Tag Archives: Feasibility Studies

5 Surprising Ways Endowment and Capital Campaigns Are Different in 2022

Surprised? Capital campaigns are different in 2022
  1. Sticker Shock is not just for gas pumps. In the past week I have seen 3 client’s jaws drop when they saw the estimated costs of their building renovation plans. Supply chain issues, lack of workers, and rising demand are causing pricing – and estimates – to rise. There is no crystal ball to know what will happen in in 2023 and beyond but we should all be prepared for when the shovel hits the ground with even higher costs.  
  1. Endowments have value to donors. Pre-pandemic the idea of raising money for an endowment was tough without a capital element. Everyone liked an organization to have a large endowment – but few wanted to support it. There were some exceptions for those who were giving enough to name their own fund or “chair.” But many of those gifts came with restrictions.  Cut to 2022, when capital campaigns are different, and donors understand that there are economic uncertainties that are out of everyone’s control and an endowment provides stability. And annual resources. As well as security. And ensures the organization can weather the next downturn.
  1. Donor Advised Funds (DAFs) can be used for pledges. Well, sort of. While someone with a DAF cannot make a direct pledge, they can offer a non-binding letter of intent. The nonprofit cannot use it as collateral for financing as a regular pledge can be deployed. But the letter of intent will still enable a donor to indicate a larger gift, payable over multiple years. Such a letter acknowledges the donor’s intent to recommend a grant from their DAF for multiple years. Read more about DAF letters of intent from Fidelity here.
  1. Competition for major donations can be a concern after 2 years of holding off on asking. Most nonprofits who started to consider a feasibility study and/or capital/endowment campaign in 2019, 2020, or 2021 are all looking to 2022 to raise money. This can be good for organizations who engaged donors during the pandemic -they remember you and still value you! And a lot harder if you held off contacting your donors. Either way, there will be a lot of nonprofits asking for capital and endowment gifts this year. In other words, if you are thinking about it, don’t hold off too long. Or you may find your donors have committed to other campaigns.
  1. Markets are unsettled which means you may have to be creative about how donors want to give. You can write a five-year gift of $100,000 as $10,000 this year, $20,000 for 3 years and $30,000 in the 5th year. Or vice versa. Maybe they don’t want to start until 2023. Or they want to give it all now. Or whatever the donor wants. We believe in “campaigns of one.” You strategically plan for the engagement, solicitation, and stewardship for each donor within a campaign. Just be aware that if they rely on financial markets for income they might not feel as secure as they did a year ago. I guess some things about capital campaigns are different in 2022, and some are not.

Interested in learning more about a feasibility study to know if your community would support an endowment or capital campaign? Set up a time to have a free 30-minute consultation with Abigail or David

Trust The Professionals

David Mersky and Michael JaffeOne of the aspects of our firm, Mersky, Jaffe & Associates, that has always interested me is the capability to accurately predict the amount of money an organization might raise. This is established through a combination of interviews as part of a detailed feasibility study, an understanding of the economy and the environment of the area in which our client functions and, of course, the experience of the two partners, Michael Jaffe and David A. Mersky. Our firm’s objective in its pre-campaign assessments is to show an organization “…not if, but how…” it can raise the funds for its capital project or endowment program. And, often, the members of the community indicate that they do support the project, so the fundraising plan is created, funds are raised and the project is completed.

But, rarely, we have had to tell a client that we do not think they can raise the amount they need to fund their dreams. In the current economic uncertainty, it is possible that we may have to say this to more clients than we ever have in the past.

And that is when we find out if we have been engaged to provide strategic counsel while assisting in the raising of money or engaged to just raise the money. In fact, in the latter case, it is often the arrogance and overconfidence of the organization’s leadership that has lead to the the projected shortfall.

About a year ago, when we reported the results of our assessment to a client, the Executive Director was convinced that we were wrong. “You don’t understand our community. We can raise the full $6 million. We have to. The architects told us the building addition will cost $4.8 million and we need to start an endowment for upkeep. Everyone really supports the project so they will come through with the money.”

After the exchange described above, there was silence from the client for about two months. Then a call came to inform us that the client had found an alternate fundraiser who told them what they wanted to hear and we parted ways. The organization is still struggling to raise the money and, of course, they have not yet found the way to begin construction or fund their endowment.

Experience and knowledge cost money. When you interview, research and check the references of vendors of any sort, you should have confidence in your decision to engage a particular consultant. You should then have faith in their opinion.

Trust the professionals.

Q. What do I need to consider when fundraising during a recession?

Downward trend in fundraisingA. Recently, my husband and I decided to sell our condominium. While it is tempting to use this forum for a sales pitch (MLS#: 70749691), the truth is that our place is ideal for first time buyers. The general consensus on first-time buyers in the current economic climate is that sellers need patience. It may be questionable as to whether our country is heading for a recession or not, but it is undeniable that people are taking more time to consider where to put their money. And this is as true of the housing market as it is for fundraising.

There are now, and will always be, funds set aside for donations; donors are just taking their time and giving careful thought as to which organizations they should give their hard-earned money. For some, the recent downturn will prohibit them from making new commitments, but the majority of donors will continue to give each year. However, they may decide to target their donations to fewer causes or reduce their level of donations. The question is, “How do you intend to stay on their short list?”

Often, the key is to instill confidence in your organization. Does your staff need additional training to broaden skill sets and learn new donor retention strategies? Have you done a recent analysis of the market that you are serving and whether you need to shift focus or maintain your current path? Are your goals attainable considering the current climate? Do you need to reduce the percentage of money that is used for administration instead of client services?

A strategic plan, feasibility study and/or development audit could be beneficial. I know that sounds like a sales pitch for Mersky, Jaffe & Associates services. But, it should come as no surprise that we are often busier in uncertain economic climates. Consultants are an additional way to establish certainty with donors.

However you go about establishing additional faith in your organization, don’t forget the real estate strategy – have patience. Securing the gift may take more time than you would like – but if you are in the right position with the right offering, the money will come.

How Small Gifts Add Up

Ohav Shalom imageCongregation Ohav Shalom was not, historically, a giving culture. Nevertheless, leadership realized the synagogue needed improvements and a small extension if they were going to continue to fulfill the community’s needs. Could they raise the necessary funds?

Mersky, Jaffe & Associates was engaged to run a feasibility study and determined that raising the necessary capital was, indeed, attainable. With excitement and potential motivating the leadership, volunteer development leadership was found, lead donors were determined, solicitor training began and an impact strategy was initiated. The planning had begun.

One question was still on the leadership’s mind – would their members understand the need?

The extraordinary leadership at Congregation Ohav Shalom decided that their success required a unique approach; every solicitation, every single appeal, every “ask” was to happen in person. In a community that did not have million-dollar donors, face-to-face meetings could help their community feel their urgency.

Personally soliciting every member of the congregation is no easy task. It takes yeoman. It takes model leadership. It takes the drive, tenacity and perseverance that Congregation Ohav Shalom was extremely fortunate to find in their campaign chairs and committee.

The response from the community has been just as remarkable. In the little over a year since the campaign had began, they raised more than one million dollars — and all with no gift being larger than $54,000.

With the killer combination of chutzpah and follow through, the goals set by Mersky, Jaffe & Associates should be easily attainable.

Why MJA?

There are a multitude of benefits of engaging Mersky, Jaffe & Associates as counsel. We have a great deal of experience that makes our services comprehensive. We know prospect research, direct mail, personal solicitation, board enhancement, and volunteer training. We are also cost effective. As a client of Mersky, Jaffe & Associates, you only pay for the services you need, so costs are minimized. And, in the end, counsel can allow for as much as a 10 to 1 return on your investment.

The fundraising process is an opportunity for non-profits to grow stronger. This is a time for:

  • in-depth internal analysis
  • thorough planning
  • development of solid marketing and management techniques

This is value added.

Q: We are hesitant to give up some of the monies raised to pay for the cost of fundraising counsel. Should we be?
A: Campaigns with counsel raise more money. It is that simple. Mersky, Jaffe & Associates knows how to make the most of your campaign.

Q: We are a major institution with a professional development staff. Do we need to hire outside professional fundraising counsel?

A: Campaigns benefit from the special skills and perspective of outside counsel. Mersky, Jaffe & Associates works with a variety of organizations, both large and small. Many choose to engage our firm to gain from the lessons that others have learned as well to provide an expert external voice.

Q: We will need some help with our organization over time, but not necessarily all at once. Can we pick and choose the services we need?
A: Mersky, Jaffe & Associates provides comprehensive services, including periodic consultations. We can conduct feasibility studies, training, motivation, and orientation programs, staff development, etc., on a one-time or ongoing basis.

Q: Our department is responsible for managing a major capital campaign, but we remain isolated from the rest of the organization, and we’re not receiving much support or input. Does that really matter?
A: A successful campaign is one that works best in a collaborative environment–a team approach. Mersky, Jaffe & Associates can help you gain the cooperation of the Board of Directors, senior staff, and key volunteers so that you can wage the most successful campaign possible.

Q: A feasibility study seems so expensive. Do we really need to do this step before beginning our capital campaign?
A: In a word, yes. Proper planning promotes possible positive performance , and a feasibility study is a major step in the planning process.

Q: Our campaign isn’t doing too well, but we’ve put a lot of time in already. Can you just do a quick fix?
A: Maybe. The key to success in fundraising requires patience as well as the creation and implementation of a well-crafted development program. We might need to take a little more time to make sure your campaign can be a successful one, but if we are efficient the time will be used to foster success for your campaign.

Q: We want to find development counsel that has worked with an organization like ours. Have you?
A: If we haven’t worked with your organization, then we haven’t worked with one like yours. Mersky, Jaffe & Associates is resourceful enough to utilize our past experience from other campaigns and in life to make each individual campaign a success. No two approaches are the same, just as no two organizations are the same.