Nonprofit Feasibility Studies: Understanding the Basics
If your nonprofit is embarking on a large fundraising project or capital campaign, you may need to make use of a feasibility study. Because nonprofit feasibility studies are only conducted for large fundraising projects, many nonprofits are unfamiliar with the ins-and-outs.
If you’re on the verge of conducting your first feasibility study, or if you just need to learn more about these valuable tools, then look no further!
We’ve answered the most pressing questions from nonprofits and philanthropic leaders regarding the basics of feasibility studies:
- What is a nonprofit feasibility study?
- When should your organization conduct a feasibility study?
- What information does a nonprofit feasibility study reveal?
- What kind of questions should you ask during your feasibility study?
- Who should you interview?
- What are the benefits of a nonprofit feasibility study?
- Why should fundraising consultants conduct the feasibility study?
We have the answers to these questions, and more! Let’s jump right in by tackling the first question.
What is a nonprofit feasibility study?
In short, a feasibility study is a tool that will help your nonprofit determine how to proceed with a capital campaign or large project.
In a feasibility study, a third-party representative (usually a fundraising consultant) interviews important stakeholders in your organization and community. The interviews are designed to gather intel on these stakeholders’ perceptions of your nonprofit and its reputation in the community.
Throughout the course of these interviews, your nonprofit will learn how your project will be received by your most integral supporters and donors. Not only will this help you determine whether the campaign should proceed in the first place, but it will also give you the information you need to raise as much as possible.
A feasibility study will help you craft a fundraising strategy tailored directly to your donors. And of course, it will help you determine the logistics for accomplishing each stage of your campaign.
Your study may reveal, for example, that crowdfunding campaigns are especially effective for your nonprofit and that major donors would like to be more involved with these efforts without the pressure of making an online donation (most people, after all, wouldn’t be willing to give $100,000 online). With this information, you may opt to host a soft launch of your campaign, using your major donors as leaders who will encourage others to follow suit with donations.
The point is that a feasibility study will help guide your decision-making so your campaign reflects your donors’ and supporters’ interests.
When should your organization conduct a feasibility study?
A nonprofit feasibility study should be conducted during pre-campaign planning. Conduct the study about 3-4 months before you actually start asking for donations. For more pro-tips like this one, check out Aly Sterling Philanthropy’s guide to maximizing your nonprofit’s feasibility study.
That said, your feasibility study shouldn’t be the first thing you do for your campaign.
The extent of the work you’ll need to do before the feasibility study will depend on the complexity of your proposed project.
For example, if you’re conducting a capital campaign for a building project, you’ll need to:
- Determine a few possible routes for completing the project in advance.
- Calculate the costs of the project, which may require consultation with construction firms.
After competing these tasks, you’ll have a good idea of how you should set your proposed fundraising goal. Your feasibility study will then help your team determine if you have the support necessary to make this goal a reality.
In contrast, if you’re launching a fundraising project to capitalize on an anniversary for major gift fundraising, you need not come prepared with so many details. In fact, the feasibility study will help you flesh out the logistics, like your fundraising goal, so that your strategy is built around what you know you can accomplish.
Thus, it’s important to understand the scope of your project and what you hope to accomplish before you look into these studies so that you can receive the most useful and applicable information.
No matter what, you should have board support for your campaign before the study occurs. Your board, after all, will prioritize the budget to accommodate the costs of the study and the consultant who will conduct it.
What information does a nonprofit feasibility study reveal?
A common misconception about nonprofit feasibility studies is that they’re limited in use.
In reality, a feasibility study should help you determine more than your fundraising goal; it will also tell you more than how you should complete your project.
The study should elicit the strengths and weaknesses of your organization as a whole, including areas for potential growth and problems with your infrastructure.
Specifically, this study should reveal:
- Viable candidates for leadership positions. You’ll need an adept team to complete your project, and your feasibility study can point you toward the most respected and capable leaders in your organization.
- How effective your fundraising strategies are. You may have data on your past fundraising events and strategies, but it’s important to put this information into context. Your interviewees will likely have valuable insight into what worked and what didn’t, and more importantly, why. Though interviewees may not be able to explain their feelings toward your fundraising strategies explicitly, a good interviewer should be able to pick up on themes (even unspoken patterns!) that can be quite revealing and informative.
- The strength of your case for support. Your case for support is the crux of your campaign and the justification for your nonprofit’s existence. Refining your case for support through direct donor feedback can help you clarify your mission and strengthen your communications for future fundraising efforts. Plus, you can more effectively persuade donors to give.
Apart from these specific, important details, a feasibility study can reveal underlying problems that haven’t been vocalized. For example, you may uncover that former major donors were unsatisfied with your stewardship program, and as such, you need to appoint someone to serve as Stewardship Officer instead of delegating every task to your (rather overwhelmed!) Director of Donor Relations.
Catching these issues can help you solve them, ultimately strengthening your nonprofit in the long run.
What kind of questions should you ask during your feasibility study?
One of the most important elements that nonprofits overlook during their fundraising feasibility study? The study’s interview questions!
Unfortunately, many nonprofits make the mistake of asking feasibility study questions that are too general.
In fact, your team should work with a nonprofit consultant to outline a set of questions that get to the heart of your stakeholders’ relationship with your organization.
Because you want your study to reveal potential campaign leaders, the strength of your fundraising strategy, and the clout of your case for support, your team needs to ask targeted questions that give context to how a stakeholder feels.
Work with your consultant to develop questions that provide accurate context to stakeholder responses. Your team might ask:
- Based on your longtime support of our organization, how likely is it that you’ll donate to this campaign?
- Since you’ve volunteered with our nonprofit for many years now, are you considering making a financial contribution to this proposed campaign?
- As a board member, are you inspired by the case for support, or is something left to be desired?
To add a personal touch to your questions, consider having your nonprofit consultant meet one-on-one or in person with high-value stakeholders like major gift contributors and board members.
When your stakeholders feel like they’re at the heart of your feasibility study (and not afterthoughts to your campaign plan), they’ll be more inclined to give actionable feedback and more inspired to stay active with the campaign once it goes public.
Who should you interview?
When it comes to choosing interviewees, you want to select your most dedicated supporters and donors, as well as the community leaders who can enhance your campaign.
First, let’s look at organizational figures who should be interviewed:
- Former and current major donors
- Planned gift donors
- Board members
- Volunteers in leadership positions
Additionally, you’ll want to reach out to recipients of your nonprofit’s services, depending on the type of organization you’re working for. Medical institutions, for example, could reach out to grateful patients.
All of these organizational figures and leaders will have tons of insight into your organization and direct experience working for your cause. Knowing how they feel about your project is key to securing their support, which is essential for any campaign and especially for multi-year projects.
It’s also important to consider community leaders, including business owners and vendors. These leaders should have demonstrated their support for your organization (as opposed to just offering verbal support or not following up on promises).
Businesses will offer compelling opportunities for corporate philanthropy and sponsorships. Establishing connections early can help you build a fundraising strategy based around matching gifts, challenge grants, or other corporate donations.
As such, a feasibility study will give you the opportunity to gauge a multitude of funding opportunities and heed insight from the people who know the ins-and-outs of your organization.
What are the benefits of a nonprofit feasibility study?
It should be clear now that feasibility studies allow your nonprofit to make informed, educated decisions based on direct donor and stakeholder feedback.
As such, the details of your campaign are based on what’s viable, and your nonprofit is poised to grow if you take this feedback into serious consideration.
But even more so, and perhaps most overlooked when it comes to the benefits of these studies, is the chance to cultivate stronger donor relationships. If you think about it, it makes sense.
In a nonprofit feasibility study, you’re directly speaking with your donors, asking them for their opinions and insights.
You’re actively showing them how much they matter to your organization! You’ve staked an entire campaign on what they have to say — and donors appreciate that gesture. So much so that they may be inclined to increase their engagement with a major gift or otherwise demonstrate their support.
Plus, you can use the study to stir up excitement for your campaign. Once these leaders envision themselves as contributors to your campaign, they’ll often be eager to get started right away.
It’s important that nonprofits don’t conduct a feasibility study solely looking for results. A careful, targeted interview effort can bring it’s own rewards in the form of lasting constituent relationships.
Why should fundraising consultants conduct a feasibility study?
Since your nonprofit knows your donors and your community best, it might make sense to conduct a feasibility study on your own.
This, however, is quite uncommon and generally not a best practice. Instead, most nonprofits look to a fundraising consultant to conduct the study — and for good reason.
A fundraising consultant is an objective third party who’s likely to collect more honest opinions from interviewees than an in-house party.
Just put yourself in your donors’ shoes!
Imagine that you’re being interviewed for a feasibility study. The interviewer is someone you’ve known for years, and they’re so excited about the project that it’s impossible for them to hide.
However, as much as you want to get on board, the project just doesn’t seem feasible. You don’t see a vision that you can get behind, but you don’t want to disappoint someone who’s so clearly invested in the project.
When it comes down to it, you won’t donate. But in the interest of politeness, you beat around the bush or give diplomatic responses.
In this scenario, neither you (the donor) nor the interviewer are the wrong, but your existing relationship creates a conflict of interest and a bit of awkwardness, too.
It’s easy for interviewees to misrepresent their actual commitment, or for interviewers to draft misleading results when nonprofits conduct in-house studies. In both cases, the deception isn’t intentional, of course, but it ultimately harms the project, the nonprofit, and even the donor relationship.
A fundraising consultant is a trained expert who can ensure accurate, honest results. Which, after all, is the purpose of the feasibility study in the first place!
Now that you know the basics of conducting a feasibility study, you can get started with your own. Check out these detailed steps to conducting a fundraising feasibility study!
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But if you've never asked for donations before, it can be a tough situation to be in! You might feel awkward or nervous to ask your friends and family members for money for a project, event, or cause that you care about.
To ensure that you raise enough money to reach your goal, take a look at our guide that will help you raise more money! We've got the tricks you need to effectively fundraise.
