THE TRUTH ABOUT FEASIBILITY STUDIES
Douglas D. Himes, Ph.D.
One of the most common and costliest errors in nonprofit fundraising is what may be called the up-front feasibility study. Every year such studies cost nonprofit organizations hundreds of millions of dollars in unrealized gifts and immeasurable amounts of stakeholdership among constituents. The sad reality is that a proper feasibility study requires only a little more time than an up-front study, while the differences in results can be huge.
Typically when organizations need to raise money, the first thing they want to do is a feasibility study. The process leading up to a campaign may have taken years of preparation and approvals; it is natural that, by the time the decision is made to proceed with a campaign, there is often a great deal of pent-up energy, anxiety, and impatience to determine—as fast as possible—whether the organization can raise the money it needs.
The first step for savvy organizations is to hire a good consultant, who is charged with the responsibility to find out if the charity can raise as much money as its leaders think they need to raise. Because everyone is eager for the answer, they hastily put together what passes for a case for support, usually based entirely on need and generated by staff, and they send the consultant forth to divine the answer to the burning question. The answer is predictable and the financial forecast usually inaccurate by a substantial margin. What such studies prove is that donors will not give sacrificially to something they don’t understand, and a case based on need will not reach the heart, where the decision to give originates. For these reasons, an up-front feasibility study will not reflect the true potential of the organization to raise the necessary funds; and it will fail to engage the organization’s best donor prospects in the vision for the campaign, thereby forfeiting a valuable opportunity to cultivate their eventual support. Many consulting firms get paid tens of thousands of dollars to reach these conclusions; at Douglas Himes Associates, we tell people this for free. On regrettably numerous occasions, however, we have been hired by organizations, disappointed with the results of the typical up-front feasibility study, to come in and clean up the mess and repair the ill will created by such a study, and to conduct a proper feasibility study that will produce accurate results that should have been achieved by the original study.
An accurate feasibility study must be based on a real campaign case. Plato said: “The beginning is the most important part of the work.” The most important work in a campaign is the work that goes into developing the case, for it is on the case that the entire campaign—and ultimately its success—will be based. The case must be visionary and compelling, and it must communicate effectively the relevance, importance, and urgency of anything the organization is trying to accomplish in a way that will reach the heart of anyone listening. The case should be crafted by a committee representing a cross-section of the organization’s constituencies with the full knowledge and representation of the board. This is a process of both creation and cultivation; buy-in at the core of the organization’s leadership begins with the development of the campaign case. It takes time, but no time in the course of a campaign is better spent or will have more dramatic effect on the final results. One of the great oracles from the earliest days of organized fundraising, Harold “Si” Seymour, said it best: “You can’t make a good pickle just by squirting vinegar on a cucumber—it has to soak awhile.”
An actual case study will serve to illustrate the differences between the two approaches. One of our client organizations needed to raise many millions of dollars. A large national consulting firm was hired to conduct an up-front feasibility study. After numerous meetings with staff members and more than 80 interviews with constituents, the study showed that the charity could raise a maximum of $1.5 million, far less than the amount needed to accomplish the objectives of the envisioned campaign. The board rejected the results of the study, fired the first consulting firm, and hired us to repair the damage and produce an accurate feasibility study. After development of a proper case for support, our study tested a total goal of $11.3 million and recommended a first-phase goal of $3.5 million. The ensuing campaign raised $4.7 million for Phase I, plus a gift in trust estimated at $6 million to $7 million toward Phase II. The second study cost less than the first study, and the campaign produced results many times what the first study indicated was possible. Moreover, the inclusiveness of our feasibility process produced benefits to the organization that extended far beyond the completion of the campaign.
The conclusions are simple. If you don’t use an actual campaign case for the feasibility study, you won’t get an accurate indication of what likely will happen in an actual campaign. On the other hand, if you invest the time needed to prepare a proper case and conduct a proper feasibility study, the study will not only produce accurate results; it will also be an effective cultivation tool that will lead logically, and contribute substantially, to a successful campaign and to increased support for many years following its completion.