How to Develop a Rough Budget for Your Nonprofit’s Capital Campaign - dummies

How to Develop a Rough Budget for Your Nonprofit’s Capital Campaign

By Stan Hutton, Frances Phillips

Before you test your project to find out whether it’s feasible, you need assistance figuring out what it will cost. A common mistake nonprofit organizations make is forgetting that raising money costs money. They need to dedicate staff time and invest in marketing materials and events. Often they hire outside consultants or new fundraising staff to assist them.

For example, if you want revenues from an endowment to cover five $10,000 scholarships, you need to raise at least $1 million. Your board may set a different policy, but most nonprofit organizations figure they can expect to earn 5 percent on their endowments and spend at that rate each year without depleting the money they’ve put aside.

At times when interest rates are very low, the board may decide to spend a smaller percentage earned on the endowment, which requires you to increase your fundraising goal, but we’re going to stick with the $1 million goal for this example. If you estimate that meeting that goal will take you a year and a half, you may want to budget for

  • A skilled fundraising consultant who will spend an average of ten hours per week on your project

  • Printed materials and a project web page describing your organization and the fundraising campaign

  • Funds to cover the cost of meeting with prospective donors — travel and meals

  • Money to invest in recognizing and thanking donors, including a celebratory event at the culmination of the campaign

Budgeting for building projects is complex. If you identify a plot of land or an existing building you want to renovate, you need to begin with rough estimates and develop a specific budget later — after you secure architectural drawings, construction permits from your city or county, and bids from contractors.

As you begin developing a budget, find out about the construction rules you need to follow. A local architect or city appraiser/inspector should be able to tell you what enhancements you’re required to include in your building.

For example, the Americans with Disabilities Act (ADA) establishes an important set of requirements. Buildings for public use must offer ramps and elevators for wheelchair users; appropriately placed plumbing, railings, and equipment; and large-print signs or audible signals. You may think to budget for the obvious, more-visible modifications that are needed, but an experienced professional can point out more subtle requirements that you may overlook.

Just because a building is currently in use doesn’t mean you can move right in and begin operating your programs there. Building codes are closely tied to the building’s function. Rules for classrooms, for example, sometimes change according to the age of the children. And rooms in which large numbers of people may gather are likely to have stricter safety requirements than those rooms used by individuals as offices.

Building codes often change over time, so whenever a building changes hands or its use changes, it must then comply with the most recent requirements.