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Institutions aggressively targeting private donors to fund construction projects

Capital campaigns abound, even though government financing still plays a vital role.

December 14, 2016 |

Competition is fierce among institutions vying for private capital to help fund their building projects. The Smithsonian National Museum of African-American History and Culture was partly funded by private donors. A few years ago, the Smithsonian launched its largest-ever capital campaign to raise $1.5 billion. Image: Wikimedia Commons

A recent story in the Birmingham (Ala.) Business Journal reported that so many local nonprofit organizations are competing for private capital to fund their building projects that there might not be enough money to go around. Among those projects is a new $25 million, 4.1-acre headquarters campus for the Salvation Army. Phase 1 of that construction—which includes a renovation of a former elementary school—is being funded by a campaign that raised more than $15 million, including $1 million pledged by Jim Gorrie, CEO of Brasfield & Gorrie, the GC on this project.

Birmingham is among the metros reaping the benefits of a spurt in nonprofit building. A recent article posted on the website of The NonProfit Times singles out several major capital campaigns to finance new construction of museums, hospitals, theaters, and other venues, at a time when contributions from local, state, and federal governments, while still essential to many organizations’ building strategies, aren’t as certain or steady as they once might have been.

Leading this charge has been The Smithsonian, which in October 2014 launched its first-ever fundraising campaign, with a goal of raising $1.5 billion, the largest ever for any cultural institution. (About $1 billion had been pledged even before the campaign officially got rolling.)

A portion of the $540 million 400,000-sf National Museum of African-American History and Culture, which opened in September, was financed by private donations. Most of the Smithsonian’s exhibits and programs are privately funded. And about 40% of the institution’s salaries and maintenance are defrayed by donors, compared to 30% prior to its initiating the fundraising campaign.

The NonProfitTimes also points to the American Museum of Natural History in New York, which has offset a decline in income from investments by contributions that rose to $160 million in 2015, from $78 million the previous year, mostly from a handful of major donations.

This museum is currently adding to its Rose Center for Earth and Space with a $325 million, six-story, 218,000-sf Richard Gilder Center for Science, Education, and Innovation, scheduled for completion in 2019. The 84-year-old financier and philanthropist Richard Gilder contributed $50 million to this project, the largest single donation in the museum’s history.

New York City kicked in $15 million for this addition. The city is also playing a financing role in other cultural construction projects, such as the 57,500-sf “Ocean Wonders: Sharks!” exhibit in Coney Island. The city made a “major gift” to the Harlem Children’s Zone, which in 2015—the first year of its capital campaign—raised $193 million, versus $78 million in 2014.

The Task Force for Global Health, a nonprofit health organization in Decatur, Ga., is working with DeKalb County to acquire a six-story government building that would triple the square footage of this organization’s existing headquarters. The Task Force will soon launch a $15 million capital campaign to pay for the $12 million purchase and renovating the building. 

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