So, do you really need to pay a consulting firm big bucks to run a feasibility study for you?
As we continue our series on capital campaigns, we’re going to talk about how to test and validate your assumptions. How can you be confident your donor community will get excited about your campaign? How much will you be able to raise?
In our last post, we talked about how to develop your broad campaign parameters–your vision, project cost, and timeline. We also covered how to develop a case for support, and how to develop the necessary internal buy-in needed before moving forward.
Next, you need to get some feedback and test those assumptions.
The brilliant idea you generate around the conference room table may not resonate with your actual donors. The pet projects of a few may be of no interest to those with money to give.
So, you need to validate your campaign. What does the market (your actual donors) think of your campaign vision, your case for support, your goal, and your timeline?
With a project as big as a capital campaign, you can’t afford to go on gut feel. You need your donor community to confirm that your plans are compelling and would earn their charitable support.
To Feasibility Study or Not
A campaign “feasibility study” is one way to test and validate your campaign plan and assumptions. Studies usually involve interviews with your organization’s top donors, prospects, and other community leaders. It’s a great opportunity to get feedback directly from the your target market.
At the end of the day, no study can
guarantee that your campaign will be successful. They’re an inexact science. A study can, however, validate a hunch, or give you confidence in your direction. On the flip side, they can let you know if you need to go back to the drawing board and start over.
Often, a non-profit will hire an independent fundraising consultancy to run a study on its behalf. Which, brings us back to our original question: Is this necessary?
Well, it depends. Every organization is different, and every campaign is different. Here are some are the questions you should ask yourself?
Have we ever done a campaign before? Do we have any baseline for what we could raise?
One of the goals of a feasibility study is to get a sense for how much money you could raise in a campaign. Do you have a baseline already? Has your organization completed a campaign before? What did you raise in your last campaign? Run that number through an inflation calculator to get an initial sense for what you might be able to raise now.
Are the size and scope of our ambitions such that we need a third party validation?
Let’s start with the fundraising goal. Are you aiming for an inflation-adjusted number considerably higher than you achieved last capital campaign? If so, you might want an independent third party to test your assumptions. Unless, of course, you have some key gifts lined up already.
Are there any skeptics among the organization’s leadership who need “expert,” third-party validation?
Every organization has it naysayers and doubters. And sometimes they’re on the Board! Not fundraising is not an option. And (in my option) not launching a campaign is also not an option. So, how do you convert the unbelievers? A third-party, “expert” opinion can help make the case for a campaign.
Is our staff experienced enough to do a study?
An experienced fundraising executive will be able to run a study in-house. And the results and intelligence generated will be
similar to that of a third-party study. If your Board has confidence in your Chief Development Officer, they might be willing to proceed with a campaign without external validation.
Feasibility studies are not rocket science. Yes, consultants have a process and they know what questions to ask. But experienced staff will have been through feasibility study or two–they know what to do. And they have the added advantage of close relationships with the organization’s top donors. The wealthiest people in any metro area are getting invited to take part in feasibility studies all the time. They’re on everyone’s campaign prospect list and won’t say “yes” to every invitation. But they’ll usually agree to a conversation with someone they know and trust.
So, you’ll also want to consider if your donor relationships are too close for a study to be effective. Will you donors withhold the truth out of politeness? Are there things they might be willing to tell a consultant that they wouldn’t share with the staff?
Can we afford it?
Small and mid-sized non-profits can expect to pay mid-five figures for a traditional feasibility study. The cost will be higher for large organizations. If cost is an important consideration, make sure you’re very clear on what you need to and expect to get out of a study.
Alternatives to Consultant-Run Feasibility Studies
So, those are the questions organizations should ask themselves when deciding whether to hire outside counsel for a study. At the end of the day, it’s a judgement call. The factors to consider include organizational history, staff experience, your aspirations, budget, and buy-in.
So, if a traditional, consultant-run feasibility study isn’t right for you, what are the alternatives? Remember, you must validate your campaign assumptions, especially if you aspire to raise more than you ever have before. Here are some options:
No Feasibility Study
In most cases, I don’t recommend foregoing a feasibility study entirely.
Campaigns take a lot of effort and energy; you’re trying to maximize the philanthropic potential of your donor community. You don’t want to launch a project based on untested assumptions and learn later that it doesn’t resonate with your biggest donors.
There is, however, at least one scenario where you don’t need a feasibility study: when success is already guaranteed. Two examples here:
- You have a mega-donor already committed to 90%+ of the project cost. I’ve only been part of one of these in my career–and it’s great, honestly! No feasibility study needed. The mega-gift and the project’s intrinsic value were enough to launch a campaign. It attracted over $15 million in additional charitable support, which was more than enough to top it off.
- The second scenario is similar but without the mega-donor. If you have a mission-critical project that your leadership is prepared to fund through other means (i.e. cash reserves or debt financing), you can potential build a campaign around it. I say “potentially” because a project needs to be compelling to attract philanthropic support. Upgrading the plumbing or replacing HVAC systems (often necessary things!) might not get your donors excited. You’ll want to save your capital campaign energy for something with a little more sizzle.
So, “no feasibility study” is technically an option, but I only recommend it in unique circumstances, like the two above.
How else might you validate your project without hiring a consultant to do the whole thing?
Do It Yourself
Under the right circumstances, an organization can conduct its own feasibility study. What are those circumstances? We touched on this above: experienced fundraising staff, access to and rapport with your best donors/prospects, early buy-in/belief from your Board.
In recent years, our sector has embraced a middle-ground approach to campaign feasibility studies. The team at capitalcampaignpro.com is among the strongest advocates for this approach. They call it a “Guided Feasibility Study.” Here’s how it works:
An outside consultant guides the study’s planning and execution, but leaders at the non-profit conduct the interviews with study participants. It’s the best of both worlds, here’s why:
- Investment in Donor Relationships – This is a big one. In the hybrid approach, feasibility interviews are opportunities for leaders at the non-profit (CEO, senior fundraising staff, trusted Board members) to invest in key donor relationships. You leverage the study to involve your top prospects at the very earliest stages of the project. And this is done in partnership with the administration instead of by a third party.
- Third Party Validation – Even though the non-profit’s leadership does the interviews in the hybrid model, the study is conducted under the guidance of a consultant. Sometimes boards need that stamp of approval from an independent third party. It can give them confidence to move forward with a campaign that they might not otherwise have.
- Lower Cost – By shifting the interviews from consultants to staff, the hybrid approach requires fewer overall consulting hours. This lowers the cost of the project.
Let’s circle back to our initial question: Do you really need to pay a consulting firm big bucks to run a feasibility study for you?
The answer is: Most of the time, no.
Again, there are circumstances where a traditional, consultant-led study is the right approach–large budget, low trust with donors, the board needs an “expert” opinion. A hybrid approach, however, can deliver the same results at a lower cost. And, most importantly, you’ll invest in some key donor relationships along the way. Furthermore, if you have the right staff, with the right experience, and the right environment (high trust) you can run the study yourself. Again, just make sure you doing something to validate your case for support and your goal.
That’s the end of this post, but it’s by no means the end of our series on campaigns. So far, we’ve covered 1) the rationale for campaigns, 2) laying the groundwork, and 3) feasibility studies. Next up is campaign staffing and other infrastructure. Stay tuned!