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A Capital Campaign Horror Story – In Three Parts, Part One

By Hank Lewis, MA, CFRM on December 9, 2015

(This is an email I’d received, with my comments in bold.)

We are a small Historical Society that backed into a Capital Campaign when our current President and her husband donated $1M for a new vault and study center.

A design and build Contractor on our Board did the best he could, without plans and specs, to estimate the cost of the structure. He came in at 1.2M. But apparently a number of things were not included in his estimate and the suspected cost is now 1.7 M. Before overruns.

Our 2nd year of fundraising for this project only yielded $ 156,000 and $100,000 of that is from one donor.

I gather that your organization did not have a Planning Study done to determine if and how a capital campaign could/would be successful.

As there were no plans/specs, I don’t see how you can legitimately ask people to give to support a project the depth of which is unknown.

It is my impression, just from your first paragraph, that the organization saw $1million on the table, and did no thinking or planning.

It is my opinion, based on the above, that you should not have gotten into a capital campaign.

Our Executive Director has told the Board that if we do not build within 2 years we have to start returning the money?? Is that true?

I can’t say if there are any State laws that would required returning the donated funds within a specific time period – I don’t know !! I do know that, at the rate money is being raised, that your organization’s credibility is on shaky ground.

Without a firm capital campaign plan, there is no way to know, to even
have an idea when/if all the needed funds could/would be raised.

Accepting contributions for a specific purpose, without being able to
assure donors of a timeline for the use of those funds for that purpose,
again brings your credibility into question.

And, accepting such contributions and not using those funds for the
intended purpose within a reasonable timeframe could border on fraud.

With what you’ve told me, and if you can’t come up with a solid plan
(based on reality, not wishful thinking) for raising ALL the needed funds
within a reasonable timeframe, my reaction is to tell you to return the
funds that have been contributed.

So, though I don’t know your ED’s thought process, I must agree with the conclusion.

Next Week – Part Two

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Hank Lewis with Development Consultant Associates has over thirty years as a fundraising consultant and is a specialist in Board and Leadership Development, Capital Campaign, Bequest Program and Major Gifts. [Read more ...]

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