used to carrying debt.
  3. It is difficult to transform the goal of reducing debt into a strong case for giving.
  4. Supporting new buildings is more attractive to donors than paying off the debts on older ones.
  5. Donors don’t want their funds going to the bank—to affect debt reduction. They prefer that their funds support the good work of the institution.

Pros (Common positive reactions to a campaign to reduce debt)

  1. Potential donors want to free leadership of the burden of debt so that they may plan for the future.
  2. Campaigns are an efficient way to reduce or eliminate debt and strengthen the annual budget.
  3. Homeowners may appreciate a “burning the mortgage” campaign.
  4. Some potential donors, especially those with history with the institution, may be more interested in sustaining current facilities rather than raising funds for new buildings they see as unnecessary.
  5. Debt service is expensive with little to show for it at the end of a year. Donors want their funds to support the institution rather than service its debt. With that in mind, they may be willing to rid the institution of its debt. 

If you choose to initiate a campaign to reduce or eliminate debt, we recommend that you do so alongside an endowment or capital campaign—in order to prevent future debt from accumulating. This will also demonstrate to loyalists and newcomers alike that you are fiscally responsible with plans in place for a secure and successful future.

We can help you navigate a campaign, plan for future building and security while, at the same, time reducing your debt. If you would like to speak to someone about how we can help your organization call us at 800.361.8689.

Assessing Your Nonprofit’s Donors and Prospects: Annual Fund Segmentation Strategies

Annual fund segmentationSolicitation strategies start with assessing the current situation. Do you treat all your prospects and donors the same? Should you?

Now, more than ever, you should have a development plan for all prospects and a stewardship plan for all donors.

But, you should not plan on having the executive director “meet” with every donor. How can a nonprofit engage each prospect and donor when there are thousands? Annual fund segmentation.

Start annual fund segmentation by considering how they give.

  • Are they a Prospect or Donor
  • If a donor, are they
    • Current
    • Once-a-year Donor
    • Monthly Donor
    • Major donor
    • mid-level donor
    • mid-level donor you are trying to upgrade
    • 10-year donor
    • 25+ year donor
    • first time donor
    • LYBUNT
    • PYBUNT
    • Someone who gave to a
      • specific event
      • end-of-year mail or email campaign
      • other mail or email campaigns
      • sponsorship
      • special campaign donor
      • restricted gift donor
      • peer-to-peer campaign on behalf of a friend
      • also a volunteer
    • If a prospect or a donor, are they also a
      • Recent graduate or services beneficiary
      • 10-year alumnus\a
      • 25-year alumnus\a

Additional key points to keep in mind include:

  1. It costs 4.5 times as much for the nonprofit to find a new donor than retain one
  2. Donors don’t usually give a major gift in the first year they give to a nonprofit. Cultivation and stewardship over years (3-5 years minimum) is what will get you to the point you can ask for a major gift. *This assumes they have the capacity and had been stewarded properly during the time since they made their first gift.
  3. When you start accounting for lifetime giving, someone who gave $50/year for 20 years gave $1,000 to your nonprofit. How would you treat someone who gave $1,000?
  4. Break it down specifically for your organization. Should:
  • major donors get more personalized interaction than other donors?
  • monthly donors get a different appeal than once-a-year donors?
  • PYBUNTS or LYBUNTS get the same letter as new prospects?
  • members get the same email as non-members?
  • alumni get same event invitation as prospects?
  • parents get the same Facebook post as the students?
  • ____ get the same ____ as _____ (fill this in for your nonprofit)

Each organization will have its own set of segmentations.

And contrary to popular belief, segmentation was not created to give you more work.  Instead, it gives you more directed work. And a path to raising more money (which is the point, isn’t it?)

It may seem easier to send the same fundraising letter to the 1000+ people on your mailing list and move on.  But what are you moving on to? If you rely on your annual fund to support your organization, this must be a priority for your development team. Even if it is a team of one.

The Tradeoff of Time vs Money in Fundraising – 7 Considerations

Tradeoff of Time vs. Money in Fundraising We all know the adage, time is money. Nonprofits often think volunteer time is better to spend than precious dollars. But is it really?

And in the time of the pandemic, is there more time or less?

The Tradeoff of Time vs Money in Fundraising

Let’s say that you don’t want to spend money on a fundraising consultant for a capital campaign.  You believe you can do it on your own – you have a dedicated group willing to put in the work.

Can you get the same fundraising results without investing the money in a nonprofit consultant like Mersky, Jaffe & Associates? No, time is, literally, money lost. Money lost by not knowing:

  1. How much to ask for. Most clients underestimate the ask amounts of all but the very highest and lowest donors.
  1. How to ask. We train solicitors to ask for seemingly outrageous donations, to overcome any objections to the campaign during a solicitation, and how to be persistent without being pushy during each step of the process. For instance, an untrained ear will hear “no,” and walk away. We teach solicitors to listen to hear if they are really saying “I need more information” or “not yet.”
  1. Marketing materials are a huge distraction. The weeks you spend holding off fundraising while crafting the perfect marketing materials will not improve your outcome. Marketing is within many capital campaign committee members’ comfort zones so it is not surprising that it is deemed essential before you can do anything else.  Truth: Many a failed campaign have had beautiful pieces. When we are called in to help with a stalled or unsuccessful campaign, we are almost always shown interesting, well produced marketing materials. Instead, we help you create a strong case for giving to your worthy organization – in a nice piece that an outside designer can work on while you are moving through your fundraising plan.
  1. How to create a fundraising plan with action items.  You need a campaign fundraising plan that leads you through your prospects in a methodical way. Who do you approach first? Who should be in your second, third or fourth round of solicitations? We help you avoid a scattered approach and focus on those who can make an impactful gift to the campaign.
  1. Who to ask.  Most clients have hidden gems in their donor database. Sometimes they will be low level, long-term donors with high capacity. Other times they will be people giving at a mid-level range that could easily be a major donor. We help you find the best prospects. And, help you determine when is the best time to ask them for a gift to your capital campaign.
  1. The potential for the overall goal.  What would you do if we could discover that you could raise $2,500,000 over your current goal? Our feasibility studies help predict accurate, achievable goals. Potentially, a goal you would not even consider without advice from someone like us.
  1. It just takes longer without counsel.  There is a lot to learn on the internet. In fact, MJA has 118 articles, before this one, that reference a capital campaign. It takes a lot of time to understand best practices, fundraising techniques and capital campaign strategies.  Time that could be spent raising money instead of watching construction costs rise.

If you still think the tradeoff of time vs money in fundraising without counsel is worth it, here is a link to the 118 other articles on capital campaigns. No judgements – this is why we write them.

If you would like to speak with us about your upcoming (or stalled) capital campaign, email me and we can start the process today.

What Makes a Successful Fundraising Campaign?

Pieces of a successful fundraising campaignRecently, a prospective client asked whether we thought that they had the resources for a successful fundraising campaign. They were questioning whether their staff had time to dedicate to a new fundraising initiative, their current database could manage the new data, and whether they would have enough volunteers to get the work done. Those are important pieces of a successful campaign that help strengthen their results. But, there is one additional consideration that few nonprofits consider:

Will they do what they say they will do. 

Will the volunteers and staff:

  • Show up and/or call into campaign committee meetings? (and participate in the discussions)
  • Take on assignments? (and not only the lowest hanging fruit)
  • Make the appointments? (this can often be the most challenging piece of the solicitation)
  • Follow up after each appointment? (sending a personal thank you note, informing the administrator so they can send out a pledge form, acknowledgment of the gift and thank you note from the organization, inform the board president so he/she can send a letter, etc)
  • Share their experiences with the committee? (the elements of the case statement that excited someone and/or how someone handled a new objection to the case are great learning opportunities)
  • Take on new assignments? (whether you are looking to improve your annual fund or you are working on a capital campaign – there are a lot of prospects to get to)
  • Rinse and repeat? (a campaign takes time – maybe months, maybe years – be prepared for what it will take to achieve your fundraising goals)

A successful fundraising campaign is within your reach – if, before you begin, you understand what it takes to finish.

Email me if if you want to know more about how MJA can help your next campaign be successful.

The Annual Fund – Capital Campaign Correlation

The Annual Fund – Capital Fund CorrelationIs there an annual fund – capital campaign correlation? In one word, yes.

The annual fund does much more than supplement your budget. Your annual fund is a key indicator as to whether:

  • Donors support your mission and vision (literally and figuratively)
  • Your development program is donor focused (as opposed to organization focused)
  • You ask donors for impactful, meaningful gifts (i.e. $100 annual fund donors who have never been asked for $1,000 donations will always be $100 donors)
  • You steward donors throughout the year (sending a second annual appeal letter in the spring is not stewardship)

How does an annual fund impact a capital campaign/endowment campaign?

If you:

  1. have a strong annual fund with many donors who have given for multiple years and feel the love from your nonprofit, you have created a list of prospective capital campaign/endowment campaign donors. (Yay!)
  2. have staff who understand their role in fundraising, are willing to participate in asking for gifts, and/or willing to learn, you have a staffing structure that can incorporate a capital campaign/endowment campaign. (The next step is to determine if they have the time to add a capital campaign onto their list of responsibilities.)
  3. have volunteer leadership and board that understand their role in the annual fund includes projecting enthusiasm for annual giving, making personal financial commitments (100% participation), personally thanking donors (in person, in writing and over the phone), and stewardship of annual fund donors, you have a team ready to initiate a capital campaign/endowment campaign. (The next step is to determine who will lead the capital campaign committee.)
  4. have annual fund systems and software in place to track and correspond with donors, can access an accurate snapshot of your nonprofit’s fundraising health, and have accurate goals and results, you have a system that can work with a capital campaign/endowment campaign. (Systems are the least sexy piece of any campaign but make a major impact on whether a campaign feels complicated to organize or part of doing business.)

How does a capital campaign/endowment campaign help an annual fund?

  1. Getting donors excited about a capital campaign will remind them of their passion for your mission. (Donors who are not excited will not give to either annual or capital campaigns.)
  2. Joint asks (annual fund and capital campaign/endowment campaign) help fundraise for both. (Once you are asking for a five-year capital campaign gift, you might as well secure a five-year annual fund gift from your loyal donors.)
  3. It will provide you with the opportunity to you reassess donor list and their potential for annual gifts. (The in-depth prospect research that accompanies a capital campaign/endowment campaign can help find “hidden gems” in your list that you can also steward towards larger annual gifts.)
  4. Organizing yourself for a capital campaign/endowment campaign will establish new systems that will be used for the annual campaign for years to come. (Systems that work make fundraising less daunting for staff.)

If you are interested in assessing your fundraising and development systems, improving your annual fund or initiating a capital campaign/endowment campaign, email me by clicking here


To learn more about capital campaign/endowment campaigns consider reading:

The Nonprofit Leaders Guide to a Capital Campaign

The Difference Between Annual and Capital Campaign Gifts

Successful capital campaigns help create community

To learn more about annual funds:

11 Annual Appeal Tips

The 3 Cs of Fundraising – Capacity, Commitment and Connection

Monthly Giving Program – How to Get Your Program Started

The Difference Between Annual and Capital Campaign Gifts

Difference Between Annual and Capital Campaign GiftsA Guide for Prospects and Donors

You may be clear on the difference between Annual and Capital Campaign Gifts, but can you explain the distinction to your prospects and donors in quick, clear and concise language? If not, here is your cheat sheet.

Annual Campaign

An Annual Campaign supports unrestricted operating expenses—part of your annual budget. Salaries and overhead are a part of what is covered (although hopefully allocated to particular programs as either direct or indirect expenses). This income ensures you can provide your essential programs and services. This fund has to raise money each and every year to keep your nonprofit sustainable. Note: Because it is a yearly gift, donors usually give this gift based upon their income.

Capital Campaign

A Capital Campaign supports larger expenses—usually restricted to physical plant and facilities— that come around once every 20, 50 or even 100 years. These are one-time expenses that may not occur for the foreseeable future. (These one-time expenses are often paid for by capital campaign pledges that span 5 years). Building renovations, major equipment purchases, and infrastructure overhauls would be included in a capital campaign. Note: Because this gift is a once in a generation gift, the donation will often be based on assets rather than income.

Endowment Campaign

An Endowment Campaign supports the annual budget but is created by larger, one-time gifts that are pooled together. Return on the endowment’s capital are often used as revenue in the annual operating budget or restricted to use for a particular program.. While return on investments vary from year to year, organizations currently tend to assume a 4-5% return based upon a 36 month trailing average. This translates into $40,000-$50,000 into your budget for every $1,000,000. Note: Endowment campaigns are often run in conjunction with capital campaigns so these gifts are also based on a donor’s assets.

Which campaign should donors support?

No nonprofit is looking for capital or endowment support at the expense of an annual gift.

And, hopefully, your donors will be able to support both.

Major gift prospects of a capital and/or endowment campaign can even be solicited for both gifts at the same time. How? “All of us at Organization YYY appreciate your annual gift of $5,000 a year. Your support enables us to offer free and reduced-rate memberships to those in need. And, we hope you will continue to give at that level, but we are starting this exciting capital campaign in which we hope you will want to participate. (Fill in details here). Will you join me in donating to our capital campaign with a gift of $50,000. Over five years, that would translate to a $15,000 gift, $10,000 to help create a new pre-school and $5,000 would continue your annual fund support. Could we count on you for a gift of $15,000 a year for each of the next five years?”

An annual gift, over a long-term donor’s lifetime, will almost always be worth more to the organization than a one-time gift.

If you are still a bit confused on the concept consider the following example to explain the difference. “Your donation to our annual fund is what we use to provide mentorship opportunities to hundreds of students each year, and our capital campaign will ensure the students have enough space to learn and grow.”

If you would like to learn how we can help you with your annual fund or capital/endowment campaign, email me today.

Read a case study on about the “Double Ask” by clicking here

Solicitor Slowdown? 10 Tips to Motivate Volunteers to Continue Soliciting During a Capital Campaign

Motivate volunteers quoteAs a nonprofit consultant, I have found that even the most devoted board and development committee members have periods of time where they slow down and/or stop making calls and setting up appointments. How do you reset their enthusiasm and motivate volunteers to start solicitations again?

  1. Bring in new blood. Capital campaigns take time. Often two to three years, and that can be exhausting. Whether great progress continues or there has been a slowdown, changes in the life of the volunteers and volunteer fatigue can set in.  Sometimes, all it takes is the expansion of the development committee to bring back the enthusiasm.
  2. Pair solicitors. It is hard to coordinate the schedules of two solicitors and a prospect, but the efforts will be rewarded. It creates accountability between the solicitors and should increase the likeliness of setting up appointments.
  3. Help the committee feel like a team. You can motivate volunteers by creating a camaraderie within the committee. With everyone working together towards the same goal you will create a deeper connection that will last for many years to come.
  4. Have the committee help each other. As nonprofit consultants, we encourage our clients’ meetings to begin with time to share individual experiences so that the rest of the committee can learn. Whether an interaction went surprisingly well or a solicitor received a lot of attitude, the committee can brainstorm next steps, get excited, and/or commiserate with each other.
  5. Create group benchmarks. You have your committee working as a team, create short and long-term goals that reflect that.  How many phone calls –in total– should you aim for in the next week?  How many meetings do you want scheduled in the next week?  Everyone should feel responsible for the effort.
  6. Create individual benchmarks. On the flip side, sometimes it is easy to hide behind the group effort.  Create goals for each campaign development committee member and make the goals public. This is not to shame, but to motivate volunteers.
  7. Recognize achievements. Whether you do this on an individual basis or as a group, continue to remind everyone how far they have come – even if there is still a long way to go.
  8. Move the time of your development committee meeting. The time worked when you first started, but “Jeff” took a new job, “Claire” extended her hours on Tuesdays and school ended so childcare issues have changed. A new time can bring different people to the meetings and a new energy.
  9. Consider the leadership. Is the leadership still excited about the project?  Are they still dedicating the same amount of time and energy? Whether you have chosen your committee heads by their capacity to give, their capacity to bring in donations, or their leadership skills, it may be time to add a third or even fourth committee co-chair to the mix.
  10. Make sure everyone leads by example. No nonprofit can afford to have people talking about what others should do than doing it themselves.  Remember, the one of the characteristics of great leaders is that  they do what they say they are going to do.

If you would like Mersky, Jaffe & Associates to help you motivate your volunteers and bring energy to your capital campaign, call us today at 800.361.8689

Want to read more?

Why He Joined This Board (AKA The Importance of Time, Talent, and Treasure)

Board Leadership – A Burden or a Blessing?

A Stronger Fundraising and Development Committee (What would help your nonprofit raise more money this year?)




The 3 Cs of Fundraising – Capacity, Commitment and Connection

Pyramid for the 3 Cs of fundraisingSometimes, when I am working on a capital campaign, I spend a lot of time focusing on which prospects have the capacity to give a 6 or 7 figure gift. In a recent meeting when I mentioned the prioritization of the next round of donors based on their capacity someone spoke up. While not contradicting me, she reminded us of that there are the 3 Cs of fundraising ­­– Capacity, Commitment and Connection. She wanted to stress that capacity was just one leg of the stool.

She is correct.

However, her experience working with annual campaigns and grassroots fundraising is not 100% transferable to a capital campaign.

All 3 legs, or, the 3 Cs of fundraising ­­– capacity, commitment and connection should be firmly in place prior to raising money for a building renovation or endowment campaign. However, when raising millions of dollars to realize your dream, capacity has to be the way you prioritize those who are already committed and connected to the organization.

There is just no way to raise millions of dollars from the bulk of your community (see why below). Pareto’s 80/20 principal reminds us that 80% of your donations will come from 20% of your donors.  And, today, that seems to be moving closer to 90/10. Your nonprofit may have more $100,000 donors and fewer $1,000,000 donors who support your capital campaign.  But, the amount cannot be split evenly among all committed, connected donors.

If only it were that easy.

Consider a $10,000,000 campaign.  If you have 500 donors to your annual fund, you are probably doing a lot of great fundraising.  But, it would require each and every one of those donors to give $20,000 to your campaign to split it evenly.  Every one of those $25 gifts would have to turn into $4,000 a year for the next 5 years.  Every person on a fixed income and every student would have to be willing to give their share. Should I even mention the donor retention issues that have have to be ignored to ensure this type of success?

Instead, we would like to help you create strong nonprofits with committed, connected donors who will all give to a capital campaign.  We will just focus on the ones with higher capacity to get started.

Want to read more about donor strategies?

Nonprofit Solicitation: It’s Harder To Get The Appointment Than To Get The Gift

The Fundraising Committee: Reflecting on a Year – Part I

Meaningful Major Gift: From The Heart And The Wallet