The Shriners Hospitals for Children entered a new and unchartered territory for the 85-year-old organization recently by having to ask people for money to take on a construction project.

Shriners previously funded its 22 hospitals in the U.S., Canada and Mexico from its own pockets.

But the changing economics of healthcare has forced it to turn to the public for help with its $73 million rebuilding of its Honolulu hospital. Last year it quietly embarked on a $14 million capital campaign and this year went public with it. So far $4.2 million has been raised in pledges and gifts.

"This is the first one," said Gene Bracewell, an Alpharetta, Ga., resident who is chairman emeritus for the Shriners, explaining recently that the Honolulu campaign may become a blueprint for other Shriners campaigns elsewhere. Previously the local hospitals were funded from the Shriners' national endowment; now local communities will contribute to funding renovations and new hospitals.

"We've never had a capital campaign before."

Shriners is getting a quick lesson in the world of economics for most nonprofits, which have to turn to capital campaigns when it comes to raising endowments and funding large projects such as new buildings, expensive equipment or other assets. Statewide there are more than $400 million of capital and fundraising campaigns in various stages with organizations seeking gifts from foundations and corporations, the wealthy and everyday individuals.

Fundraising campaigns range from Maui Family YMCA's efforts to fund expansion and renovation of its Kahului facility to the University of Hawai'i's $250 million Centennial Campaign. Most of the money is being sought from people in the state, though some will be obtained on the Mainland and in the form of community block grants from the U.S. Department of Housing and Urban Development.

CAUTION ON CAMPAIGNS

"The good news is Hawai'i is a small place and there's people who can reach people," said Barry Shain, a principal in Myerberg Shain & Associates Inc., a Honolulu-based fundraising consultancy.

"The bad news is that it's a small place and there's limited resources."

As such, Shain and other fundraising professionals said organizations need to take a careful and studied approach to undertaking any capital campaign.

Even if someone has a donor willing to contribute $1 million to a $2.3 million campaign the effort isn't worth it if the campaign has a difficult time raising the remaining money, Shain said. If fundraisers don't plan an endowment for upkeep of a building it can become a financial anchor around the organization's neck, he said.

"Don't do a capital campaign to do a campaign," Shain said. He said the effort has to meet the vision and mission of the organization and help meet its goals more effectively.

The campaigns typically start with a quiet phase, according to Vicki Suyat, director of development and communications for Child and Family Service and co-author of the book "Fundraising 101." During this quiet period the organization's board maps out a strategy and possibly chooses a group of volunteers to oversee the effort. She said having an energetic and committed person heading the effort is key.

Suyat said that sometimes it takes months to find the right person who is willing to take on the task, which involves hours of work and sometimes calling in personal favors and IOUs to get others to join the effort or donate.

"It's hard work," said Suyat. And "it's on top of all your other work."

Shain said having a board that donates to the cause is important as well since many institutional sources will question what percentage of volunteer leadership has invested in the effort. The board also has to investigate whether it makes sense to bring in a consultant to help.

SHRINERS' DECISION

In the case of the Shriners, the overall organization's board decided it could no longer fully fund hospital construction since just running its hospitals was costing it about $2 million a day. Shriners doesn't charge for the orthopedic surgical and rehabilitative care it offers children at its hospitals, nor does it seek insurance reimbursements or government payments.

The group decided to start seeking contributions from the community as it renovates and build new facilities. First up was the Honolulu facility, which was originally built in 1923 as the second Shriners facility.

The Shriners enlisted the help of Sinclair, Townes & Co., a Marietta, Ga.-based consultant that's helped numerous healthcare organizations, universities, schools and nonprofits with fundraising. It also added development officers at each of its hospitals to seek funding.

In Honolulu it assembled a committee with Gov. Linda Lingle and U.S. Sen. Daniel K. Inouye (a former Shriners patient) as the honorary co-chairs. The rest of the committee was filled in with well-known community members, including Allan Dowsett, whose family donated the Makiki land for the Honolulu hospital. Others include Office of Hawaiian Affairs trustee Oswald Stender, First Hawaiian Bank Chairman Walter A. Dods Jr., and attorney Jeffrey Watanabe.

By the time the campaign was announced publicly earlier this year the group had been able to secure $3.6 million toward the $14 million. Fundraisers said having money already pledged is important when a campaign goes public since it shows the effort already has some momentum.

The committee "brings a tremendous amount of credibility to the campaign," said Shriners' Bracewell. More importantly, said Iwalani Obrey Dayton, director of development for the Honolulu Shriners hospital, is that the group just doesn't lend their name to the effort, but buys into the mission.

"There's certainly a lot of great causes in Hawai'i," Dayton said. "We have a specialty that we offer, this expert medical care for children."

WORKING WITH DONORS

The Shriners, after working behind the scenes since the beginning of 2006, went public with the fund drive earlier this year, having already secured $3.6 million toward the $14 million goal. Fundraisers said having money already pledged is important when a campaign goes public since it shows the effort already has some momentum.

Suyat said board members may be enlisted to make face-to-face calls on large potential donors such as the Harry & Jeannette Weinberg Foundation and other foundations or corporations. Depending on the size of the donation, some contributors may be offered naming opportunities.

"A wonderful experience is to walk through the Rehabilitation Hospital of the Pacific because very room is named," Suyat said. "They've been very, very good about giving their donors credit."

She said some donors will want details on how the money is to be spent, down to asking for a spreadsheet and requesting progress reports. She said typically fundraising expenses are less than 1 or 2 percent of the total being raised.

Shain, who is writing a book about fundraising, said the average capital campaign lasts about four years. He said there is only so much money to be donated in Hawai'i each year. Planners need also to take into account economic cycles since raising money is more difficult during tight economic times, though there are ways to raise money in bad times, he said.

"This is not an easy thing to do," Shain said. But "as long as you bring your A-game you can do this."

Reach Greg Wiles at gwiles@honoluluadvertiser.com.