Big investments should be approached carefully. Most people wouldn’t buy a new house or car sight unseen. The same is true for your nonprofit as it weighs a major fundraising campaign.
Capital campaigns represent significant investments of your organization’s time, resources, and energy. If all goes according to plan, you’ll reap the benefits of raising funding for a major capacity-building initiative, expanding your fundraising capacity, and teaching your team valuable fundraising and stewardship lessons along the way.
So, how should you begin carefully approaching this kind of major investment? With plenty of planning and a feasibility study.
What are feasibility studies? How do they work, and what are their outcomes? In this crash course, we’ll cover everything growing nonprofits need to know about this critical first step of a capital campaign.
What are feasibility studies?
A feasibility study consists of a series of interviews and discussions with the key stakeholders of a capital campaign. The stakeholders involved in a feasibility study then typically include:
- Your nonprofit’s leaders
- Key external partners and funders
- Major donors
- Community philanthropic leaders
- Other key constituents with funding capacity
During these interviews, you or a fundraising consultant will gauge your stakeholder’s thoughts and opinions on your initial campaign plans. What do they think of its objectives and preliminary fundraising goal? Do they think your organization can feasibly reach that goal to accomplish the objectives? Do they have other concerns? Are they excited about the prospect of your nonprofit reaching the next level of impact and capacity?
The findings from your feasibility study interviews are then compiled and presented to your board to help them make a decision about moving forward with your campaign. In some cases, the study findings will trigger a reexamination of your campaign plans in keeping with the recommendations of the study.
What is the purpose of a feasibility study?
A feasibility study will safeguard your nonprofit’s time, resources, and energy and keep you from conducting a campaign that isn’t likely to be successful.
The interviews show you early on if the campaign’s key donors are truly interested in the campaign and up to the task of helping you drive it to success.
Think of it this way—you don’t want to commit years of hard work to a campaign if you already know that your stakeholders don’t believe in your plan and aren’t likely to give at the levels necessary for success. Alternately, if you find that key supporters think you can and should go even higher with your working goal, you don’t want to stick with the smaller goal when you can realistically raise even more money than you thought possible.
Your feasibility study tests your plans and will give you concrete information that will help you decide if you should go full steam ahead with your current plans or revise the campaign’s scope by raising or lowering its goal.
When should you conduct a campaign feasibility study?
As mentioned above, a feasibility study tests a plan and a fundraising goal. But it should happen before you officially begin raising money for the campaign and long before you announce the campaign publicly.
You’ll need to have a clear idea of your campaign’s objectives—what you want to accomplish, purchase, or build with the funds raised—and an initial financial goal—the amount you’ll need to reach those objectives.
What are the most effective ways to conduct feasibility studies? There are two different models or approaches for conducting feasibility studies. These approaches include:
- The consultant-led approach. An outside fundraising consultant conducts the study for your nonprofit from start to finish. They’ll conduct confidential interviews with your campaign stakeholders and report back to you with their findings and recommendations.
- The guided approach. With a guided feasibility study, a fundraising consultant, guide, or coach shows you the ropes, and your leadership conducts the interviews themselves. Then, you’ll work together to review the findings, write the recommendations, and present them to your board.
Which model is the most effective? Each model can be a good choice depending on your nonprofit’s size, bandwidth, and experience. For maximum, long-term value, we recommend guided feasibility studies.
This is because a hands-on approach plus the support of a campaign expert gives you the interview findings you need to move forward and direct experience and confidence to carry forward into your campaign. These are some of the key benefits of this approach that we’ve seen:
- Hands-on interviews enable active participation and learning for your nonprofit.
- Being interviewed by your director or other leader strengthens the relationships between the organization and the donors.
- This personal touch can generate more buy-in from prospects and often leads more directly to a campaign gift.
- Directly interviewing stakeholders gives you clearer insights into all the responses and findings that come out of the process, not just those a consultant deems relevant.
These benefits all spring from the fact that a guided feasibility study’s stakeholder interviews are not confidential. Confidential interviews are the classic approach. The rationale is that donors and team members are more likely to honestly speak their minds about your nonprofit’s leadership and plans when interviewed by a consultant behind closed doors.
However, we haven’t seen this rationale hold up across the board. Many donors (especially loyal, high-value donors whose relationships are the most important for your nonprofit) would rather talk directly with your leadership. If asked, they will be happy to discuss their ideas and concerns directly.
Relying on a third party to conduct the interviews the leadership doesn’t allow your team to actively learn from the experience, and they miss insights and context that direct conversations will yield. And, if a major donor’s concerns can be dealt with directly.
Whichever model you choose, your feasibility study will be an invaluable opportunity for your nonprofit to get important feedback from your most influential donors and constituents.
Capital Campaign Readiness Assessment
Is your organization ready for a capital campaign? This simple assessment tool will help you find out. You’ll assess six key areas of your organization. Take this free assessment now and find out if you’re truly ready for a campaign.
About the Authors
Amy Eisenstein, ACFRE, and Andrea Kihlstedt are co-founders of the Capital Campaign Toolkit (CCT), a virtual support system for nonprofit leaders running successful campaigns. The Toolkit provides all the tools, templates, and guidance you need — without breaking the bank.