The nonprofit world is building again! For many years after the 2007/08 recession hit, capital projects ceased to sprout up in the nonprofit world as often as they did in the early 2000’s. Organizations were fearful about their ability to commit to long term, high cost projects. It made sense. But now that the economy has stabilized, and annual campaigns have recovered and even achieved all-time highs, we see building and renovation campaigns populate the nonprofit landscape once again. So the question is this – are nonprofits spending the time and money necessary to assure their capital projects are feasible before raising dollars and putting shovels in the ground? Many are not – but they should. Let’s explore why.
Typically, a feasibility study is done prior to a capital, endowment or significant major gifts campaign. It is part of the campaign planning process. Feasibility studies are especially critical before embarking upon campaigns to build or renovate facilities or purchase land. They are primarily used to 1) test a fundraising campaign goal, but they can also:
2) Test how funds should be used, i.e., what to fundraise for
3) Test campaign messaging
4) Provide valuable cultivation opportunities
5) Assess an organization’s philanthropic and organizational readiness to conduct a major fundraising campaign
6) Identify campaign leaders, volunteers and major donors
7) Give prospective major donors a feeling of being on the “inside”
8) Allow nonprofits to seek advice from respected community leaders, government officials and potential donors
9) Give nonprofits an understanding of how its mission and work are viewed in the eyes of its stakeholders and prospective donor community
10) Provide definition to the project or cause, resulting in a case statement (or case for support) that is often used beyond the feasibility phase
Most nonprofits engage consultants to lead them through the feasibility process. This is because the consultant can serve as an outside, objective party who is able to function as an unbiased interviewer, listener and observer. Often times, donors and prospects will confide in or provide candid feedback to the consultant; feedback they might not share directly with the nonprofit. The consultant must be careful not to betray the donor’s trust, but should explain to the interviewee (before the interview begins) that the general nature of the conversation will be shared with the nonprofit, but specific comments will not be attributable to a particular interviewee. This allows the interviewee to be honest, open and forthright and the nonprofit gains from this insight.
The bottom line is that most nonprofits engage in feasibility planning in order to best understand how much they can raise for a campaign project. Far too often, nonprofits bite off more than they can chew when it comes to large fundraising projects. They set budgets based on what they want, not what they are realistically able to raise, which leads to aggravation, unfinished facilities and disappointed donors. So before you get excited about attractive architectural renderings, consider a feasibility study! Stay tuned next week for more on the feasibility process, including what materials are needed and what the process entails…