Understanding Endowment and Capital Campaigns

Updated: Sep 26, 2020

Charity organizations do not generate revenue by conventional methods as they usually do not generate marketable products or services. Here the revenue is generated by putting out ads and marketing for donations to the said organization and by applying for revenue fro the government. For a charity organization the majority of revenue comes usually from donations. Hence it is important to understand how donations work and what sort of campaigns can be undertaken to generate funds for organization. There are mainly two types of fundraising campaigns. Charity organizations and NGOs raise funds for their operational and administrative expenses through what are known as capital campaigns and endowment campaigns.

Capital Campaigns

A capital campaign raises money to cover the cost of capital assets that cannot and should not be part of a non-profit organization’s annual operating budget. This is a campaign designed to raise funds for a very urgent cause on behalf of the organization. This may be meet an immediate need such as repairs for the building in which the organization is run, or upgrades to the existing office space to meet new building guidelines. It may also be used to upgrade equipment within an organization which is seen as essential for the organization to deliver consistent quality of services. Most of the time capital campaigns are designed to meet tangible needs of a charity organization which can be measured clearly in terms of cost and implications of investing in the same.

A capital campaign is most effective when associated with an endowment campaign leading to a back and forth funding dynamics feeding each other. The goal of a capital campaign is not just the capital expense but also the potential that can be raised with respect to the fund.

Such a campaign will have fixed payment schedule and waypoints for cash-in hand required to be made against a capita asset that is being acquired. Construction of a building is a prime example for this.

In cases where the capital asset is acquired prior to projected completion date, the prospects are not informed of the completion, should they think that their money is any less needed at this point.

For such funds, even though it is not advisable to seek deferred gifts actively, it is wise to accept them as they come, so that they can be added to associated endowment campaigns. The income generated in the future by such gits may be sufficient to cover operating expenses for future capital asset acquisitions.

It is essential to credit donors with market value credits so that the donors feel their contributions are highly valued.