You have a dream of a new program or an upgraded building. You know you’ll need to fundraise to make it happen. But is your fundraising plan possible? Can your donors make your capital campaign successful? Conducting a feasibility study helps determine whether your organization can raise the funds you need in a reasonable amount of time. Outside agencies exist to help you conduct your feasibility study. If that’s not in the budget, you can do the study yourself. Read on for tips on conducting feasibility studies so your development staff can set attainable goals for funding major projects!
Get real estimates
The best place to start when conducting a feasibility study is determining costs. You may have an estimate for how much you think your new program should cost to implement, but is the estimate really accurate? Don’t take The Price is Right approach! Take the guesswork out of budgeting and get real quotes for things you’ll need. This can mean getting multiple quotes for services, comparison shopping across multiple stores for supplies, and even factoring in estimates for salaries and benefits for any new positions.
Be sure to determine the annual operating costs for new programs, and factor that in to the feasibility study. Even if you can get the initial program funding, can you afford to sustain the program beyond the first year? How will you fund the program?
There will be some items you can’t get an exact dollar amount for. That’s okay! You’ll want to determine a range of costs and either budget on the higher end or use the average cost to help inform your project budget. Unexpected expenses can arise with major projects, especially capital campaigns. Give yourself a contingency fund to plan for any emergency funding needs.
Your project may require contract negotiations and other legal matters. If you don’t have a lawyer on staff, meet with an attorney to get estimates on legal costs too. Court filing fees, legal fees, and a lawyer’s hourly rate can quickly add up. Use your consultation to get an understanding of your projected legal costs.
Once you’ve got the individual costs determined, add them up to determine the total projected cost of your program or new building.
Don’t assume donors can pay 100%
Once you’ve got your program’s projected cost, you need to plan how you’ll get the project 100% funded. You might think that a solid capital campaign will get you there. You might be right. But you can’t assume your donors can pay 100% of the project’s implementation costs. Your donors may not have the capacity to achieve a huge capital campaign, for instance. Conducting a feasibility study also means looking at your donor data to determine what you can reasonably expect existing donors to pay toward your project.
A detailed CRM makes this step easier. If you can, run a report listing all your active donors (donors who have given within the past twelve months). The report should include each donor’s average gift size and size of their most recent gifts. Calculate what each active donor would have to give to reach your fundraising goal. Next, determine if your donors could afford to make payments of that size. You can segment your donors and ask major gift donors to give more, but you must also keep in mind that not every donor you ask is going to give.
Don’t limit funding sources to your existing donors. Lapsed donors aren’t likely to give and your active donors can only give so much even with a perfectly crafted appeal. You must factor external funding sources into your plans.
Research additional funding sources
Once you know the percentage your donors can cover, the next step in conducting a feasibility study is determining how to get the rest of the funds you need to reach your goal. It’s not enough to say external fundraising sources will raise the remaining 50% of funds needed. You need to break down what methods you’ll use and who you’re reaching out to for that funding.
Ask questions such as:
- Are you asking local businesses to sponsor the project?
- How much are sponsorship packages and what do sponsors get for giving?
- Are you applying to grants?
- Which grantmakers are you sending applications to?
- How much do those grantmakers normally give in grants?
- Are you recruiting new donors with events and appeals?
- How much are those appeals going to cost and is that accounted for in the estimated project costs?
Develop sponsorship specifics
Seeking a sponsor can be a great way to get funding to 100%. However, a sponsorship program for your project needs its own specific considerations made.
First, determine which businesses you’ll reach out to for a sponsorship. You’ll need a tailored sponsorship package that provides the businesses with benefits for the sponsorship. How will they be recognized? What do they get out of supporting you? Naming opportunities can help a capital campaign secure sponsors. However, naming opportunities may be less enticing for funding a new program.
Trying to find a single sponsor to pay for the rest of the fundraising goal is tricky. Can a single business reasonably pay the remainder of what you’re asking for or do you have significant funds to raise? You’ll need to determine if your project requires multiple sponsors and what giving levels for sponsorship will look like. Assume most sponsors will give at the lowest level to earn easy recognition. How many low-level sponsorships will you need to sell to get fully funded? Should a cap be placed on the lowest level to encourage giving at higher levels for better benefits?
Research available grants
When considering grants as a source of funding you need to be as specific as possible for the feasibility study. If you want to use grant writing to raise project funds, assume that you won’t get every grant you apply for. Apply for more money in grants than you need to help you win enough to reach your goals. This means researching different grantmakers, determining what they normally give, and making strong cases for why they should fund your project.
Determine whether there are enough grantmakers to apply to for funding. If your application is ineligible for most grant applications (capital campaigns tend to have a harder time getting grant funds) you’ll have to add contingency plans for additional funding.
You’ll also need to determine your department’s familiarity with applying for grants. If you need help, consider hiring an outside consultant (but factor their costs into your feasibility study), or take advantage of free resources to help you write grants.
Set a funding timeline for your feasibility study
Once you’ve developed a plan for funding your study and have your projected costs and potential revenue calculated, set a timeline for when the project is expected to be fully funded. Normally, a one-year timeframe is sufficient for funding a project. However, if your calculations make it apparent that one year won’t be long enough, determine how long getting fully funded will take. Your campaign can be active for multiple years. However, if the project is time sensitive, being able to estimate the length of time it’ll take to be fully funded could determine whether the project is feasible at all.
For instance, if you need a new building before the end of a lease you may have to scrap plans for its construction if you won’t have all the funds together before you need to vacate your current building. Rather than continue the capital campaign, it’d be more important to look for a space to move your organization to before the end of your lease period.
You wouldn’t jump into a major financial decision without conducting research first. Funding a capital campaign or other major project requires that same degree of due diligence. Conducting a feasibility study helps you determine whether a major fundraising goal can be reached with your plan and whether that project is sustainable after implementation. Using these tips will help your organization make informed decisions and approach major fundraising campaigns with a solid funding plan. Those plans can focus your efforts and help you get more of your projects fully funded in a reasonable timeframe.