If you’re steering a large organization of members who depend on its leaders’ decisions for its long-term health and value, you likely think a lot about risk, innovation, and decision-making. And if you’re considering a major fundraising push or capital campaign to kickstart your organization’s growth, risk has undoubtedly been part of the conversation already.

Capital campaigns are among the biggest fundraising initiatives that nonprofits undertake. They can bring huge benefits, but they also require significant investments of time and resources. Before committing to a capital campaign (or any major fundraising project), understand your organization’s risk tolerance to set the right goals and make appropriate decisions.

Understanding Risk Tolerance

Some organizations are historically risk-averse and prefer only to take on large projects or investments if the payoff is likely. Others are bolder with their decision-making, leading with passion and vision. Associations like that are willing to accept bigger risks.

The people who make up and lead your organization contribute to its risk tolerance. Your association’s risk tolerance will play an integral role in shaping your plans for a capital campaign. Associations that are risk-averse will be more conservative, while those with a higher tolerance for risk may suggest a larger, more visionary project.

Although the specifics of your plan can be adjusted once the campaign is underway, you can’t kick off without a firm objective and initial working goal in mind, and you can’t define these essentials without understanding what your organization is prepared to commit to.

How to Measure Risk Tolerance

Once you determine that a capital campaign may be a good choice, work with your board and leadership to evaluate their different risk tolerances. We recommend this exercise:

Prepare a survey for your leadership team and board members. Have them answer these questions on a rating scale of one (not confident or important) to 10 (very confident or important):

• How important is it that our association gets to the next level of growth and service for members, even if there’s a chance we could fail?
• From your perspective, what is the organization’s overall risk-tolerance?
• How thoroughly have we evaluated the risks of expanding our services?
• How confident are you that the association would be resilient enough to overcome setbacks associated with a large project/campaign?
• How confident are you that the leadership team can guide the organization to its next level of growth?
• Add any other questions that you think would be valuable to know.

Collate and Review. Collect and compile the responses anonymously. At your next board meeting, review the purpose and intended outcomes of the proposed campaign and discuss the survey’s findings.

This will give you initial insight into whether your team is aligned on the desire and need for expansion and on the potential scope of the project. Use the collective results to stimulate additional discussions to learn about your association’s risk tolerance and the scope of the project you might undertake. As you discuss the results, look for consensus around three scenarios:

• A conservative plan seeking to do only what is needed.
• A moderate plan including objectives that are desired and needed.
• A breathtaking plan that would boost the organization to the next level of operation.

Keep having discussions, and you’ll get a clearer view of whether your team is on the same page about the need and feasibility of a major campaign and what an appropriate scope would be. A robust discussion of the options will help find consensus about the best way forward and set your campaign up for success.

Long-Term Considerations

When it comes to fundraising, we’ve seen that big thinking leads to big outcomes. For capital campaigns, these outcomes include more than just the total dollar amount raised. They include the long-term impact of what those dollars will enable, plus a range of non-financial returns like deepened relationships with partners and improved solicitation skills.

In other words, capital campaigns are investments that can yield greater, more wide-reaching returns than other forms of fundraising. These are important considerations as you weigh your options and discuss risk tolerance with your team. Beginning with a well-organized risk-assessment process will give you a solid starting point.