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  • Understanding the steps is more important than following them in this specific order. Be sure to point out that steps 3A & 3B and 5A & 5B happen concurrently.
  • Emphasize, this is an important step! Might want to mention: To watch out for plans to “lease” extra space. Many people think that this will be easy and it rarely works out. Don’t make this a key part of your business plan.
  • If you are planning a high performance building. PLAN it from the beginning. LEED is the nationally recognized voluntary rating system for green or high performance building standards. It stands for Leadership in Energy and Environmental Design. LEED is only one of many certification programs. LEED certified buildings normally increase the total project cost by 1.5% to 6%, depending on the building scope and LEED level. The cost results from extra administration/documentation, choice of materials/equipment and the certification itself. There are four LEED certification levels: basic certification, silver, gold, and platinum LEED, the last being the most expensive. The good news is that, as the materials used in LEED buildings are more widely utilized, the price is dropping. You can create a higher performance building without certification. The objective is to build a highly efficient building to save you costs over time and to use sustainable materials. However, having LEED certification does send a positive message to your constituents. It is an integrated process: if you invest in higher performance windows and utilize passive solar energy, you may spend less on HVAC equipment. In Colorado some professionals think that external changes work well versus internal. It is important to take location, climate and other factors into consideration. Some models work better for different geographic regions.
  • The existing plan may need to be updated to include the capital project The plan should be updated every 2-3 years
  • Emphasize, this is an important step! Can your organization raise additional funds above what you are doing now? If your organization is experiencing periodic deficits you should think twice about a capital campaign. You may need to delay the project until you can stabilize operations and build up your reserves. If you have a board member who is interested in providing services such as a contractor, architect or fundraising consultant they should resign from the board before bidding on the project.
  • Mention: If a person is providing pro bono services and is not performing satisfactorily, it is extremely difficult to terminate him/her!
  • Emphasize, this is an important step! In this process, it is VERY helpful to have a volunteer or board member who can provide rough cost estimates at different stages of the planning process, e.g. basic square footage costs, estimate on the conceptual plan, etc. It is easy to dream big, beyond your means.
  • Again, an experienced contractor can take a look at the conceptual plan and give you a ball park cost estimate, providing assurance that the design can be accomplished with what you think you can spend or raise.
  • Emphasize, this is an important step! There are many approaches – there is no one best approach for any given project. You should clearly understand the advantages and disadvantages of the one you choose. Design-Bid-Build process is the “traditional” method that predates WWII. It is architect driven. Some contractors jokingly refer to it as Design-Bid-Build-Litigate since the architectural plans are not vetted until after the Bid process. As a result, this usually results in more change orders, and more cost and, frequently, conflicts, e.g. litigation. Design-Build is often used for price-driven projects where the focus is on keeping the costs down. The architect or designer is a consultant to the contractor. Construction Management at Risk (CMR) or Construction Management General Contractor (CMGC) is where the architect/designer and construction manager are separate entities each hired by the owner. It is considered a balanced method where the Construction Manager is involved early and helps keep the architects plans grounded. The Construction Manager will hire the construction team and the project is usually bid as a Guaranteed Maximum Price (GMP) project.
  • Emphasize: Checking references and past experience. Also vet subcontractors if possible.
  • A schematic design provides more detail on the conceptual plan.
  • Not every type of funding source will be available to all organizations. It is important to do research and determine early on what is available to for your organization. Issues that come into play include: Your financial track record The size of your organization The type of organization you are… for example organizations that work with affordable housing or low income people will qualify for loans from Rocky Mountain Mutual Housing. Others will not qualify. Where you are located. Rural organization might qualify for assistance from the USDA Rural initiatives. The City and County of Denver often uses their block grants to help nonprofits with capital projects. Many construction firms will offer significant in-kind donations. However, in-kind donations are often time sensitive. They may depend on when you can actually start the project. For example, a one to two-year delay may result in changed circumstances for the contractor, making it difficult for them to provide the in-kind work.
  • Moves your project sooner Your capital campaign pledges aren’t going to be paid tomorrow Construction costs usually increase over time Borrowing money lets you start building now to avoid higher costs in the future Loans can be structured to allow pay-down as you receive pledge payments Preserves liquidity which is important to protect your organization’s financial health You can keep your cash to cover unforeseen or emergency expenses Contributions can be used to fund and endow rather than being spent on “bricks and sticks” Interest earned on cash is usually higher than tax-exempt loan interest Spreads the cost of your project over its useful life Allows you to build what you really need for your future rather than what you can afford now Rather than cutting your project’s scope to fit the limits of what you can raise in one capital campaign, spreads part of the costs out over time Allows you to include initial capital costs that yield operating savings, e.g., Green building features. BUT, YOU MUST BE ABLE TO CARRY OR MANAGE YOUR DEBT!
  • Click on Budget to review details of Hard and Soft costs. Be aware of unexpected expenses, such as port-a-pottie rentals, heat and electricity during construction, etc. Sometimes the contractor plans for this –but sometimes not. Point out contingencies on both hard and soft costs – might be from 5-15% of costs. Contingency budgets are different depending upon the type of building process you select. The Design-Bid-Build process often has more change orders and you should consider budgeting up to 15% of the project for contingencies. The Construction Manager at Risk tends to run closer to budget and you can plan on 5-7%.
  • Emphasize, this is an important step!
  • Click on Model to show what is included in a Financial Model All budgets are working documents that will increase/decrease as you make different design decisions. It will be an iterative process as you develop your project plans. The Sources and Uses budget is needed if you are going after financing. It details the source of the money and how it will be used so that lenders can verify that you are clearly accounting for all sources and not “double counting.”
  • Emphasize, this is an important step! Organized minutes that you can easily refer back to can reduce conflicts or disagreements between the owner and the contractor. Point out that many contractors will have project managers. These people work for the contractor. You want to have your own representative who can be on site watching out for your interests. This is not the place to try and cut corners and save money. This person can save you money and avoid grief in the long run.
  • These activities happen concurrently with project planning 3A
  • Typical costs can range from $10,000 to $40,000. Depending upon scope they can be lower or much higher. For example, will interviewing potential donors require extensive travel? Are your donors nationwide, statewide or local? The Feasibility Study can be a great opportunity to introduce the project to your best donors in a personal way.
  • Construction refers to much more than just the building. It should include the parking lot, landscaping and all soft and hard costs.
  • Emphasize, this is an important step! Great solicitors: are ambassadors for the organization are highly motivated are passionate supporters of the organization can easily talk with people are positive and unapologetic when done with a presentation or conversation, they make sure they have made a friend regardless of the results. They are friend-raisers as well as fundraisers! don’t give up. If a prospect declines, they are asked for advice and for possible suggestions of others who may be interested in the project.
  • Emphasize, this is an important step! Focus on what the donor’s dollars will do for you. How it will improve the program. Good case statements are short and compelling
  • Emphasize, this is an important step! Campaigns do not run themselves! You must be organized and stay on schedule – need good people and a task master.
  • Volunteers should be trained so they have confidence when asking others to consider contributing. It is helpful if the volunteers know the people they are soliciting –you don’t want the prospective donor to say “who?” when they are called for an appointment. The prospect should know about the project before they are asked for money. Ideally they should know and respect the solicitor. Were they approached during the feasibility study? What has their past giving been? Solicitors should know everything they can before approaching a donor for a gift or even informing them about the project. Major gift solicitation requires several contacts before the request is actually made.
  • Emphasize, this is an important step! Really STRESS HOW IMPORTANT THIS STEP IS. Must not be skipped over!
  • The Design Development is the basis for the construction documents.
  • It is very important to review the construction drawings carefully to make sure that the design is solid before final approval. For example, one building had windows so high the people sitting at desks inside could not see out the window, because the architect had concentrated on the geometry outside the building not the functionality inside the building! Staff should be involved enough in the project design process so that they can catch things like this.
  • It is important to understand the building process you are using and the advantages and disadvantages of the contract you choose. WE NEED TO DEFINE THESE CONTRACT TYPES See original document..
  • Runs concurrently with Project Design
  • Emphasize, this is an important step! Be sure to go over all steps. Each of these is very important. Examples: You might need extra clerical staff for the campaign Without good databases, fundraising can be frustrating Moves management insures that prospects are ready to be asked and more likely to give when they are seen by volunteers. Campaign communication needs to be clear to avoid problems. Volunteers need to be nurtured, trained and supported.
  • Emphasize, this is an important step!
  • Maintenance costs will not be significant for 7-10 years; thus, you have time to develop a solid plan (and to build up a reserve) for replacement and repair.

POWER POINT VERSION POWER POINT VERSION Presentation Transcript

  • EXECUTIVE SUMMARY Facility Expansion & Renovation: Planning for Capital Projects & Campaigns An Initiative of the 06/03/10 Facility Expansion & Renovation Planning for Capital Projects & Campaigns
  • From Dream to Reality…
    • Nonprofits that are considering facility expansion may ask, “How do we get from dream to reality?” This guide seeks to help them do just that, beginning with an assessment of the organization’s readiness, the development of a capital campaign, and ending with actual construction. The first and second pages, the “Table of Contents,” and “Overview,” provide a roadmap through the process. The Gates Family Foundation, which focuses on grants for capital projects in Colorado, developed the guide to encourage small and large nonprofits to plan earlier and thus avoid, as much as possible, all too common mistakes. Of course, every capital project brings unique challenges. One does not have to follow the sequence recommended or each of the guide’s steps; however, by understanding the outlined process, your team should have a better chance of completing its capital improvement with more success and less pain!
    • This PowerPoint can be downloaded from the web and is particularly useful to get familiar quickly with the entire process or to communicate it to your board and staff. If you print it, make sure to print it in black and white, not grayscale. A longer version in PDF format provides more detail with references and definitions; it makes an excellent desk reference for nonprofits engaged in facility expansion. Both are available on the foundation’s website ( www.gatesfamilyfoundation.org ). These two documents are a second edition of the original guide which has been used in workshops attended by over 400 Colorado nonprofits. The work of a talented review committee that represented many disciplines (page 60) was critical to the new edition. Suggestions for improvement are always welcomed at: [email_address] .
    •  
    • Tom Kaesemeyer
    • Executive Director
    • Gates Family Foundation
    • [email_address]
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns
  • 06/03/10 Table of Contents STEP 6. Construction STEP 4. Board Approval STEP 1. Needs & Options STEP 2. Org Readiness STEP 3A. Project Planning STEP 3B. Campaign Prep STEP 5A. Project Design STEP 5B. Capital Campaign Step 1. Needs & Options Step 2. Organizational Readiness Step 3A.Project Planning Step 3B. Campaign Preparation Step 4. Board Approval Step 5A. Project Design Step 5B. Capital Campaign Step 6. Construction 1.1 Understanding Capital Projects 6 2.1 Review Strategic Plan 10 3A.1 Develop a Facility Plan 17 3B.1 Consider a Feasibility Study 29 4.1 Answer Key Questions 35 5A.1 Start Design Development 37 5B.1 Est. Campaign Management 42 6.1 Celebrate Ground Breaking 48 1.2 Consider Key Issues 7 2.2 Assess Org. Capacity 11 3A.2 Create Conceptual Design 18 3B.2 Set a Campaign Goal & Budget 30 5A.2 Complete Construction 38 5B.2 Complete Silent Phase 43 6.2 Implement Project Management 49 1.3 Consider a High Performance Bldg 8 2.3 Form AD HOC Committees 12 3A.3 Select Building Process & Team 19 3B.3 Identify Campaign Leadership 31 5A.3 Solicit Bids & Contract for Construction 39 5B.3 Finalize Financing Plan 44 6.3 Plan for Donor Recognition & Facility Dedication 50 2.4 Budget for Planning 15 3A.4 Create a Schematic Design 21 3B.4 Prepare a Case for Support 32 5A.4 Review Budget & Scope 40 5B.4 Set Campaign Goal 45 6.4 Develop a Maintenance & Facility Plan 51 3A.5 Determine Financing Plan 22 3B.5 Develop a Campaign Plan 33 5B.5 Launch Public Phase of Campaign 46 3A.6 Develop an Est. Project Budget 24 3B.6 Begin Major Gift Solicitation 34 3A.7 Estimate Impact on Operating Budget 25 3A.8 Create Financial Model 26 Resources 52 Type of Contracts 54 Sample Loan Terms 56 Gift Models 58 3A.9 Establish a Project Mgt System 27 Estimated Project Budget Costs 53 Financial Model Outline 55 Case Statement Outline 57 Campaign Schedule 59
  • 06/03/10 OVERVIEW
    • STEP 1. DETERMINE NEEDS & OPTIONS
    • Understanding Capital Projects
    • Consider Key Issues
    • Consider a High Performance Building
    • STEP 2. ORGANIZATIONAL READINESS
    • Review Strategic Plan
    • Assess Organizational Capacity
    • Form AD HOC Committees
    • Budget for Planning
    (3A & 3B Happen Concurrently)
    • STEP 3A. PROJECT PLANNING
    • Develop a Facility Plan
    • Create a Conceptual Design
    • Select a Building Process & a Project Team
    • Create a Schematic Design
    • Determine Financing Plan
    • Develop an Estimated Project Budget
    • Estimate Impact on Operating Budget
    • Create a Financial Model
    • Establish a Project Management System
    • STEP 3B. CAMPAIGN PLANNING
    • Consider a Feasibility Study
    • Set Campaign Goal & Budget
    • Identify Campaign Leadership
    • Prepare a Case for Support
    • Develop a Campaign Plan
    • Begin Major Gift Solicitation
    • STEP 4. BOARD APPROVAL OF CAMPAIGN & PROJECT
    • Answer Key Questions
    (5A & 5B Happen Concurrently)
    • STEP 5A. PROJECT DESIGN
    • Start Design Development (DD) Phase
    • Complete Construction Documents (CD)
    • Solicit Bids & Contract for Construction
    • Review Budget & Project Scope
    • STEP 5B. CAPITAL CAMPAIGN
    • Establish Campaign Management
    • Continue Silent or Major Gift Phase
    • Finalize Financing Plan
    • Set Final Campaign Goal
    • Launch Public Phase of Campaign
    • STEP 6. CONSTRUCTION
    • Celebrate Ground Breaking
    • Implement Project Management
    • Plan for Donor Recognition & Facility Dedication
    • Develop a Long-range Maintenance & Facility Plan
  • Step 1. Determine Needs & Options
    • 1.1. Understanding Capital Projects
    • 1.2. Key Issues to Consider Before Getting Started
    • 1.3. Consider a High Performance Building
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Overview
    • 1.1. Understanding Capital Projects
    • They improve an organization’s facility or infrastructure
      • Consist of new construction, expansion, lease, renovation, or replacement of an existing facility
      • Usually have:
        • A significant cost &
        • A useful life of at least 10 years
      • Should enhance the program and the mission of an organization
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 1. Determine Needs & Options Overview
    • 1.2. Consider Key Issues before Getting Started
      • Quantify your space needs. Identify real needs versus “wants” or non-essentials.” Consider staff, volunteer, constituent, and visitor needs and usage
      • Utilize a third party to review your space requirements
      • Look realistically at all options. Explore renting, renovating, purchasing, expanding, or building
      • Consider the impact of the proposed improvement on your operating budget. Will your program costs increase?
      • Scan your environment. What other projects in your community might compete with your efforts?
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 1. Determine Needs & Options Overview
    • 1.3. Consider a High Performance Building
    • Sustainable, green, and energy efficient are synonyms for high performance buildings
      • High performance buildings have lower annual operating costs
      • When designing, analyze interconnected issues:
        • site and building design
        • energy and water efficiency
        • resource-efficient construction
        • lighting and mechanical design
        • building ecology
        • the costs/benefits of a green building approach
        • combine all these aspects into an integrated design
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 1. Determine Needs & Options Overview
    • 2.1. Review Strategic Plan
    • 2.2. Assess Organizational Capacity
      • Board Capacity
      • Fundraising Capacity
    • 2.3. Form AD HOC Committees
      • Capital Campaign Committee
      • Building Committee
    • 2.4. Budget for Planning
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 2. Organizational Readiness Overview
    • 2.1. Review Your Strategic Plan
      • A strategic plan defines your organization’s long-term goals and the short-term implementation steps for getting there
      • The proposed capital project should be driven by community and program needs and be consistent with the overall strategic plan
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 2. Organizational Readiness Overview
    • 2.2. Assess Organizational Capacity
      • Capital projects are different from annual operations. Some of the skills/experience your board, staff and volunteers will need:
        • Fundraising capacity
        • Expertise in business planning and financing options
        • Design and/or construction experience
      • Do you have the necessary skills among your staff, board, and volunteers?
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 2. Organizational Readiness Overview
    • 2.3. Form AD HOC Committees staffed with board or non-board members
        • Capital Campaign Committee
        • Building Committee
      • Both of these new committees will work closely with your existing Finance Committee or your Treasurer & Board Chair
      • Final decisions always reside with the board
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 2. Organizational Readiness Overview
    • 2.3. Capital Campaign Committee
      • Recruits campaign leadership
      • Develops a case for support
      • Develops the campaign plan and schedule
      • Establishes the campaign management system
      • Identifies & cultivates prospective donors
      • Asks prospective donors for gifts
      • Ensures the successful completion of the campaign according to the plan and schedule
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 2. Organizational Readiness Overview
    • 2.3. Building Committee
      • Reviews options and determines the project’s scope
      • Manages facility planning process
      • Develops the budget and schedules
      • Selects architect for the conceptual design
      • Works with Finance Committee on the financial model
      • Establishes a project management system
      • Selects the building process and project team
      • Develops the long-range maintenance plan
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 2. Organizational Readiness Overview
    • 2.4. Budget for Planning
      • Capital projects often require expertise not readily available from your staff and volunteers
        • Examples include space needs study, evaluating fundraising readiness, preliminary schematics, feasibility study
      • Be cautious of professionals offering pro bono work provided they are guaranteed contract
        • Send out a Request for Proposal (RFP) specifying the service requested, cost estimates, and an outline of the interview process
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 2. Organizational Readiness Overview
    • 3A.1. Develop a Facility Plan
    • 3A.2. Create a Conceptual Design
    • 3A.3. Select a Building Process & Project Team
    • 3A.4. Create a Schematic Design
    • 3A.5. Determine the Financing Plan
    • 3A.6. Develop an Estimated Project Budget
    • 3A.7. Estimate Impact on Operating Budget
    • 3A.8. Create a Financial Model
    • 3A.9. Establish a Project Management System
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3A. Project Planning Overview
    • 3A.1. Develop a Facility Plan
      • A document of your space needs, may be prepared by an architect or consultant. It includes:
        • Rough drawings, timelines, narrative
        • Space requirements
        • Utility requirements
        • Assessment of building regulations, zoning requirements, etc.
        • Environmental or community concerns
        • Architectural style, accessibility, location considerations, sustainable features, etc.
        • Rough cost estimate for construction and ongoing maintenance
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns STEP 3A. Project Planning Step 3A. Project Planning Overview
    • 3A.2. Create a Conceptual Design
      • After understanding the space requirements and site recommendations from the owner, an architect or consultant produces a conceptual design of the project for people to review
      • Though rough, the conceptual design is important since it is the first visual representation of the desired capital improvement
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3A. Project Planning Overview
    • 3A.3. Select a Building Process
      • The type of construction contract and project delivery method you select is a critical step for the project
        • Design-Bid-Build: Owner hires an architect who completes the design, owner then hires a construction company after design is complete following a competitive bid process to build design
        • Design-Build: Owner hires a contractor. The contractor hires an architect/designer to design the project he will build. Contractor is the point person
        • Construction Management at Risk: Owner hires a designer and then a construction professional who assumes risk for project at the conceptual design or schematic phase. The Construction Manager provides pre-construction services such as estimating and scheduling and eventually hires the construction team to complete the project
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3A. Project Planning Overview
    • 3A.3. Select a Project Team
      • Seek competitive proposals from interested architects, construction managers, or general contractors
      • Take into consideration:
        • Similar work experience and references
        • Whether their approach matches your goals and budget
        • Their current work load
        • Their quality control procedures
        • If a green design, look for LEED ® or other accredited professionals
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3A. Project Planning Overview
    • 3A.4. Create a Schematic Design
      • Schematic Design:
        • Approved conceptual designs are turned into architecture with floor plans, elevations and perspectives
        • Engineers and specialists get involved
        • Schematic designs can be submitted to planning commissions and review boards
        • If a high performance building, key design features are outlined
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3A. Project Planning Overview
    • 3A.5. Determine the Financing Plan
      • There are many different sources of funds: cash reserves, capital campaign contributions, in-kind support, government or foundation grants
      • Most capital projects also require some level of financing, which will need to be repaid:
        • Early stage: short-term loans for land purchase, feasibility studies, planning and design, etc.
        • Construction or bridge/gap financing: short-term loans to cover construction expenses and/or multi-year pledge payments
        • Permanent financing: longer-term loans such as mortgages or tax-exempt bonds
    06/03/10 Facility Expansion & Renovation Planning for Capital Projects & Campaigns Step 3A. Project Planning Overview
    • 3A.5. Determine the Financing Plan
      • Reasons for considering financing or why you should consider borrowing money:
        • Moves your project forward sooner
        • Preserves liquidity
        • Spreads the cost of your project over its useful life
      • CAUTION: You need to be able to afford the cost of financing within your operating budget
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3A. Project Planning Overview
    • 3A.6. Develop an Estimated Project Budget
      • Be sure to include:
        • Hard costs (ex. demolition, earthwork, on-site power generation, utility installation, building construction, parking, landscaping, and contingency, etc.)
        • Soft costs (ex. architecture and engineering fees, surveys, studies, legal fees, permits, construction management, contingency, and Fixtures, Furnishings and Equipment (F,F&E), etc.)
        • Plan for timing and inflation
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3A. Project Planning Overview Budget
    • 3A.7. Estimate the Impact on Operating Budget
      • Consider the impact of the project on the operating budget and make changes as needed. Examples:
        • Before construction
          • Possible reduction in annual giving, more staff during campaign
        • During construction
          • Rentals, utility costs, temporary relocation
        • After construction
          • Increased operating, program costs
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3A. Project Planning Overview
    • 3A.8. Create a Financial Model
      • Forecast the organization’s financial performance, starting one year before project and ending at least one year after project is over to see impact on day-to-day operations
      • Model should include :
        • Operating budget
        • Project budget including all hard and soft costs
        • Capital campaign plan
        • Sources and Uses budget (capital funds and project expenses)
        • Pro forma cash flow
        • Financing plan
        • Assumptions
      • Expect the unexpected!
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3A. Project Planning Overview Model
    • 3A.9. Establish a Project Management System
      • A good system early in the process can prevent significant problems later on. A good system includes:
        • Proper oversight of project, while you continue to focus on day-to-day operations
        • The onsite owner’s representative should be the same person from start to finish. This person works for you, not the contractor
        • Regularly scheduled meeting with minutes that are logged and distributed
        • A mechanism for resolving problems and conflicts
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3A. Project Planning Overview
    • 3B.1. Consider a Feasibility Study
    • 3B.2. Set Campaign Goal & Budget
    • 3B.3. Identify Campaign Leadership
    • 3B.4. Prepare a Case for Support
    • 3B.5. Develop Campaign Plan
    • 3B.6. Begin Silent Phase to Secure Leadership Gifts
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3B. Campaign Preparation Overview
    • 3B.1. Consider a Capital Campaign Feasibility Study This is a report compiled by a third party consultant to measure your chances of a successful capital campaign
      • Consists of interviews with key donors, board, volunteers and staff
      • Consultant recommends attainable dollar goal, suggestions on improvements, and offers additional funding prospects
      • Especially useful if you are unsure of your ability to conduct a successful campaign
      • Builds confidence among your team and especially, the interviewed potential donors
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3B. Campaign Preparation Overview Gift Models
    • 3B.2. Set Campaign Goal & Budget
      • The goal should be consistent with the financial model. The budget should be comprehensive and include:
        • Construction
        • Sustainable design and engineering
        • Project management
        • Cost of fundraising
        • Financing and interest expense
        • Bad debt from unrealized pledges
        • Inflation or other cost increases
        • Any drop in operational fundraising
        • Fixtures, furniture and equipment
        • Program ramp-up expenses
        • Consulting or professional service fees
        • Contingencies (% of overall construction cost)
        • Ground breaking and opening day celebrations
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3B. Campaign Preparation Overview
    • 3B.3. Identify Campaign Leadership
      • Leadership is the single most important element in a capital campaign
      • The Leadership team should include board members, community leaders & senior staff. Team members should be able:
        • To make or solicit significant gifts
        • Individually or collectively, to have personal networks of others who can give
        • Inspire 100% board participation and support
      • The team should include at least 3-5 great solicitors who are good ambassadors for the organization
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3B. Campaign Preparation Overview
    • 3B.4. Prepare a Case for Support Answers the question, “Why should I contribute to your campaign?”
      • Good case statements:
        • Tie the need for the project to the mission/vision of organization
        • Are written from donor’s perspective
        • Focus on benefits, not features
        • Are succinct & straightforward in style
        • Include attractive schematic/visual material
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3B. Campaign Preparation Overview Case
    • 3B.5. Develop a Written Campaign Plan Organizes and coordinates the capital campaign. It describes the strategy and the specific steps to be taken.
    • A good plan includes a:
      • Succinct version of case statement
      • Brief description of conceptual design
      • List of campaign leadership, their roles and responsibilities
      • Gift model: a projection of number of gifts by size
      • Phased campaign schedule
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3B. Campaign Preparation Overview Gift Model Schedule
    • 3B.6. Begin Major Gift Solicitation
      • The major gift or silent phase usually lasts 3-6 months, involving personal solicitation of the board, and major gift prospects
      • Early solicitation of major gift prospects begins with those closest to the organization
        • Board members
        • Campaign leadership
        • Prospects who are familiar with the project and ready to be approached
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 3B. Campaign Preparation Overview
    • This is the point of NO return! (From here on costs go up significantly.)
    • Proceed only if you can answer YES to these statements:
      • We have the leadership on board and staff to see the project through
      • We have a clear idea of the project’s cost
      • We know the impact on our annual operating costs
      • We have the necessary project and campaign management systems in place
      • The board is 100% behind the project
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 4. Board Approval Overview
    • 5A.1. Start Design Development (DD) Phase
    • 5A.2. Complete Construction Documents (CD)
    • 5A.3. Solicit Bids & Contract for Construction
    • 5A.4. Review Budget & Project Scope
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 5A. Project Design Overview
    • 5A.1. Start Design Development (DDs)
      • The Project Team:
        • Finalizes the design and project schedules
        • Holds a design meeting with all key stakeholders to reiterate project goals and ensure that all new team members are on the same page
        • Refines drawings and designs to include needed details
        • Further develops and integrates sustainable design strategies
        • Reviews cost estimates again; they should be consistent!
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 5A. Project Design Overview
    • 5A.2. Complete Construction Documents (CDs)
      • The development of the construction documents signals the end of the design phase
      • The previous designs become rigorous technical drawings with specifications needed to obtain the project permits and actual cost estimates
      • Present alternatives on certain features if costs rise
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 5A. Project Design Overview
    • 5A.3. Solicit Bids & Contract for Construction
      • Depending upon your preferred delivery method you will work with different people (general contractor, construction manager, designer, architect, LEED consultant, etc.)
      • CHECK references for lead contractor and subcontractors
      • There are several types of contracts:
        • Lump Sum Fixed Price
        • Guaranteed Maximum Price (GMP)
        • Cost Plus
        • Time and Materials
        • Performance-based Fees
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 5A. Project Design Overview Contracts
    • 5A.4. Review Budget & Project Scope
      • With bids in hand, review estimated budget
        • If bids come in high, note specific areas that are over-budgeted
        • Propose “alternates” to reduce budget, if necessary
        • Forward to Building Committee/Board
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns. Step 5A. Project Design Overview
    • 5B.1. Establish Campaign Management
    • 5B.2. Continue Silent or Major Gift Phase of Campaign
    • 5B.3. Finalize Financing Plan
    • 5B.4. Set Campaign Goal
    • 5B.5. Launch Public Phase of Campaign
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 5B. Capital Campaign Overview
    • 5B.1. Establish Campaign Management
      • Good campaign management includes:
        • Sufficient staffing to handle extra burden of office support, special events, and donor relations
        • A donor database that your staff understands and uses well
        • A donor management system that tracks and prioritizes prospects as they are identified, researched, cultivated, asked, and recognized
        • Clearly defined communication that identifies how information flows to and from your organization and who are the decision-makers
        • Proactive volunteer support. Volunteers need to be informed so they can effectively help
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 5B. Capital Campaign Overview
    • 5B.2. Complete Silent Phase or Major Gifts Phase
      • Work to complete the solicitation of major gift prospects
      • Normally once the dollar goal for this phase is (nearly) met, the public phase will soon follow
      • Major gift solicitor volunteers should be given an orientation from an experienced fundraiser
      • Solicitation is personal and occurs only after the prospective donor is well informed about the project and the solicitor is well informed about the prospective donor
      • The presented case for support is concise, attractive, and completely outlines the project’s scope, cost, and impact
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 5B. Capital Campaign Overview
    • 5B.3. Finalize Financing Plan
      • Your financial model will contain the options for financing the project. You may use:
        • A line of credit
        • A bank loan
        • Tax-exempt bonds
        • Construction loan that will convert into a mortgage
        • Personal loan from donor or supporter
        • Government loan guarantee program
        • Self-financing from cash reserves
      • Often financing is not paid off until long after project is complete. Make sure you have a plan to pay it off!
    06/03/10 Facility Expansion & Renovation Planning for Capital Projects & Campaigns Step 5B. Capital Campaign Overview
    • 5B.4. Set Campaign Goal
      • With the results of the construction/design bids and the major gift phase of the campaign complete, the board will affirm or adjust the final campaign goal
      • The goal may be unchanged or amended because of disappointing fundraising or increased construction costs. The project may need to be phased
      • Before the public launch, update marketing materials to reflect any adjustment in goals and project scope
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 5B. Capital Campaign Overview
    • 5B.5. Launch Public Phase of Campaign
      • With substantial fundraising progress, the support of the board and a core of major donors, you can kick-off the public campaign
      • Normally a special event is planned that highlights the key leadership of the campaign and informs the audience that wider solicitation of support will begin
      • Donors, potential donors, volunteers, staff, community leaders, and selected beneficiaries are invited
      • Includes an informative program, emphasizing the importance of the proposed project to the community or constituency
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 5B. Capital Campaign Overview
    • 6.1. Celebrate Ground Breaking
    • 6.2. Implement Project Management
    • 6.3. Plan for Donor Recognition & Facility Dedication
    • 6.4. Develop a Long-Range Maintenance & Facility Plan
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 6. Construction Overview
    • 6.1. Celebrate Ground Breaking
      • Hopefully, most or all of the funds will be raised before ground breaking. If not, it can be a great opportunity to highlight the project to donors and prospective donors
        • Hard-hat tours can give donors a feeling of exclusive access and special treatment
        • Regular construction updates make excellent content for newsletters and email blasts to donors
        • You can often get media coverage during construction, especially if you are highlighting green or sustainable design
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 6. Construction Overview
    • 6.2. Implement Project Management
      • Once you begin construction, mistakes often carry a big price tag. Having a project management system in place avoids miscommunication and mistakes
        • Have a point person who is engaged from start (design) to finish (construction)
        • Ensure that you have a complete, accurate and thoroughly understood design
        • Schedule weekly meetings and distribute minutes that document decisions and any problems that arise
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 6. Construction Overview
    • 6.3. Plan for Donor Recognition & Facility Dedication
      • Do not underestimate the importance of a dedication ceremony. It:
        • Brings attention to the impact the new facility or renovations will have on your service community
        • Recognizes and thanks the campaign’s contributors
        • Brings media attention and community visibility to your organization
        • Serves as a potential fundraising event for the new facility
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 6. Construction Overview
    • 6.4. Develop a Long-Range Maintenance & Facility Plan
      • The work doesn’t stop when the project is finished! A reserve fund (or building endowment) should be established that grows over time and will:
        • Cover routine repairs and maintenance
        • Help pay for future capital expenses
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Step 6. Construction Overview
    • Supporting materials are available from the following websites:
      • www.crcamerica.org (Community Resource Center)
      • www.coloradononprofits.org (Colorado Nonprofit Association)
      • www.gatesfamilyfoundation.org (Gates Family Foundation)
    • Workshops:
      • Community Resource Center
      • Rural Philanthropy Days
    • Other Organizations:
      • Rocky Mountain Institute
      • Mile High Housing Fund
      • Colorado Educational & Cultural Facilities Authority (CECFA)
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Resources Overview
    • Possible Hard Costs
    • Land Acquisition
    • Demolition
    • Earthwork
    • On-site power generation
    • HazMat Remediation (contaminated soil, asbestos)
    • Utility installation or upgrade
    • Building Construction (specifically, the impact of envelope, HVAC, and lighting alternatives on long-term performance)
    • Visitor parking (consider minimizing employee parking and subsidizing/encouraging alternative transportation choices)
    • Native landscaping and efficient irrigation (if irrigation is necessary)
    • Contingency for hard costs
    • Possible Soft Costs
    • Architectural & Engineering Fees
    • Surveys, Soil Testing, & Environmental Studies
    • Legal Fees, including Permitting & Entitlements
    • Construction Management
    • LEED ® (Green Building) certification and documentation fees
    • Project Administration
    • Cost of Fundraising
    • Moving Expenses
    • Fixtures, Furnishing and Equipment (FF&E)
    • Occupancy environmental and building operation educational program
    • Ground Breaking and Opening Day Ceremonies/Celebrations
    • Contingency for soft costs
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Estimated Project Budget Costs While it is necessary to itemize both the hard and soft costs, a life-cycle cost analysis should also be conducted to derive the true costs to the organization. Major items to consider include: Overview
    • There are several different ways to contract with a builder – choosing the right method for your particular project is important. They include:
      • Lump Sum Fixed Price – A single price for a specific scope of work. Consider this type of contract if you have a very well defined, straightforward project with very few unknowns. As long as the scope of work doesn’t change, the risk of cost overruns is with the contractor – look out for change orders!
      • Guaranteed Maximum Price – Places the risk of cost overruns above a certain price on the contractor, for a specific scope of work. Again, the project should be clearly defined, but if you have some unknowns, this type of contract will tell you what the worst case will be, and offers the contractor an opportunity to save money (normally, cost savings are shared with the contractor to add incentive to beat the budget).
      • Cost Plus – Contractor will pass the actual costs of the project on to you, plus a fixed fee. When a project has a lot of unknowns, contractors are forced to add more contingencies to their budget, which increases the price. In such a case, using a Lump Sum or Guaranteed Maximum contract may be either unreasonable to expect, or very expensive. With Cost Plus you only pay for the actual costs of the project, plus a pre-negotiated fee for project overhead and profit. The risk of cost overruns, however is the owner’s to pay!
      • Time & Materials – Similar to a Cost Plus contract, but each hour of labor and each cost for materials, subcontractors or equipment is marked up and passed on to the owner. This type of contract is often used for smaller projects or those that have a high degree of unknowns (like historic renovation projects).
      • Design Build – A completely different animal! Design Build is a contract type that includes both the architect and engineering team as well as a contractor.
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Type of Contracts Overview
    • Project Budget
    • Include all hard and soft costs
    • Escalate costs over time as anticipated (project inflation)
    • Capital Campaign
    • Project pledges according to your campaign plan
    • Project future cash payments of pledges
    • Include allowance for bad debt (usually 2-5%)
    • Operating Budget - Revenues and Expenses
    • Forecast the project’s impact on your monthly budget
    • Look at periods before, during and after construction
    • Consider the capital campaign’s impact on fundraising
    • Consider the added expense of running a new facility
    • Financing Plan- Both short-term & long-term
    • Identify any short-term “gap” financing needs
    • Include debt service of any long-term bonds or loans
    • Cashflow
    • Overlay all components above into a cashflow pro forma
    • Make sure you are always projecting positive cashflow
    • Assumptions
    • Keep track of all financial assumptions you make above
    • Throughout the project, always challenge your assumptions
    • Expect the unexpected!
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Financial Model Outline A Financial Model involving a major capital project normally consists of a model that forecasts the organization’s financial performance over a 10-year period. As a minimum, the following key components should be included in a spreadsheet Overview
  • 06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Sample of Loan Types & Terms THIS CHART IS AN EXAMPLE FROM March 2007. It is intended for illustrative purposes only. Details are subject to change and you must check with the lender for current information. Mile High Housing Fund provides short-term loans to nonprofits and for profits for the development or preservation of affordable housing and to nonprofits that serve low-income populations for the purchase and/or construction of facility space. Projects must be in the seven county Denver Metro area, El Paso, Pueblo, Larimer, Weld, Clear Creek, Summit or Eagle counties. Overview Type of Financing Loan Amount Term of Loan Repayment Terms Collateral Timing: Application to Approval Timing: Approval to Close Pre-development unsecured loans Up to $150,000 12 months maximum Flexible N/A 5 business days 2 business days Pre-development secured loans Up to $250,000 12 months maximum Flexible Up to 90% Total Loans-to-Value 10 business days 5 business days Acquisition loans Up to $1,000,000 24 months maximum Monthly interest only Up to 90% Total Loans-to-Value 10 business days 5 business days Construction loans Up to $1,000,000 24 months maximum Monthly interest only Up to 90% Total Loans-to-Value 10 business days 5 business days Bridge loans (to cover shortfalls) Up to $1,000,000 24 months maximum Flexible Up to 100% Total Loans-to-Value with commitment for funds being bridged 10 business days 5 business days Mini Perm loans Up to $500,000 60 months maximum Principal & interest payments amortized up to 20 years Up to 90% Total Loans-to-Value 10 business days 5 business days
    • There are many ways to organize a Case Statement, here is one sample outline.
    • Executive Summary: Include the organization’s mission, the reason for this project, a brief description of the project, the size and schedule of the capital campaign and a call to action ( contribute! )
    • The Community Need for this Project: Why is this project a NEED and not a WANT? How will this project help meet needs and solve problems of your service community?
    • The Organization: Brief history, mission, vision and a description of your program now and in the future (be sure to indicate how this project will get you where you need to be). Include a summary of how this project will affect your operational budget.
    • The Team: Volunteer leadership, Board members, key staff, and any consultants, architects, engineers or contractors you are working with.
    • The Project: Describe the project, its features and the direct benefits each feature will provide to your service community. Include any graphics you may have, a summary project budget, including hard and soft costs, and a project schedule.
    • The Capital Campaign: Provide a brief summary of your Campaign Plan, including the Leadership, a phased campaign schedule, and any major gifts that have been pledged to date. Also include, perhaps as an attachment, a list of naming opportunities for donor recognition.
    • Call to Action: Remind the reader again of the significant impact a contribution to your campaign will have on the community. Include contact information for those who are interested.
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Case Statement Outline Overview
  • 06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Gift Models Three Ways to Raise $1 million Traditional Campaign - “Giving Pyramid” - 1 gift @ $250,000 - 2 gifts @ $100,000 - 5 gifts @ $50,000 - 10 gifts @ $25,000 - 50 gifts @ $1,000 Concentrated Giving Campaign - 20 gifts @ $25,000 - 15 gifts @ $20,000 - 10 gifts @ $15,000 - 5 gifts @ $10,000 - 0 gifts @ $1,000 Hour Glass Campaign - 25 gifts @ $25,000 - 10 gifts @ $15,000 - 5 gifts @ $10,000 - 15 gifts @ $5,000 - 100 gifts @ $1,000 Overview
  • Sample Campaign Schedule Overview Year: 1 2 3 4 5 6 7 8 9 10 11 12 Step 1 - Readiness Step 2 - Business Planning Step 3 - Preparations Step 4 - Project Design Step 5 - Capital Campaign Silent Phase Public Launch Public Phase Community Phase 100% Campaign Goal Pledged! Gap Financing Pledge Collection Step 6 - Construction Grand Opening! Continuing Facility Maintenance
    • This guide was developed in 2004 by Tom Kaesemeyer, Executive Director of the Gates Family Foundation and Rick Tallman, founder of the Tallman Group. The project was funded by the Gates Family Foundation.
    • Gates Family Foundation:
    • Founded in 1946, the Gates Family Foundation focuses on capital projects within the state of Colorado. Its major interests include 1) education; 2) arts and culture; 3) parks, conservation and recreation; 4) well-being of children, youth and families; and 5) community development and revitalization. The Foundation also engages in initiatives, partnering with other organizations, public and private, to add value to promising projects or ideas. Gates’ awards normally come in the form of challenge grants after 30% of the project cost has been committed. Grants are made after the campaign goal has been reached. The Foundation’s market value was $455,000,000 at years end (12/31/06). Tom Kaesemeyer has served as Executive Director of the Gates Family Foundation since 1997. Prior to his appointment, he was the head of two independent schools, Kent Denver School in Englewood, Colorado and Westtown School in Westtown, Pennsylvania.
    • Appreciation for the 2007 Review Committee:
    • In 2007, both versions of the guide, the PowerPoint and the PDF word document, were revised with the help of a talented review committee made up of experts in fundraising, construction, finance and lending, nonprofit management, and high performance buildings. The committee included: Liz Edgar (Dini Partners); Lisa Flores (Gates Family Foundation); Caroline Fluhrer and Greg Franta (Rocky Mountain Institute); Mike Langley (Durrant Group); Rick Tallman (The Tallman Group); Jeff Seifried (Mile High Housing Fund); JoAnn Soker (Colorado Educational and Cultural Facilities Authority); Charlie Shimanski (Colorado Nonprofit Association); TC Werner (Community Resource Center). Special thanks goes to TC Werner who served as both technical coordinator and editor.
    • To obtain additional copies of Facility Expansion & Renovation: Planning for Capital Projects and Campaigns, access the website of Community Resource Center at http://www.crcamerica.org/resources/publications/gates.asp or the website of the Gates Family Foundation at www.gatesfamilyfoundation.org .
    • 11/12/07
    06/03/10 Facility Expansion & Renovation: Planning for Capital Projects & Campaigns Acknowledgements Overview