Season 2: Episode 12: How Capital Campaigns Can Help Your Nonprofit Achieve Its Mission

taradavis@harriscpas.com

In this episode, we welcome our special guests, Erin Anderson, Executive Director of the Idaho Botanical Garden, and Cheryl Guiddy, Nonprofit Industry Lead at Harris. Learn how successful capital campaigns are helping nonprofits meet their future goals, and the importance of an organized structured plan, which often begins years in advance. Cheryl brings her insight into crucial accounting considerations, and Erin also shares the exciting future expansion plans for the Idaho Botanical Garden.

Show Notes:

  • 00:35 Introduction and Guest Introductions
  • 01:46 Overview of capital campaign and why nonprofits use them
  • 03:00 Idaho Botanical Garden’s impressive plans for expansion
  • 09:37 Capital campaign phases
  • 11:40 Financial accountability and transparency
  • 17:45 How to help your board and staff understand the financial data coming in
  • 20:43 Best piece of advice for nonprofits looking to do a capital campaign

Links:

Idaho Botanical Garden Website

Erin Anderson’s LinkedIn

Transcript

 Thank you for joining us today. I'm Josh Tyree, president at Harris CPAs, and I'm really excited about the topic we have today about capital campaigns.

We've got Cheryl Guidi who leads our nonprofit industry at Harris joining us and Erin Anderson, the CEO at the Idaho Botanical Gardens. Maybe we could start by just you guys giving a little background. Thank you.

Yeah, for sure. As mentioned, I'm Erin Anderson. I'm the executive director at the Idaho Botanical Garden, and I have been at the garden for just about eight years now.

I've worked in the nonprofit industry for over 15 years, so this is my second director role. Before that, I grew up in the event planning and development. And I'm also an active volunteer in our community. So I like to sit on boards and participate in those types of activities just to give back.

Thank you for being here.

Cheryl?

Yeah, I've worked in the non profit industry probably my entire career. And so I've done assurance, tax, consulting, internal controls. I also sit on several boards, so I can see nonprofits from that side well. And just happy to be here.

Oh, thank you. I know both Cheryl and I are CPAs, but we get pulled into the capital campaigns a lot over all the years and they're always really exciting time, right?

Everyone's very excited to go through it. It's a ton of work, but it'll be interesting to go through this topic today , . So just to get us going here. What is capital campaign? just maybe Aaron, you can kind of just give us an overview of capital campaigns and why nonprofits use them and maybe different sizes.

Yeah, that's a great question. Typically, capital campaigns are a fundraising campaign with the goal to raise a significant amount of money, and that can be a significant amount of money for your organization. So, in my very first capital campaign that I conducted, it was for 250, 000.

Right now, the Idaho Botanical Garden is at the very beginning stages of a 15 million capital campaign. And a lot of the times it's for permanent infrastructure, bricks and mortar. Sometimes it's for an endowment fund possibly raising funds so that you can, you know, look at that return on investment to help just with the day to day.

operations of the organization. And sometimes I've even seen organizations maybe looking at moving into a new direction and doing some sort of a programmatic campaign. That's a lot more rare, I think, in my experience. So typically it's, we need to expand, we need a building, we need some things to help us, Accomplish our mission in a more effective or efficient way or meet the needs of a community.

So you just mentioned botanical gardens is starting a capital campaign. Maybe you give us a little overview of what you guys are starting to for or what you're looking for.

Yeah, it's a really exciting time for the botanical garden. During the pandemic we had an opportunity to evaluate what was next because we had a little bit more time, not a whole lot more.

We were still operating and running a botanical garden, but we had a little bit more time to be reflective. Typically for botanical gardens across the United States and across the world, we operate on what's called a master plan and a master plan is essentially it's a map, but it's also a programmatic roadmap to our future.

What is it that we're trying to accomplish for our community? But when you look at it, it looks very much like a physical map of what's to come. And the botanical garden has. total of 32 acres of land that we lease from the state of Idaho. Right now, 15 of those acres are cultivated and developed.

We have 10 acres that are at the very front of our garden as you're driving in through the parking area. And at the very back, we have eight acres that go up into the Boise foothills. So during the pandemic when people were really needing outdoor green space more when people were wanting to come together in spaces and nature that helped them feel safe and secure.

And as we were looking at what's next for the garden, we really recognized that we needed to expand. And so we started working on our master plan and met with several different community groups, key stakeholders, our neighbors, past board members, present board members. Other cultural arts groups in their community, other nonprofit groups in our community to determine what is it that we need to do and how can we help meet those needs for the community.

So we came up with a really amazing plan and with partnerships from several different nonprofit sectors. We're really excited and it's really innovative the way that we've decided to partner. So what we're doing is that first 10 acres, as you come into the botanical garden, we have 10 acres of vacant space there.

We are going to be building a 22, 000 square foot visitor center. That visitor center will include new indoor education classroom space. It'll include administrative offices, a central visitor area and meeting area. And a large event space, that large event space will also be the new home to the Boise Farmers Market.

That's the market that's located on Shoreline Drive. They have no permanent location to date. They pop up in parking areas and sometimes that's challenging for them to secure those lease agreements from year to year. So we will be the new home for the Boise Farmers Market. And in addition to that, within that event space, we're going to be building a space that's called a food hub.

And a food hub is essentially, it's a network of individuals, but it's also a physical space. And what happens in that space is we will be working with, through the Boise Farmers Market farmers as they come to the market on a, you know, weekly basis every Saturday. And maybe they have a excess of carrots that they were unable to sell through the market or onions or whatever that may be.

They'll be able to minimally process and package that produce and then they can store it on site through some of our longterm and short term storage. In partnership also with another nonprofit organization called City of Good, we're going to work to do two different things with that food. That.

Produce will either go into the general kind of food landscape, whether that's through restaurants or hospitals or school systems, and that will be sold for the benefit of the farmers who participate in the market. But the city of good will also Pull from that food supply to be able to produce food that goes out to low income families in our community.

And so it's a really great opportunity for us to keep food local which is more environmentally friendly and creates more food security in our community, but also helps us this great opportunity for a small business incubator for farmers here in our community. And then also he keeps feeding low income families.

So that's the indoor space, which that's like so much, and there's a lot going on there, but we're also building a new permanent parking garden is what we call it. So when people arrive to the Idaho botanical garden, they have a sense of arrival. Right now you arrive into a dirt parking lot. It's a little challenging to find the entrance.

And then when you do find the entrance, you walk all the way across outlaw field into the garden. And Tell you what, if it's 90 degrees outside, you lose people along the way, it gets a little bit hot. So we'll have a new parking garden that really provides this amazing experience. And then we'll have four and a half new acres of garden space.

Those gardens will include an outdoor, Amphitheater, small outdoor amphitheater for smaller groups, nothing like our outlaw field concerts. But this outdoor amphitheater is being built in partnership with a lot of our cultural arts groups in mind so that the ballet or Boise contemporary theater or the opera or The Boise Phil can come and perform in an outdoor space.

We'll also have a scholar garden, which is essentially an education based garden. We will have a vegetable garden close to the building. We'll have an indoor cafe. And we want people to really, between the Boise Farmer's Market and the cafe, be able to draw that connection between where your food comes from and why it matters.

We'll have a horticulture therapy garden, which is a really exciting place where we will be working with different groups of at risk adults and children throughout our community. And in that space we'll be working on programming and that could be mental health programming, occupational therapy, or even physical therapy.

And then lastly, we'll have a nationally accredited and recognized arboretum. So Boise, we don't have a arboretum. We are the city of trees. We feel like it's very important to educate people on what it is that we are, why trees are so important here in our community. So it's a lot. It's very challenging for me to try and put that into like a, you know, one minute elevator speech, because there's a lot of things going on.

But I think the most important thing for us is we're really working to partner with as many. Different nonprofits in our community and groups so that we can create a space that's really necessary and needed

as amazing as so much. I assume it's going to take a few years as you go through this process.

, it's phenomenal what you guys are doing. maybe we can start talking about what is going to make the campaign successful, , what pieces of a capital campaign that you and Cheryl look at in the past campaigns you've done. And then for your current one you're undertaking what are different pieces that will make it successful?

Yeah. I'll start, Cheryl, and then you can tell me what we're missing. We can always there's always room for improvement. For us, the way that we really started working through this process was we first started off after we'd created and finalized our master plan, we did a feasibility study working with a local consulting company to determine what's the amount of funding that we can raise here in our community based on our current.

Donor database the individuals who are currently supporting the garden and who else is out there that specifically has interest in these areas that we were working towards once we determine what that number was, we then started building our campaign cabinets or leadership team of individuals who are going to help us accomplish this big, big goal.

Fundraising goal. And then we've launched into our silent phase. A lot of nonprofits called the silent phase, but really it's the major donor phase because essentially what our goal is, is to raise about 85 to 90 percent of the funds for our entire campaign and project before we go out to the public.

And then we'll open this out to a public or a community phase where we're trying to raise that last one or one and a half million dollars. The reason we do that is because when you talk about a 15 million capital campaign, that feels like a lot of money to a lot of people because it is,

but when we go out to the community and say, Hey, we need to raise 15 million, but we just have 1 million left. People really feel that. Every dollar that they can contribute matters. So a $10 donation makes a big difference when you have a $1 million, you know, close that gap goal versus a $15 million goal.

So that's what our process has been. But Cheryl, I'm sure you have participated in so many other campaigns, and I would love to hear what other, opportunities you have or what you've seen work well for nonprofit organizations.

So, from my perspective, we look at it from the dollars and the cents and making sure that the money the organizations are raising are accounted for properly.

So, of course, we always like to have organizations have good current financials to give to their, especially large donors , to see where you've been and where you might be going. And then whenever you're putting together all of your marketing materials and, , brochures and things to go you know, out and solicit donations, making sure that what you're soliciting for is how you're going to then account for your donations inside the organization as you get the pledges

so restricted versus unrestricted. And most capital campaigns tend to be restricted because you're raising for a specific project or specific building, like in your case, lots of different things at the gardens.

I was going to say, I think that's a really good point, having all the financials put together.

And then Aaron, you highlighted having leadership. , I've been on personally a couple capital campaigns and leadership not only on the capital campaign committee makes such a huge difference, but then also leadership at the organization and having really good financial information, good leadership.

That's who people are donating to, right? There's the cause, but they want to make sure that the cause actually happens, right? That the farmers come in your particular case and the gardens supported, and we could build a garden, but then if you're not going to maintain it for the future, right? So they've got to buy into, all that infrastructure being there.

it's really important, especially in the quiet phase when you're raising pretty large dollars

of money. Absolutely. I think that's. One of the major questions that we have as we're reaching out to donors and foundations is, who is it that's helping to support this? We're in process right now of finalizing a five year business plan, so we know what we need to do in the next two years, and once the new facility opens, we know what it's going to cost to sustainably operate it, what kind of revenue we're going to be generating from some of those earned revenue components of our plan, And how we can continue to make that successful.

And I think part of that comes down to the leadership of our team, our finance director Nathan has been really digging in working with you all to understand how is it that we make sure to properly. account for the funds that are coming in, things like, when do you recognize a pledge? Is it from the moment that your pledge agreement is signed, or is it from the first check that you receive?

And you don't think through some of these questions, you know, when you're in the very initial stages, but we've really had an opportunity to, as I mentioned, dig in with Harris and try to get that sorted out. And I'm glad that we have, because we have a lot of staff Savvy donors in our community who they donate to capital campaigns often and because we've done the work and really researched and worked with you all on how can we ensure that this capital campaign that we are doing all the things by the book as we go through, you know, and prepare for every single audit that we go through as we're, you know, Raising these funds.

It's really important. It's important to be thinking five steps ahead. Because it has a significant impact in the way that we report that from year to year, but also in our fundraising efforts. So we know when we get that million dollar commitment and that letter is signed and we have the agreement in place, that's when we count that towards our goal, not a minute before.

And those are things that we've started learning along the way based on really great recommendations.

Yeah, I think that goes to accountability. You're right. And transparency as you go through the process that goes a long way. I don't know, Cheryl, from an accounting standpoint or anything that you've seen in the past that have helped organizations kind of express the capital campaign and the accountability of the financial aspect of it.

I think, like you mentioned, the pledges, making sure you have an actual, sign commitment. Not just a, Oh, yeah, I'll give you some money is hugely important, knowing that. When you're accounting for it, that you're not going to collect all of them, just things will happen, having an appropriate allowance against it or a discount if their pledges are going to be coming in over the next five years, instead of just all at once making sure that you're accounting for those things will help you present the financial position correctly on your annual financials.

And you're right, then have your true need that you are trying to raise. accurately presented in those financials is hugely important.

Something else just from the accounting side that we've really been thinking through over the past almost eight years, since I've been at the garden is because of the size of our organization, sometimes we've talked about, do we do a full audit?

Do we do our 990? Like, what are those year end financials that we need to report? As we were moving into the capital campaign and getting closer, that was no longer a question for us. So often, smaller non profit organizations can not do a full audit and there's an expense to it. to do a full audit. And it's quite substantial.

But what we knew is that a lot of these foundations and individual donors were going to require that from us. And so we wanted to ensure that we had several years of fully audited financial statements leading into this capital campaign. And it makes it a lot easier and less of a heavy lift for us as an organization.

Because we've been doing that for the, well, since I've been at the garden and even before then, but it makes it a lot easier, not only for our team to pull together that documentation, but to give a really great just overview of our financials and our financial situation. And it makes it a lot easier every year that we go through the process.

And so that's been really nice because there are several different grants that we've applied for during this process and our capital campaign. That that's been a requirement. And had we not doing that, been doing that or understanding that was necessary leading up to this campaign, we would have been challenged to be able to apply for some of those funds.

And also we've been scrambling to try and get some things done, you know, outside of that. So that's been really great advice too.

When you go into a capital campaign, you're going to have these massive numbers coming through your financials, right? Big pledges and it just really. The overall financial picture of the organization, but then it's restricted.

And sometimes that requires a lot of education for your board. Yes, to understand these dramatic changes that are going to have maybe either one of you could talk about how you went through that education process and prepared your board members , you know, not all of them are accountants and CPAs, but kind of walk them through what they should see or what they should expect as they go through this process.

I know in the accounting side, especially with capital campaigns, the actual money you're raising as recognized as revenue, but then you're expending that for a capital asset, which is it ends up. Not going through your profit and loss. So you show these huge amounts of revenue on an annual basis.

And so sometimes that is difficult to get the board members to understand that the revenue is set aside for something other than just operations.

Yeah, we really worked with our board. To help them understand the difference from our operating budget versus our capital campaign and investment budget.

And it's something that we continue to have conversations about. We have a really. Fantastic finance committee and they're top of their field to, help us and to guide us because some of this is new for us and a lot of our board members and finance committee members have been through this large of a capital campaign in the past.

The other challenge that we have is how do we educate our staff and our team? Because that's a lot of where some of that. Challenge comes in in the full understanding and scope. So when we have, , hundreds of thousands or, you know, eventually millions of dollars coming into the capital campaign that we have to hold off on some investments, some staffing investments, some staff expansion, because we don't have those funds in our operating budget.

Sometimes the question is, well, why is all the money going to this thing? That's not even here. It's happening in the future where. We need two additional horticulturists now, or we need somebody to help with our visitor services now, not in two years, but right now. So that's been definitely a challenge that we like to be really open and transparent with on our team.

And we share our financials or full financials with our entire staff, just like we do with our board, but also with our entire staff every other month. And we help them understand this is what our goal is. This is where it falls on our financial statements. This is different than our general operating but it is, , it's an education.

And quite frankly, when you're not in this mindset every day, like all of us are , it's a bigger leap to get there to fully understand that. But, I would recommend to any nonprofit, you know, board member or staff member who's going through this process that it's super important for the board to understand, but it's also incredibly important for your staff to understand.

Cause they're the ones who are affected day to day.

So looking back, I know you've done other capital campaigns and now you're embarking on a massive one. , what's the best advice you can give someone who's going to go through this process?

For us, it's been engaging with donors and doing it soon before you're even starting the capital campaign process.

At the garden, we've never had a significant capital campaign like this. And one of the challenges that we're having is we're really reintroducing some of our past donors and then introducing some brand new donors into the mission in the vision of the garden. And I think what's important for nonprofit organizations and for board members to understand and to know is that this work takes time.

And You really need to be doing the work on an annual basis in preparation for a capital campaign years and years in advance. You know, you don't determine we're going to have a capital campaign and then the floodgates are open and people are just begging to give you money. There needs to be long term relationships that have been established, that trust needs to be established.

We are a very trusted brand and name within our community, but there are still many members of our community who aren't of the full like depth and breadth of our programming. And so that's been something that we've been working to educate individuals on. So that's one area of recommendation that I would have.

. I was going to say, I think building into that is the trust is built by the leadership. To me, the people on the , capital campaign committee or cabinet or wherever you call it and how passionate they are, they can really spread it, but then the people at the organization like yourself, Aaron, and people buying into you and your leadership and your commitment it just makes a huge difference in the success of the capital campaign.

So making sure you have those people. on board and ready to go. Cause it is a lot of work. You're not going to get a lot of sleep for the next few years. That's

right. And the Treasure Valley is such a small, large community. And I think that trust goes a really long way here. And we have A lot of traditional values here and anything that gets done in the treasure Valley gets done through relationships and who do we know and who do we trust and who do we want to continue to work with?

And so I think that's important. It is our leadership cabinet. It's our board of directors. It's me, it's our leadership team that's on our staff and everybody collectively is really helping us get through this process and, help get us over the finish line.

Well, thank you, Cheryl and Aaron for coming on our podcast today.

We're it's capital campaigns are a very exciting time. There are a ton of work, but they're very exciting and there's a lot that goes into them. And like you said, Aaron, partnering with people, you know, your CPAs and your committees and everyone around it. Generally makes a successful capital campaign.

And so we enjoyed the conversation and thanks for joining us on our podcast.

Thank you so much. And I would be remiss if I didn't say, if you're really interested in helping the Idaho botanical garden grow, please get ahold of me. We're in the middle of a capital campaign and it's going to be a really exciting time to get involved.

The quiet face,

the quiet face. Okay.

Thanks, Aaron.

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