Let’s say you run a disaster relief organization. Over the past couple of years, your nonprofit has grown, and you need a new facility to effectively operate and help your beneficiaries. To fund this project, you launch a capital campaign.
However, before you can kickstart your new project, you must consider whether it’s a good fit for your organization and if you have the means to tackle it.
That’s where a nonprofit feasibility study comes in. A nonprofit feasibility study is the first step to any major endeavor, allowing your organization to determine the viability of the proposed project, identify potential challenges, rally early support and create a successful action plan.
If your nonprofit is gearing up to launch a large-scale project like a capital campaign, you’ll need to know the basics of feasibility studies. In this article, we’ll review:
- What is a nonprofit feasibility study?
- What are the benefits of nonprofit feasibility studies?
- When should your nonprofit conduct a feasibility study?
- 9 Steps for Conducting a Successful Nonprofit Feasibility Study
Before we dive into how to conduct a thorough nonprofit feasibility study, let’s cover what a nonprofit feasibility study is and its various benefits and use cases.
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What is a nonprofit feasibility study?
Nonprofit feasibility studies assess an organization’s readiness for a large project, such as a capital campaign.
Specifically, nonprofit feasibility studies capture perceptions from key stakeholders regarding your organization and the project in question.Fundraising consultants help conduct one-on-one interviews with your stakeholders to gather unbiased information and feedback.
Then, you can use the results to determine whether or not the campaign should proceed and craft a fundraising strategy. Whether you move forward with your campaign or not, fundraising feasibility studies reveal valuable information that your nonprofit can capitalize on.
What are the benefits of nonprofit feasibility studies?
A nonprofit feasibility study is more than a means of determining whether a project is viable. These studies have many benefits, allowing your organization to:
- Gather feedback. Since you’re speaking directly with key contributors, a nonprofit feasibility study is a chance to gather feedback before you launch a project to the public. What is it about your cause that resonates with them? What fundraising strategies do they respond to, and how do they feel about your project overall? Using these insights, you can set your project up for success.
- Develop your campaign case for support. A well-designed campaign case for support will demonstrate your organization’s credibility and inspire donations to your project. You can use the feedback you collect from your capital campaign feasibility study to inform your case for support.
- Create early support and awareness for the project. A feasibility study is the perfect opportunity to generate early excitement for your fundraising campaign among the stakeholders you’re interviewing. If these stakeholders get the chance to learn more about your project, they’ll be able to picture their role in your campaign ahead of time and offer their support.
- Set informed goals. By understanding how much your dedicated supporters are willing to contribute, you can better determine your overall fundraising goal. Instead of solely relying on donor data, speak directly with donors to project your campaign’s donation revenue.
- Steward your supporters. Lastly, a fundraising feasibility study is a chance to deepen donors’ relationships with your organization and get them more earnestly invested in your cause. After all, you’re reaching out to your most important supporters and demonstrating that you value their opinions, suggestions and involvement in your organization.
In addition to the items listed above, nonprofit feasibility studies can help you assess and improve your overarching fundraising strategy. Whether you’re conducting a fundraising feasibility study before the launch of your capital campaign or for another large-scale fundraiser, the people you interview may have valuable advice on ways to modify your approach.
When should your nonprofit conduct a feasibility study?
A nonprofit feasibility study can apply to any major project that requires significant support and funding. Let’s take a look at specific situations in which your nonprofit should complete a feasibility study before jumping in:
- Hosting a capital campaign. Capital campaigns are the most common cases in which nonprofits use feasibility studies. A capital campaign is a time and resource-intensive project designed to raise a specific amount of money within a defined time period. You may launch a capital campaign to fund a large endeavor like constructing a new building, renovating an existing building or purchasing new equipment. Since these projects typically require millions of dollars in funding and several years to complete, it’s essential that your organization completes a fundraising feasibility study first.
- Launching a new program or service. If you’re introducing a new program or service to your organization, you must determine whether it’s a good fit for your nonprofit’s mission and if your supporters will be receptive to this change. A feasibility study can help you gauge key stakeholders’ perspectives and if you have the financial backing to launch this new program.
- Expanding an existing program or service. A feasibility study is also applicable for projects that involve changing an existing program or service. Through a fundraising feasibility study, your nonprofit can decide whether there’s enough demand for this change, if it addresses an existing problem and presents a clear solution and if you have the necessary resources and support to execute it.
- Seeking major funding. Let’s say you’re looking to grow an endowment or supercharge your major gift fundraising efforts. Both of these cases require strong relationships with donors, which you’ll be able to grow during a feasibility study.
As the name suggests, feasibility studies are a great way to assess whether the project you have in mind is feasible for your nonprofit. This way, you aren’t rushing into a major endeavor and risking your nonprofit’s financial well-being and reputation.
9 Steps for Conducting a Successful Nonprofit Feasibility Study
Now that you know the function of a nonprofit feasibility study, let’s get into our top tips for conducting a well-designed feasibility study for your next major project. We’ll walk you through the process step-by-step with helpful tips and tricks along the way.
1. Define the project to be tested.
The first step in your feasibility study is to develop your project—what is it you would like to test? Let’s go back to our original example of constructing a new building. You don’t need to know the complete ins and outs of your project just yet—like zoning guidelines and local building codes and regulations (though this information is helpful). However, you do need to take this broad concept and narrow it down to explain how your proposed project meets your organization’s needs.
To develop a concrete plan, map out these three elements:
- Problem. What challenges will this project address? By defining the problem you’re trying to solve, you can hone the focus and goal of your project.
- Solution. How will the project present a clear solution? If you’ve pinpointed multiple problems, think through how your project will address each of them.
- Benefit. What benefits will this new project bring to your nonprofit and its community? Make sure these advantages are worth the time, effort and funding you’ll invest in your project.
Use this worksheet to draft the problem, solution and benefit of your project:
Let’s consider an example of a feasibility study from Anchor House, Inc. Anchor House is a community shelter and pantry that aims to tackle homelessness, provide hunger relief, and help families in need get back on their feet.
- Problem: Due to widespread job loss and sickness prompted by COVID-19, Anchor House anticipated a huge increase in the number of families needing their services. However, the organization had limited shelter space and wouldn’t be able to meet this demand with its existing resources.
- Solution: Anchor House proposed building a new facility that would allow them to serve 36 more individuals and three additional families at a time. As the only year-round shelter in Jackson County, Indiana, Anchor House’s second housing facility would provide more people with the care and services they need.
- Benefit: The new facility at Anchor House allowed the organization to introduce a new mentorship program to help individuals and families transition to more permanent housing and use basic technology and safety measures to create a safe environment. Anchor House also proposed that this new facility be built with easy access to transportation, business and important services.
After delineating what the new facility would accomplish, Anchor House identified this as a project worth pursuing. Your nonprofit should also follow this format to uncover how your proposed project will push your mission forward and align with your overarching goals.
2. Develop your project’s goal.
Once you’ve outlined the problem, solution and benefits, you can generate a working goal for your project. You can refine this goal over time as you collect more information and hear from your major stakeholders, but it’s important to develop a clear purpose statement to guide the rest of your campaign.
For example, an animal welfare organization might create the following goal statement:
“Our goal is to raise $5 million over the next three years to build our new animal shelter, which will provide temporary homes for 300 pets as they await adoption.”
As you can see, this goal has a specific dollar amount the organization aims to raise, a timeline for goal completion, what funds will go toward, and how many beneficiaries this project will support.
To create a goal with this level of specificity, determine the possible routes to achieving your goal and the associated costs with each. For example, if you’re developing a new building, you could consult with architects to understand the costs associated with different aspects of the project, such as construction and interior design.
3. Hire a fundraising consultant.
The most fundamental aspect of a nonprofit feasibility study is the interview process. Through interviews, your nonprofit will gather the stakeholder feedback you need to shape your project.
While some nonprofits perform their fundraising feasibility studies in-house, this strategy is not advisable. It may save on funds, but an in-house interviewer’s lack of objectivity toward your organization may inadvertently jeopardize the study’s results.
An objective third-party representative like a fundraising consultant is best equipped to conduct a nonprofit feasibility study because:
- Interviewees are more likely to be candid with someone who doesn’t have a stake in the campaign. It could be uncomfortable for a supporter to express doubts or skepticism to an interviewer attached to the project or the mission. As such, supporters may withhold negative opinions or over-promise their commitment, causing your team to miscalculate expected revenue and support.
- Consultants have experience with feasibility studies and can help you build sustainable solutions from the information they gather. Due to their fundraising expertise and experience with other nonprofits, consultants can help you identify themes and opportunities from your interviews. Additionally, they can prioritize problems and suggest how your nonprofit should address them strategically.
- Consultants may be more transparent and honest about their findings than someone closely tied to your organization. Even unintentionally, an in-house interviewer can misrepresent a project’s feasibility and gloss over challenges. Consultants can present the results as they are so your organization is best poised to achieve successful results.
Ultimately, it’s important to have an unbiased party conduct your fundraising feasibility study to present the results as accurately as possible. Otherwise, the study could be a waste of your organization’s time and money.
4. Determine key stakeholders.
The stakeholders your consultant interviews during the study should be engaged and invested in your organization. They need to have a genuine connection to your nonprofit and actively contribute to your mission, whether that’s through frequently volunteering their time, giving recurring donations or offering key support in other substantial ways.
Select interviewees with a demonstrated commitment to your organization, such as:
- Current and former board members
- Current and former major donors
- Planned gift or legacy donors
- Volunteers in leadership positions
- Community stakeholders
- Business owners
- Recipients of your nonprofit’s services (alumni, grateful patients, etc.)
Consultants usually interview 20-40 people, depending on the scope of the project. Remember to choose a variety of supporters who can provide diverse feedback. Enthusiasts and skeptics alike can be invaluable!
5. Develop a feasibility case for support.
Your case for support is key to the success of your feasibility study. This is because it presents an overview of your project and important organizational background to stakeholders, so they can answer your questions and give constructive feedback for your study.
Your feasibility case for support should include important details, such as:
- Your organization’s mission and story, including the need for the mission and key impacts
- The need for the project, framed as challenges to the mission
- Projected benefits of the project and how it will solve the addressed challenges
- Proposed project details and costs
Additionally, the feasibility case for support gives you an opportunity to try out different messaging to see how your stakeholders respond. Remember to keep this document on the shorter side—about four pages is enough content to shed light on your proposed project and why it’s necessary.
Your consultant can help you prepare your feasibility case for support that outlines the most important details of your project, demonstrates its projected impact and explains how you’ll carry it out.
The more specific your organization can be, the better. As you build your case for support, remember to emphasize the challenges your nonprofit faces, the solutions to address them and the overall benefits of your proposed project.
Let’s revisit our earlier example of Anchor House. In their case for support, Anchor House clearly outlines the problems their organization faces and combines the solutions and benefits that address these challenges in a neatly organized chart to clearly communicate the need for this project to stakeholders:
Work with your consultant to use language and messaging that will best resonate with your supporters. Additionally, be sure to implement your nonprofit’s branding to align the document with your organization’s identity.
6. Take steps to cultivate strong relationships.
It’s a common misconception that fundraising feasibility studies are primarily about the results. While the results are definitely important, a nonprofit feasibility study is also a chance to steward and cultivate stronger relationships with key donors and organizational leaders.
Nonprofits can capitalize on this opportunity by:
- Sending invitations to participate in the study that focus on the recipient, not the organization. When inviting a stakeholder to speak with your organization, it’s important to focus on their contributions, not your organization’s accomplishments. Use the second person (“you”), and express how much you would like to hear about their thoughts and opinions.
- Helping participants envision themselves as contributors to your project. A fundraising consultant can help conduct the interview strategically to stir up early excitement for the campaign. It’s common for interview participants to become eager for the project once asked to imagine its conception.
- Thanking participants before and after interviews to show your appreciation. When a stakeholder accepts an interview request, thank them for taking the time to meet with your organization. After the interview, thank them again for their time and commitment to your cause!
By actively cultivating donor relationships during your fundraising feasibility study, you’re building steam for your project so donors are invested and excited before it even gets off the ground. Remember to take their feedback seriously to show them that you value their input.
7. Prepare questions for stakeholder interviews.
The questions you ask your interviewees are integral to the success of your nonprofit feasibility study. With the right questions, you’re not just learning whether or not stakeholders will support your project, but you’re also fleshing out the logistical details of how you would accomplish this project.
Work with your consultant to develop questions that determine:
- How stakeholders view the organization’s reputation
- How stakeholders view staff and board leaders
- Whether stakeholders think the project is needed and the scope is appropriate
- If the project is financially sustainable
- If the timing of the project or campaign is strategic
- If the stated fundraising goal is attainable
- If stakeholders are interested in giving to the campaign
- Prospects for major gifts and volunteer leadership positions
- Any questions or concerns stakeholders have
Make sure you have a mix of questions specific to your project and about your organization more generally. That way, you can have a well-rounded perspective about stakeholders’ perceptions that can help you develop a strong fundraising strategy now and in the future.
8. Review the results of your nonprofit feasibility study.
After a nonprofit feasibility study, your consultant should present the results. These results will tell you, first and foremost, whether the campaign should move forward. Additionally, the results should identify problems you need to address for the campaign to succeed.
No matter the results of your fundraising feasibility study, you can use these insights to your organization’s benefit. If the results determine your proposed project isn’t currently in your organization’s best interests, analyze why that’s the case and keep those considerations in mind when planning your next major campaign. On the other hand, if the results indicate you should move forward with your campaign, remember to factor in any new insights and information from your interviewees that can improve your approach.
Your study can also help you identify specific areas of improvement that can strengthen your organization as a whole. For example, if your study reveals mixed perceptions of your nonprofit from community leaders, then it could be worth investing in stronger branding and messaging to solidify your public image outside of the scope of this project.
9. Prepare to move forward.
Report your results to the board and have them vote on the recommended next steps for the campaign, which could be to move forward or hold to work on some things. If the campaign moves forward, you can determine whether to work with your current consultant or choose someone else to help you lead the campaign.
Then, you’ll go over your staffing needs and begin to piece together your team of cabinet members and campaign co-chairs. For instance, you’ll need a dedicated development officer, communications chair and finance chair to guide your organization through its campaign.
Your consultant will also take a close look at your technology toolkit, ensuring you have the right tools to manage a large-scale project. Nonprofits running a capital campaign or other large-scale project will typically need the following solutions, ideally integrated so that data is easy to collect, manage and use:
- Donor management software. Donor management software allows you to create comprehensive donor profiles and track donor behavior. You can leverage this information to create targeted asks and grow your relationships with supporters.
- Fundraising platform. A dedicated fundraising platform can help your organization create a user-friendly donation experience, manage campaign events and collect donor insights so you can actively adjust your strategies as needed.
- Prospect research tools. Take a deep dive into your donor database and leverage prospect research tools to identify major donors. Then, you can use this information to deepen your relationships with them and encourage giving during your large-scale project.
- Campaign website builder. To effectively market your campaign in the public phase, create a microsite or campaign landing page. A nonprofit-specific website builder can help your organization create a high-quality website or page with an embedded donation form.
- Email marketing software. With the help of an email marketing platform, you can automate your donation requests and updates to supporters, yet still add a personal touch by syncing with your existing donor management platforms. This will save your nonprofit team time during your campaign.
When your board receives the study results and votes on the next steps and your team has all the tools it needs, you can ensure that everyone is on the same page, knows they will have a role in making the campaign successful and can confidently move forward.
Additional Nonprofit Feasibility Study Resources
A nonprofit feasibility study is the first step to ensuring the success of a major fundraising undertaking. When conducted correctly, a feasibility study helps your nonprofit assess its readiness, develop clear goals and construct a roadmap for navigating challenges.
Make sure to partner with a fundraising consultant to help you navigate the feasibility study process. Backed by an outside expert, you’ll work through this essential campaign step with confidence and give your nonprofit the foundation it needs to lead a winning project.
For more information about nonprofit feasibility studies and setting your organization up for success beyond your large-scale campaign, check out these additional resources:
- 35+ Best Fundraising Consultants to Revolutionize Your ROI. Not sure which consulting firm will meet your nonprofit’s specific needs? Check out this list of the top fundraising consultants to steer your organization through the feasibility study and beyond.
- How to Supercharge Your Fundraising Strategy in 10 Steps. Every campaign, no matter the size, needs a strong fundraising strategy. Explore how your organization can build a well-designed fundraising plan.
- Hiring an Expert Capital Campaign Consultant: 6 Simple Steps. If you’re running a capital campaign, you may want to work with a consultant who’s an expert in this area. Check out our guide to hiring an effective capital campaign consultant.
