Nonprofit 411: Capital Campaign Planning Studies (aka Feasibility Studies): Yay or Nay?

by Diane G. Remin, MajorDonors.com

Diane will be presenting at MNN’s annual conference ADVANCE on October 21. Click here to learn more about this topic or the 20+ other exciting options.

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When it comes to capital campaigns, the question that creates the Maalox moment for leadership is: Can we reach the goal?  Historically, nonprofits have retained consultants to visit with potential campaign donors to provide reassurance that in-house projections square with reality—or raise a flag if they don’t.

In a March 17, 2015 Chronicle of Philanthropy article, Holly Hall reported that James LaRose’s forthcoming book will have a chapter titled, “Feasibility Studies: the Crack Cocaine of Nonprofit Consulting.” Mr. LaRose is quoted as saying: “Eighty percent of nonprofits don’t need to spend $25,000 to $50,000 to find out what they already know, that they aren’t ready.”

A November 6, 2012 blog post by Tom Suddes on the forimpact.org website is titled:  “No More Feasibility Studies.”  Mr. Suddes focuses on the failure of such studies to involve and engage  donors.  Instead, as he puts it, internal leaders enlist external consultants for “justification, CYA and backup.”

Rationale for traditional Planning/Feasibility Studies:

  • Prospective donors are more likely to tell outside consultants what they really think. How do people feel about the organization?  How important is your mission and the particular capital project?  Do donors have any special concerns?
  • Being included in the study is part of the donor cultivation process.
    1. Flattered to be asked
    2. Opinions taken into account
    3. Initiates thinking about a capital/stretch gift.
  • You are likely to have a better handle on how much you might realistically be able to raise—and from whom.
  • You’ll find out if the volunteer leaders you envisioned playing a key role are, in fact, willing to do so.
    1. Campaign co-chairs? Committee members?
    2. Is the board ready?
  • Donors will let you know if there anything happening internally or externally that you may have over-looked.My take:
  • It is dumb to spend $25,000-$50,000 to find out you are not ready…when you already know. For smaller nonprofits, in particular, here’s a Capital Campaign Readiness Litmus Test™:
    1. You can’t name at least 30 potential top donors you could send a consultant to talk to if you were to do a Planning Study. (They won’t all say “yes.”)

 

  1. Your board doesn’t have at least three members who can make an impact gift—a gift would situate them among the top 20 donors on your campaign gift chart.
  2. You don’t have a campaign goal (estimated project cost along with endowment or other components, if applicable).
  3. You can’t identify two volunteer campaign co-chairs who are well-known in your community and committed to picking up the phone on your behalf.
  • Planning/Feasibility Studies and deep donor engagement need to work hand-in-hand.
    1. Suddes is right—it makes sense to involve your donors early on. Include key stakeholders in the preliminary conversations about the need, the project and the messaging—a “leadership consensus building” model he calls it.
    2. If you know your donors well, have a robust donor base, a strong board and enthusiasm for the project, then go for it.
  • Even if you ordinarily might forgo a Planning/Feasibility Study, consider doing one if donors have a particular reason to want to vent or be re-assured, e.g., the organization has:
    1. Shifted direction or leadership;
    2. Endured recent financial struggles; or
    3. Been embroiled in controversy.

Bottom line:  If you don’t have the donors or the campaign leadership, then take a step back and “get ready.”  You may have to build your board and/or strengthen donor relationships. Otherwise, engage your key donors in the campaign process early on.  Engagement can take the form of “leadership consensus building” or a more formal study.

Author’s note:  This article was adapted from “Capital Campaign Feasibility Studies: Yay or Nay” that appeared on massnonprofit.org in April, 2015. In the upcoming MNN session, whether or not to conduct a Planning/Feasibility Study will be one of the elements we cover.