How to Test the Feasibility of Your Nonprofit's Capital Campaign - dummies

How to Test the Feasibility of Your Nonprofit’s Capital Campaign

By Stan Hutton, Frances Phillips

A nonprofit organization’s capital campaign starts with a feasibility study, which is research that tests the hypothesis that you can raise the amount of money you need. A feasibility study for a capital campaign has four test points:

  • How much money does this organization have the capacity to raise?

  • For this particular need?

  • At this location and at this time?

  • Is that enough money to pay for what the campaign plans to do?

The accuracy of the feasibility study is important to the capital campaign. Whoever conducts it has to have enthusiasm for the project, yet be able to speak honestly about the organization’s position and listen carefully to the messages conveyed in the interviews. The person conducting the study must interview key leaders in the organization along with its current supporters and others whose involvement in supporting the project is critical.

Nonprofits often use a consultant for feasibility studies for this reason: She’s a step removed from the organization, and therefore interview subjects are more likely to be frank with her.

Lead the way with the board

Whether or not an organization’s board includes wealthy individuals, all its members should contribute to the campaign. The board’s willingness to support the campaign is an indication of its feasibility. Also important, potential donors who aren’t board members are likely to ask whether you have 100 percent board participation. They’re asking whether every board member has given a gift or made a pledge to the campaign.

Board members are expected to lead the way. Their contributions may not be the largest, but they should be made in the campaign’s earliest phases.

Why is this step so important? A charismatic executive director may be able to stir up enthusiasm about a capital project; but to succeed, such a project usually requires broad-based support and the assistance of all levels of leadership in the organization. If every member of the board of directors hasn’t given to the campaign, it suggests that only a few people really support the idea.

Also, people asking other people to make contributions are in a much better position to ask if they, themselves, have given. Board members must be willing to be involved in the campaign fundraising.

In addition, the size of a donor’s gift is some indication of enthusiasm. If a penniless playwright gives $100 toward a capital campaign for a theater, he’s making as clear a sign of enthusiasm as a wealthy banker on the board who makes a gift of $1 million. If the wealthy banker makes the $100 gift, it suggests either that the board has one malcontent or the project is unsupportable.

Feasibility study interviews

A typical feasibility study interview opens with an overview of the proposed project, emphasizing why the nonprofit selected the project and how it can enhance the organization’s programs and better serve its constituents. Next, the interviewer describes how much money the project needs and how, in general, the organization plans to raise it. If any major donors are already involved, the interviewer mentions their levels of support.

Finally, the interviewer suggests a possible donation to the potential contributor and makes note of whether that person is likely to give to the campaign and how much the contribution may be.

The interview should be a conversation among the parties in the room rather than a one-sided presentation. The more the interviewer can engage the interview subjects in discussion, the more the interviewer finds out about how outsiders view the organization and about the fundraising potential.

In these conversations, most contributors aren’t making promises, but they’re suggesting their probable levels of support. The study, therefore, is important for two reasons:

  • It gathers information that helps the organization estimate whether its capital campaign goal is feasible.

  • It begins the process of “cultivating” contributions to and leadership for the campaign.