The Importance of a Feasibility Study
A few years ago there was a lot of talk about how feasibility studies were not a necessary part of a capital campaign. A lot of smaller nonprofits breathed a sigh of relief and started campaigns without doing a study. Some hit their goal. Others floundered. After talking to a lot of organizations what struck me was that success did not necessarily depend on doing a feasibility study but whether the organization would have been able to conduct a study that would have been useful.
A big purpose of the feasibility study, of course, is to see if your organization can achieve a dollar goal. So the first thing you need to be clear about is how much do you have to raise above and beyond what you currently raise. Too many organizations seem to think that if they currently bring in say $1.2 million and they need $2 M to buy a building, then they only have to raise $800,000 more. Which is nonsense. The $1.2 they are raising is already supporting something—often much of the general operations of the organization. What happens if that money is moved elsewhere?
The second thing a feasibility study does is talk to stakeholders and potential donors. They are asked how they feel about the organization and whether the case statement is one that speaks to the person being interviewed. If not, what is the problem? Is it the message? The project? The lack of specificity? The interviews also talk about campaign leadership, and critically, the level of support a donor at this moment would consider. This doesn’t bind them to a gift, but it does give a good idea of whether the organization with the donors it has can achieve its goal.
The donors it has is a a key point here.
When you figure out your campaign goal, a next step is to build a gift range chart. This chart graphically shows that in order to raise X dollars, you need Y donors at specific price points. To get those Y donors, you must have 3 to 4 times as many prospects—though as you go down your chart (and the chart is always built top down), you will need fewer prospects because some from higher levels will give at the lower ones. And remember, prospects are individuals and organizations you have real reason to believe could and would make a gift at a particular level.
A few years ago I was hired by an organization to do a feasibility study. All was good at first. They knew how much they’d need, they developed a good case with great pictures and plans, but then we began working on the gift range chart. As with all good things, one size does not fit all, but there are some constants to start with. Like the lead gift should be between 15-25% of the total.
Then cut the gift size in half and double or triple the number of donors at each level. Make sure you round the donation levels up or down to avoid weird numbers.
For a capital campaign, 20% of your donors will most likely represent 80% of your goal.Roughly 80% of your goal will come from 20% of your donors.
Okay. We created a chart. And my clients stared at it. Then shrugged.
“We don’t have any donors who could give at that top level.” Or, it turned out at the next 4 levels. In fact, in order to reach the goal they set, given their donors’ capacity, they would have needed several thousand donors.
This didn’t mean that a capital campaign wasn’t in their future; but it did mean that unless they knew a few people with deep deep pockets, it wasn’t something they could do now.
What they could do—and what we did—was to begin building a robust individual program that wasn’t predicated on events but rather on finding donors who were dedicated to their mission and willing to make substantial gifts.
We also began training a cadre of people who could ask. Not via email or letters, but face to face (even if face to face has meant phone or zoom), and understood the importance of strategically planning the moves they were making to bring prospects closer to giving, and donors closer to making larger gifts.
In the meantime, they started sweeping money into a fund that would kickstart the campaign that they are planning on launching in a year. With a feasibility study to help ensure success.