I’ve been getting quite a few inquiries lately about capital campaigns. While the economy hasn’t completely recovered, improving conditions have encouraged organizations to think about moving ahead on capital fund drives.

What is interesting about the questions I’ve been getting around such campaigns and how they are structured. People are asking what foundations, and corporate giving programs, want to see raised before they will get involved.

In short, many of these inquiries come with the hope that institutional donors, foundations and corporate giving programs might fill the gap created by a difficult individual-giving environment.

While I understand this hope, this rarely happens. One reason is that the same factors that produce a lull in individual giving also affect foundation and corporate funding sources. The economic upheavals of the past few years are a prime example of such factors.

The basic fact is that campaigns depend upon constituencies. Organizations have to look at how they generate their annual operating revenues and use that information to guide their capital efforts. For many organizations this means that individual donors provide the core of a capital campaign, in the number of donors and the dollar impact.

An extreme example of this hope to rely upon foundation support for a capital campaign is typified by a phone call I’ve handled on a few occasions over the years. From time to time people have called me to ask if they can apply for a grant to pay for a capital campaign feasibility study. My usual answer is that if your organization needs a grant to pay for a capital campaign feasibility study you probably don’t have the capacity to raise the money you’d like to raise.

There are times when individual giving is not the key to a successful project, which leads me to mention that we need to be careful about mixing terms and meanings. Your capital project, and the resources it takes to accomplish that project, is not always the same as your capital campaign fund raising goal. That doesn’t invalidate what I’ve said before; indeed, it clarifies it.

Here’s an example. A major youth serving organization receives 85% of its budget from state contracts. These are payments for services the agency provides, not grants. The remaining 15% of the operating budget comes in from various grants, including government, foundations, corporations, and some individual giving.

The group wants to buy a facility to replace aging space that it now rents. What constituency is going to contribute to build that new building?

Often groups such as this do not have the fund raising experience or constituency to run a major capital campaign. Another strategy is for the organization to approach its major funder, the state, for an agreement to allow the organization to convert its rent payments into mortgage payments. That revenue stream, which can be documented, can leverage a loan.

The gap between the actual cost of the project and the loan amount becomes the focus of a capital campaign. That’s were you look at those donors who provide that 15% you raise each year.

While the project budget is much larger, the fund raising campaign focuses on a smaller target that the organization can probably handle given its experience and connections in the community. The key lesson is that the project is built on the resources provided by the key constituent: the state government and its payments for service.

The other lesson is understanding that before you move on to other funders, you need to have your key building blocks in place. Funders are always faced with more opportunities than they can fund; so those projects that leverage other assets already in place make the strongest case for support.