Monday, February 25, 2013

Private Club Capital Campaigning

Is your cousre feeling a little rough around the edges? Are you spending too much money on maintaining tried sand bunkers, irrigation system or overused practice facilities? Are your maintenance and repair costs rising to accomplish the same level of maintenance just years ago? If you answer "yes" to any or all of these questions, it's time to begin thinking seriously about mounting a capital campaign. Especially after the economic downturn and the resulting deferred investments in capital now may be the time to embark on a needed capital project.

If the thought of raising a lot of money in a relatively short time for capital improvements gives you pause, here's a word of encouragement: it is easier to raise money for capital campaigns than for annual operational funds. That's right: capital campaigns are "money magnets!" Why? First, capital improvements are tangible: imagine your club members and their families marveling at the all new practice facility and thinking to themselves: "My $2,500 helped pay for this!" It's easier for a donor to get his or her mind around a capital gift than a one-time, member-wide, large assessment.

Second, capital campaigns offer tangible opportunities to truly change the face of the golf course. While some donors prefer to give anonymously, most love to be honored and feted. Capital campaigns afford the opportunity to honor donors by naming buildings, wings, rooms, even golf course renovations after them. How about naming a new greens construction project after the club members of 2013 on a commemorative plaque in the clubs trophy room!

By the same token, the decision to initiate a capital campaign should not be made lightly. Your readiness to undertake steps one, two and three below will help you assess your readiness to mount a capital campaign. If you are indeed prepared, steps four through ten will help ensure your success.

Step 1: Make the Case for Capital Improvements

The fact that your staff would like a new maintenance facility is no justification for a capital campaign. Successful capital campaigns depend on convincing members will be better served as a result of the capital improvements. Don't succumb to the "edifice complex:" I.e. "We've been around for a long time and we deserve a bigger and better maintenance facility and a staff Jacuzzi." Donors will not be impressed by your proposed capital improvements unless you can demonstrate that your clients will benefit or your business will benefit with improved safety and efficiencies. Additional under-roof storage areas, better equipped equipment shop an expanded employee locker room, space for lodging interns. The bottom line, fundraising is an emotional business every bit as much as a logical one; your job is therefore to create "emotional resonance" by showing how member’s facilities will be improved by the proposed capital improvements. 

At this stage, the "case" need only be a couple of sentences. An example might read, "The Happy Members Country Club has a 35% increase in members and a 45% increase in play in the past five years. New equipment to help make the course playable sooner with less player interference has paid dividends towards an overall increase in golf membership and better maintained course. This new equipment purchased in 2012 needs to be stored and maintained properly to ensure its long life; a new maintenance facility will house all equipment. In addition an intern housing facility will save the club labor expenses and attract the brightest minds studying to be golf course superintendents. These additions will elevate Happy Members country to truly the best club in the metro area.”

Later in the capital campaign process, the case will serve as the basis for a "case statement," which is a handsome document designed to convince donors to make significant contributions to your campaign.

Step 2: Locate a Site, Prepare Architectural Plans and Draft a Campaign Budget

Once you have determined that you do indeed have a saleable "case" for the campaign, the next step is to develop conceptual architectural plans. If your capital improvements will occur on your present site, you still need to prepare these plans. Donors will not buy "a pig in a poke;" they will insist on knowing what the improvements will be.

Do not fall victim to the assumption that, because you can make the case for the importance of the improvements, donors will fall in line whether you have the architectural plans or not. For example, it is one thing to demonstrate that your club has added play and membership because of course improvements. It is something else entirely to show donors that you have a new maintenance facility in mind, and that you have detailed architectural plans and a drawing of the new facility in hand.

Step 3: Determine the Financial and Organizational Feasibility of Proceeding with the Campaign

You are now ready to conduct a feasibility study to determine whether to go forward with the campaign. Some companies hire consulting firms to conduct feasibility studies, though there are certainly instances in which the study has been done by a staff person familiar with a member that will act as a flag bearer. The principal value of hiring a firm is that the folks who are interviewed for the study will often be more comfortable and forthright in talking with an "objective third party" than with a staff member.

The typical feasibility study involves 30 to 40 interviews of current and past board members, current club staff, committee members and a cross-section of members at large from differing age groups and membership categories." The person leading the study will also conduct formal research on those focus groups that are the "best bets" to make the largest impact to the campaign.

 The purpose of the interviews is five-fold:

• To determine how your organization is viewed in the eyes of supportive members;

• To determine whether your club understands the importance of the proposed capital improvements with regard to member service, other capital investments and overall staff safety;

• To determine whether you have access to financial resources sufficient to reach your campaign goal;

• To "light a fire" under prospective membership categories by inviting their input about your proposed campaign;

• To assess your organizational infrastructure and its ability to handle all the particulars of a capital campaign, as well as membership volunteers and committee member’s capacity to solicit contributions.

Feasibility study "passing grade" means that your membership appreciates the work of you and your golf maintenance team, understands the value of the proposed capital improvements, and has the financial resources to put the campaign over the top, and that your organizational infrastructure is sufficient to handle the rigors of a capital campaign. An example would be, "In preparing the feasibility study for the proposed new Golf Course Maintenance Facility, McMahon Group interviewed 38 men and women, including past and present board and current staff members as well as current membership in the equity class. We also identified the golf committee and green committee members that we believe would be interested in making additional funds available through an annual benefit golf tournament. It is our considered opinion that the Happy Member Country Club can indeed support the $1.7 million that it will require to build the new golf maintenance facility through individual member pledge, the annual golf tournament and a slight capital dues increase."

Step 4: Assemble a Capital Campaign Committee

Assuming that your board of directors has concurred with the feasibility study recommendation to proceed, the next step is to put together a well-connected, hard-working campaign committee. The committee should include members of your board, appropriate staff, and other volunteer members who care about your golf maintenance operation, understand the importance of the campaign and have the time and willingness to see the campaign to a successful conclusion. Don't worry about having too many people serving on the committee, but do make sure that everyone who is invited to join is committed.

The chair of the campaign committee should not be someone who is currently a board or green committee member. Rather, the chair should be a person of means who is comfortable both serving as the "point person" for the campaign (e.g. - addressing the membership at gatherings after golf, in the club at special events and on the course, on behalf of the campaign) and soliciting significant contributions from member colleagues and friends. The committee is responsible for overseeing the entire campaign. It is common to break the full committee into subcommittees to handle much of the campaign detail work.

The full committee should meet every two or three months for the duration of the campaign; the subcommittees should meet as appropriate, though it’s advisable to encourage regularly scheduled meetings.

Step 5: Plot Your Fundraising Course

Capital campaigns may depend on as many sources of funds: additional capital dues, direct donations from members, tournament proceeds, etc. The capital campaign committee must decide early in the campaign whether or not to include a capital dues proponent in the funding scheme. In either case, the committee must review the sources of funds above and determine which offer the most significant opportunities.

A word of advice: most private club capital campaigns depend more on capital dues increases than individual gifts for funding. The determination of people of means who are close to the campaign to “bear the flag” is the key to the huge majority of successful private club campaigns.

All fundraising campaigns have three phases: research, implementation and follow-up. It is commonly accepted that the most important is research. When pursuing a contribution from a membership, your club must conduct research to amass all relevant information. Research is the responsibility of the campaign consultant or staff.

At the beginning implantation stage with reference to modest individual donors, it is recommended that possibly the green committee conduct a campaign via mail, e-mail or telephone to solicit smaller gifts to begin the research stage. These gifts are valuable in two ways: they are campaign revenue and they are "good advertising" in the effort to secure a capital dues increases. It is powerful evidence of membership and committee support for your capital campaign to demonstrate that, say, 100 people responded to your direct mail effort with an average gift of $250. This may represent only a fraction of your campaign goal, but it will show other donors that the membership "means business" about the campaign.

Step 6: Prepare a Campaign Case Statement

If your campaign is to succeed, you must prepare a handsome document that communicates the case for the campaign. The case statement contains four elements:

a. A description of your maintenance team and committee members, including important past accomplishments and plans for the next three years.

b. Architectural plans and a drawing of the completed/renovated facility.

c. An explanation of how services to your members will be improved as a result of the capital improvements.

d. Information on how people can make individual contributions, what capital dues might become and the individual and group recognition opportunities that await them.

One of the most noxious myths in the private club world is "If our written collateral looks too good, members will think we're spending too much money on these materials and not enough on membership programs." If you are to make headway with your capital campaign, you must convince all members that your organization is a serious about this capital plan. Nothing communicates this seriousness like a case statement on high-quality paper that boasts attractive photographs and imaginative design. Scrimping on the case statement is a classic case of "penny-wise, pound-foolish."

With regard to recognition opportunities, capital campaigns provide a marvelous opportunity to honor donors by naming buildings, rooms, even golf features after them or their group. Do not take this lightly: some donors will be at least as interested in having their names emblazoned in a handsome plaque as they will be in supporting your worthy cause. Give donor recognition the time and imagination it deserves.

Step 7: Ask Campaign Committee Members for Their Gifts; Train Them in Major Gift Solicitation and Schedule Meetings with Major Gift Prospects

The "engine" of most capital campaigns is major individual gifts. Capital campaigns should be "front-loaded;" that is, you will succeed if you get an impressive number of large donations early in the campaign. Also, more modest individual donors-solicited by mail or e-mail-will make contributions once they see that their "big brothers and sisters" have made large gifts.

The capital campaign committee must therefore hold a brainstorming session to locate those men and women who might make major gifts. Categories of prospective donors include:

• People who have given to your organization previously and who have the capacity to make larger gifts;

• Member friends, and colleagues of committee members;

• Vendors to the organization;

Remember: "Charity begins at home." Prior to soliciting major individual gifts, each member of the capital campaign committee must make a capacity gift. Obviously, "capacity" means different things to different people: for some folks, $500 is a stretch, while others can comfortably give $10,000. The chair of the committee must visit or telephone each committee member and ask for a donation. The more the committee gives, the easier it will be to convince other donors to make sizeable contributions. A corollary: be sure to recruit people to the capital campaign committee who have the wherewithal to make significant gifts. We don't expect that everyone on the committee will be wealthy, but the more money that can be generated by the committee itself the better.

It cannot emphasize too strongly the importance of training committee members in the art and science of major gift solicitation. It would be foolhardy simply to send committee members out on major gift "asks" without training them first. Capital campaign committee members must focus on four things in their preliminary training:

• Vitally important fundraising concepts, including "People give money to people;" "fundraising is done from the donor's perspective, not the applicant's;" and "success breeds success." These concepts provide the theoretical underpinning for the balance of the training;

• Exercises to help committee members overcome their fears of fundraising and to help them deal with the criticisms and concerns that may be voiced by prospective donors;

• Specific instruction in how to make the "ask;"

• A role-playing exercise to give committee members a concrete sense of how it feels to make these solicitations.

Once the training is over, committee members must get on the phone or on e-mail to schedule meetings with prospective donor members. The committee chair has an important role in "nudging" committee members to make these calls.

Step 8: Hold a Kick-Off Event and Solicit Modest Individual Donations

Once you've raised approximately 15% of your capital campaign goal, it's time to move from "the quiet phase" to "the public phase." It is recommended that you hold a splashy kick-off event to announce to the world that you have exciting plans to erect a new maintenance building or renovate an existing one. You may wish to have the event at the building site; the upside is that members can see exactly what you need to replace and what you have in mind. If, however, the site is too dirty, dangerous or otherwise undesirable, there is nothing wrong with holding the event at the club, or even at the home of a board member or major donor.

The reason to hold a kick-off event is not to raise money on the spot, but to give your campaign a broad member profile. It is therefore imperative that you begin to make notice through the clubs newsletter and website. Be certain to have copies of your case statement handy. You certainly should have a formal program, but keep it short. Likely presenters include your board president, golf professional, club manager and architect or planner. Make sure, too, that you display detained conceptual plans, as well as a drawing and perhaps even several views of an artist’s rendering of the completed facility.

Following the event, begin to solicit modest individual gifts via direct mail, e-mail or telephone. While these gifts will not be large, they have great advertising value. Major donors are impressed when they see that other members have "stepped up" and made contributions to your campaign. This will smooth the way in securing those major gifts.

Step 9: Capital Dues Increase

Now that you have acquired seed money and proved to the membership at large the merits of your project; introduce a monthly capital dues increase. A polling of the membership to acquire an amount that would be likely acceptable would be wise prior to the formal vote to increase capital dues.

If you have raised $150,000 in steps 1 through 8 and the total project cost is $1.5 million you will need to secure a commercial loan for $1.35 million, these are the costs:

• Assume a 15 year note for $1.35 million;

• 350 dues paying members;

• 5.5% interest rate;

• $31.52 per month dues increase would fund the loan.

With capital projects that have a direct impact on increasing the value of the club’s property often times other member categories are ask to contribute a small percentage. Senior and junior members may add a 5% capital dues increase which would have a positive impact on a full member dues increase.

Other fund raising ideas are ongoing annual charity tournaments can also have an impact on funds needed. Some clubs use a check-off system on golf cart rentals and guest fees.

Step 10: Celebrate and Acknowledge Your Donors

Once you've successfully completed your campaign-on time and in full, we assume!-bring capital campaign committee members, donors, and other "organizational intimates" together at the site to party the night away. Be sure to have a short formal program in which you thank everyone who was instrumental to the campaign's success. Remember: today's capital campaign donor is tomorrow's annual fund supporter, so view this as a link in a long chain.

There are many more moving parts to the process than described above. But seeing a new irrigation project or maintenance building completed is the goal. These hard sell capital projects may take years to complete but they all begin somewhere, it just might have to start with you.