Feasibility Study Outline
The Feasibility/Readiness Study - “Testing the Waters”
Fundraising ventures are most always undertaken with one central focus – to meet the financial goal of the effort and thereby meet the needs of the organization or agency that are dependent on the receipt of charitable gifts. The greater the financial need and the proposed goal to meet it, the higher the stakes for success and, possibly the higher the degree of uncertainty regarding the viability of the goal. A feasibility/readiness study (herein referred to as “feasibility study) has as its primary goal to determine potential to meet the proposed financial goal.
Major capital campaigns, therefore meet the definition of big goals with crucial needs and some level of uncertainty as to the potential to achieve the goal. Typically, capital campaigns seek to raise very significant amount of cash contributions to fund site and facility development and expansion. Occasionally capital campaigns include components to fund start up or organizational needs or cash-funded (as opposed to planned gift expectancies) endowments.
The need to determine the viability of success for a proposed capital campaign is a crucial step for an organization as it moves toward implementation of the campaign. The feasibility study process, properly implemented, will provide opportunity to determine the potential for campaign success.
The study will also help craft the campaign to align with what is learned in the study. This will help raise more money. Or, it will have you wait or cancel an appeal, resulting in a cost and image savings for the organization by avoiding a flawed appeal.
When is the need for a feasibility study indicated? At least five factors are indicative of the need to conduct a pre-campaign feasibility (sometimes referred to as a “readiness”) study:
1. Uncertainty about the constituency’s acceptance of the project(s) to be funded
2. The financial capacity of the organization’s donor/potential donor base to fund the effort
3. The “will” of the organizations leadership and volunteer corps to do the work necessary to implement the campaign
4. The economic environment for fundraising in the constituent area
5. Determination as whether or how to phase the campaign
The accuracy and relevance of feasibility study is more of a subjective judgement than an objective one. However, the integrity and helpfulness of the study results can be strengthened when there is good preparation and implementation. The potential for achieving this dependent on a couple of key factors:
1. Clear articulation of the “case” for the proposed campaign
2. Careful selection of participants of those chosen to be surveyed, particularly those selected for personal interview.
Potential Outcomes
Feasibility/readiness studies are highly recommended given the size and scope of most capital projects. As listed below, a number of vital objectives can be accomplished:
1. The organization will learn the image that the organization projects to members, donors, community members, residents, those served and other constituents.
2. The organization will gain insight regarding the perception of the organization’s management and leadership.
3. The organization will hear the perceived value of the services and provided, in particular the service provided to those who are directly or are otherwise served by the organization.
4. The plan that is developed for the campaign will be reviewed and critiqued by constituents and an assessment of the plan's viability will be gained.
5. Fiscal factors regarding the project’s long-term viability (operational costs, potential revenue generation, marketability of services, etc.) regarding the proposed capital campaign may be surfaced.
6. Competing campaigns/projects will be identified.
7. Key campaign leaders will be identified.
8. Potential major donor sources will be uncovered.
9. Campaign timing issues will be identified.
10. Economic conditions in the constituent area, both current and projected, will be assessed.
11. The organization will gain information to determine the phases and goals to be set for the campaign.
12. The organization will receive a clear course of action on how it might gain the best results from the campaign.
13. The organization’s current major donor prospects will gain ownership of the planned project plans and goals and will also be “conditioned” to the potential of the upcoming campaign.
14. The organization may be able to determine the advisability of integrating endowment goals (especially through planned/deferred gifts) into the proposed campaign.
15. A preliminary viable financial goal and projected campaign timetable will be determined, if proceeding with the campaign is recommended.
16. Interviewees and in particular, those who are donors, will gain a sense of ownership through their participation
The Direct Benefits to the Organization
These outcomes will lead to the organization either saving money in the long-term, or more often, raising more money when the campaign is implemented.
At its best a well conducted study will:
1. Help the organization make new connections. Often the largest donors and key campaign volunteer leaders, even a general chair, are found as part of this process.
(An example: A large multi-state organization in the SE United States was able to secure and interview with a regionally/nationally recognized professional sports executive who had only marginal, if any, connection to organization. That executive ultimately ended up serving as honorary chair for the successful campaign, became a major donor, and hosted donor cultivation and gratitude events. He also participated in further campaigns for the organization.)
2. Be an important part of networking your way to the ultimate campaign goal.
3. Expand the organization’s donor capacity. The organization’s database likely doesn’t have all the donors needed to reach the goal and oftentimes doesn’t include heretofore unidentified non-donor prospects who may have both passion for the proposed project and financial capacity to make a significant impact on the campaign. This step, when done well adds to your prospect list.
(An example: An interviewee in a feasibility study who was, beforehand unknown to the organization, identified a potential major donor prospect, also unknown to the organization. Subsequently, the interviewee also made known to the organization’s leadership that he was interested in serving on the organization’s board of trustees and that he wanted to introduce the major donor to the organization’s executive. The major donor ultimately contributed a lead gift of $750,000 to the campaign and later endowed a new program venture.)
The Case for The Proposed Campaign
A study document often called the “case” for the proposed campaign should be prepared for use in a feasibility study. The purpose of this document is to clearly define the organization’s plan to address the needs and opportunities that it is planning to address by conducting a campaign to secure funding for funding the solutions to the needs and opportunities. This document is crucial to providing information to those who will be surveyed in the study process.
Typical elements of the case document would include at least toe following information;
The basic organizational and programmatic history of the organization
The organization’s service to society and constituents over the years,
Current financial information, including, if available, a recently audited balance sheet or statement of financial position.
The needs to be met in sustaining and strengthening the organization’s service.
How the projects and improvements proposed will meet the identified needs.
The plans and costs of the proposed projects and improvements
The proposed campaign to secure the campaign including timetable and anticipated gift levels that will be needed to meet the campaign goal.
This case document should be distributed to all participants in both electronic and hardcopy formats prior to receiving their input in the study. Participants include those persons who will be interviewed personally and privately, those who participate in focus group sessions (in person of virtual) and those who will be surveyed by mail and via electronic methods.
Study Procedures
Those identified as the key participants due to their potential as donors and leaders for the effort should be interviewed personally.
Interviews should be conducted privately and confidentially by a third-party person, usually a consultant for the organization. All interviewees should be asked the same questions.
Foundation contributions may be a potential component of the campaign. However, it is often not productive to spend a lot of time surveying them as a part for many feasibility studies. They may be excellent funding sources, however, especially those that are family foundations, donor directed funds within community foundation and those that have contributed to your organization in the past or those with similar missions.
In some cases, a “wealth screen” study can be conducted to determine, in a cursory way, the potential financial capacity of the organization’s constituent supporters. This screen is typically focused on individual/family prospects, especially those with closest philanthropic ties to the organization and/or kindred organizations. It is to be noted that a strong financial capacity indication for a particular prospect identified is only one factor in the likelihood of that prospect’s possible significant or any contribution to the proposed campaign.
Mail and electronic surveys can also be helpful and be used to survey a broader population, especially donors to your organization. Focus groups can also be conducted, again among donors but also might include not-donor prospects and community stakeholders as a method of introducing the potential campaign to the broader public.
Study Participants
The most effective and efficient method to gain the information needed to develop a successful campaign with nearly any constituency, and particularly with one that is large geographically or has a large constituent base, is through personal interviews conducted with persons across the that range of distance and/or breadth of prospect base. These interviews would be conducted with potential major donors, key leaders, elected leaders, board members (present and past), regional administrators and other people of influence. For organizations that are church related, it is important to include church leadership.
Profile of Persons to Be Personally Interviewed in the Study
Leadership people . . . people who have their fingers on the pulse of the region, communities and congregations . . . who know what's going on.
People of influence who may not have significant financial resources or be able to give… but are able to influence others.
Your donors who have provided the largest contributions in the past . . . prospective largest donors . . . people/organizations/businesses you would approach and ask to consider giving a major gift … people of means, generous to charitable, social service, religious causes and kindred organizations.
People who are representative of groups of people . . . some might know what the businesses, groups and churches would do, but not what individuals would do . . . likewise some might know what individuals would do, but not what business groups, churches or the greater community would do . . . those might know the economy of the region well.
Persons/family members residents served by your organization.
Representatives of family foundations or donor designated funds held in community foundations.
Bankers . . . business persons . . . . . . farmers . . . lawyers . . . administrators… regional development staff… insurance professionals . . . past and present board members and, for church related organizations, judicatory leadership and clergy
Profession and occupation are not as important as the person's knowledge of their region and/or the church and his or her ability to become a donor and/or leader and worker.
Persons to be surveyed via mail/electronic survey and attendees at focus groups should include those who might have qualified for an interview, were there time for their participation. A much broader audience may be included as well.
The Study Report
Following the interview process and all other survey efforts, the third-party consultant prepares a final written report and presents it to the leadership staff and board of the organization. The final report will include at least the following information;
A compilation of all responses to all questions asked in personal interviews.
Comments made by interviewees and by those responding to fucus group or e-mail/mail surveys
A list of findings from the interviews as determined by the third party.
Recommendations regarding further action to be taken by the organization.
In addition, it will be most helpful to the organization if the report includes a complete listing of all potential leaders and donors who were identified by the interviewees and from other sources. It is best that no direct responses from interviewees or surveys be reported in a manner that identifies the respondent.
Finally, in the case where a wealth screen process is conducted, a summary of the findings gained from this process should also be presented in a manner so as not to disclose financial information of those included in the study.
It is helpful that a summary of the report be produced to share, in limited quantities for use in recruitment of campaign leadership and preliminary cultivation activities with select lead donor prospects.
The Challenges
Board members/other leaders don’t want to spend money and time to do the study – “Let’s just go out and raise the money and see how much we can get.”
Reluctance to secure a third-party consultant to lead and implement the study.
“We can do this ourselves. We don’t need outside help.”
Organization leadership doesn’t know who to include as participants in the process and has weak or no relationships with key stakeholders and leaders.
The planning for the proposed project is incomplete and lacks enough specifics and details to provide study participants a basis to provide meaningful information and observations.
Three Feasibility Studies
Case 1
Proposed Campaign Goal: $800,000
Project: Major upgrade and renovation of existing facilities
Study Findings and Recommendations: Secure professional site planner, redesign project and delay campaign until new plan is presented to constituents for approval
Result: New plan, including one new stand-alone facility and minor renovation of existing facilities. Capital campaign goal set at $1million resulting in 1.1 million received.
Case 2
Proposed Campaign Goal $8.6 million
Project: Multiple new facilities and major renovation of existing facilities all presented in five phases
Study Findings and Recommendations: Move phase 5 to phase 1, revisit the design for largest ($4 million) project, set base goal of $4.5 million and challenge goal of $7million.
Result: After significant cost savings through the revision of the major project plan as well as other designs, the campaign was “rephased.” A total of $5.7million was received, completing all projects except a major parking project. This project was addressed with a follow up special appeal.
Case 3
Proposed Campaign Goal $2.75 million
Project: Renovation of one residential treatment facility and construction of a new residential treatment facility. This project was to be phase one of a development plan, the second phase of which was intended to be addressed in a future campaign.
Study Findings and Recommendations: Significant donor and general public support far beyond the organization’s assumption was identified. The expressed need for and interest in the proposed future phase were very prominent. A goal of $5million and the inclusion of the second phase were recommended.
Result: The organization set the campaign goal at $5million and included the second phase as recommended. $5.4 million was received.