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The stock market is at or near an all-time high, yet interest rates are climbing when they should be diving. Gasoline prices are topping $3 a gallon, but more people than ever drove for vacation during the Memorial Day holiday, according to the agencies that track those things.

And while the prime rate is stable now, it has more than doubled from its 10-year low of 4 percent on July 1, 2003 to 8.25 percent now.

Market and economic trends are not following their usual patterns, and that could have an impact on the large gifts nonprofits need to fund capital campaigns. And for nonprofits planning to build -- either brick and mortar or endowments -- the cost of money is getting more expensive and sensitive to the mood swings of the Dow Jones.

"For the most part, it's the volatility of the stock market that seems to have a greater effect that we have seen. People may delay making a gift until they feel the time is more advantageous," said Donna M. Finley, CFRE, senior manager, Greater Washington, D.C., region, for the consulting firm Graham-Pelton. "And on the other hand, if they have under-performing securities, then they may decide to use those to finance a gift because they get the benefit of the charitable deduction."

Donors are looking at cost basis versus capital gains considerations, being able to roll something over that they might not necessarily need for the future, she said. "It's a very good strategy for them to give to a cause they care about in a way that will not only benefit the institution but them as well," said Finley.

The uncertainty might also provide opportunity. "It tells us to be as aggressive as you can be. We don't talk about their personal investments but we talk about now being the time for us to have that campaign because the economy is doing well," said Bob Carter, president of the consulting firm Ketchum in Pittsburgh, Pa. "More than interest rates, the stock market tends to drive capital campaigns because so many people in the major gifts area give away appreciated security," Carter added. "There's been a bunch of appreciation in the last few years. We see that as a much more significant monitor of successful capital campaigns than interest rates."

Interest rates could change the type of planned-giving vehicle nonprofits pitch to potential donors. For example, if interest rates are high, a life income gift annuity might be a better choice than cash or other securities.

"You don't want a gift annuity (donor) before age 55 because the donor could possibly out live life expectancy, and the amount of money that the college would have to give back would exceed the amount of the original gift," warned Finley. "The gift that seems to be talked about a lot right now is the IRA rollover for people who are 70 1/2-years of age. It's something nonprofits are trying to make donors aware is available as a charitable gift," she added.

Interest rates can make a building project too expensive. However, there are strategies for that, too. "Whenever the interest rates are down, organizations try to get their bonding in place so that they can escape these times when rates are going up," said Carter. "We advise clients to do their planning way in advance of the project so they can capture the lower interest rate."

The sale of municipal or other types of secured bonds to fund a capital campaign can impact fundraising for a project, Carter warned. "People who buy the bonds are the people you're also asking for money" because they can afford such investments, he said. But right now, in this economy, "we see no correlation that people who buy the bonds will not also make gifts to the institution," said Carter.

With the stock market hitting all-time highs, Carter said it's time to talk to donors about dumping under-performing assets by donating them. "Low-performing assets that are not giving an interest yield that they (donors) would like to see, they might give them away because they can at least take the tax deduction by giving away a poor-performing asset," said Carter. "They can satisfy a commitment or pledge with something that wasn't giving them as much yield as something else might."

Often a capital campaign involves land acquisition. Given these market aberrations and the state of the nonprofit sector, Clara Miller thinks that nonprofits are too real estate heavy.

"There is a huge amount of debt available to nonprofits out there for all sorts of facilities issues," said Miller, president and chief executive officer of the Nonprofit Finance Fund in New York City. "The interest rates go-ing up might have some effect on long-term mortgages, but even new market tax credits and other debt issues help nonprofits finance facilities," she said.

"The availability of cheap debt or buildings is pushing us toward real estate more strongly than we should be going. What I think is worrisome, we may be over-building in real estate when we should be investing in other kinds of capital investments, like technology or long-term growth needs for the organization itself," said Miller.

The concept of a capital campaign should be about more than a building, she said. And, debt isn't necessarily a bad thing. E