Owning a building can be a turning point in the life of a nonprofit. A building represents positive attributes: permanence, ownership, longevity, visibility, stability, status and achievement. You can control your destiny, make improvements, and expand when needed. You have an asset to leverage for future projects. No one can make you move.
Fundraising for a building is also a milestone. In addition to securing funds for annual operations, you will need to simultaneously raise funds for the building. Questions regarding strategy, leadership, and financing need to be addressed. A new building may require an expanded or new board, especially if your current board doesn’t have the experience, connections, and fundraising expertise required by a capital campaign.
The process of planning for a new building can be longer than anticipated. Knowing your organization’s needs is the first step. Creating consensus is the next. Then come discussions regarding location, and whether to purchase or renovate an existing building, or build a new one. Sooner or later the discussions – and decisions – will center around money.
There are fundraising questions to be answered such as: Where will the money come from? Will our current donors continue their annual support and make additional gifts for the building? Who will lead the campaign? How much money do we need to raise?
The fundraising goal should derive from your building and/or renovation plans. But how do you create a realistic goal? “It could be that a new building will create even more challenges than the ones the organization faces in its current location.” This observation was raised by Sam King, senior vice president and financial advisor at Pinnacle Financial Partners in Memphis during a recent conversation. An experienced banker, fundraiser, and nonprofit board member he has a list of questions for nonprofits to consider as they begin the process of planning for a capital campaign.
Here are a few: In addition to constructing the building, can you raise enough money to sustain the building? How will you cover increased utility and maintenance costs year-over-year? How will you fund improvements and repairs? If you take a mortgage, how will you service the debt? Can your organization qualify for a mortgage?
“Will a new building hurt your organization? Will you have a big building with no programming? Will a new building create problems greater than those you face now? If you intend on raising all the money first, how long will it take to have “cash in hand” – no pledges? And what happens if you don’t raise all the money that you need?”
King raises important questions based on years of experience. Take the time you need to make the right decisions. Ask others who have gone through the process to share their guidance. This is a big decision – make it a positive one.
Copyright 2015– Mel and Pearl Shaw
Mel and Pearl Shaw position nonprofits, colleges and universities for fundraising success. For help with your fundraising visit www.saadandshaw.com or call (901) 522-8727.