How to Conduct Feasibility Studies: Your Nonprofit’s Roadmap

Imagine pouring your heart, soul, and crucial resources into a project, only to watch it falter due to a lack of proper planning. This is a nightmare scenario for any nonprofit.

However, what if there was a strategic tool that could significantly reduce this risk, ensuring your efforts are well-directed and more likely to succeed? This is where a well-conducted feasibility study comes into play.

To lead a successful fundraising campaign, your nonprofit has to put a lot of time and effort into planning it. From conducting prospect research to investing in the right fundraising tools, there are several moving parts to manage. These tasks become especially critical (and complex) when planning large-scale campaigns, like capital campaigns, and a thorough feasibility study can help substantially.

These studies can be complex, so we’re here to help you get up to speed on the basics. We’ll explore the following:

What Is A Feasibility Study?
Benefits of Conducting Thorough Feasibility Studies
Suggested Elements to Include In Your Feasibility Studies
5 Steps to Conducting a Fundraising Feasibility Study
An Example of A Feasibility Study
Working With a Fundraising Consultant to Conduct A Feasibility Study

These studies can guide you through the complex maze of project planning, helping you avoid common pitfalls and align your resources with your most achievable and impactful goals. Now, let’s learn what makes this step in the fundraising process so pivotal and how it can transform the trajectory of your nonprofit’s endeavors.

What Is A Feasibility Study?

A feasibility study is a comprehensive assessment that evaluates the viability and potential success of a proposed project or large-scale initiative, like a capital campaign.

The study tests your preliminary plans and goals by gathering input from the stakeholders who will later help make the campaign a reality, including board members, major donors, and other funders and partners in the community. Nonprofits typically conduct feasibility studies before:

Undertaking a capital campaign. These are time- and resource-intensive projects designed to raise a specific amount of money in a set period of time. Their end goal is typically to raise funds to construct a new building, renovate an existing building, or purchase equipment.
Launching a new program or service. Before introducing a new program or service, you should determine where it aligns with your mission and whether stakeholders will be supportive of the initiative.
Expanding an existing program or service. Before adapting existing initiatives, make sure there’s enough demand for the change and that you have the necessary resources to see the project through.
Seeking major funding. If your nonprofit is considering growing an endowment or capitalizing on a significant anniversary to raise major gifts, both scenarios necessitate strong donor relationships, which you can cultivate through a feasibility study.

Because of the size of these projects, they can take multiple years to complete, which is why it’s so critical to know whether your nonprofit is ready to launch a campaign at the desired scale long before you invest in planning it.

Who Conducts Feasibility Studies?

Various individuals or groups can conduct feasibility studies, depending on the nature and complexity of the project, as well as the resources and expertise available to the nonprofit organization. Those commonly involved in conducting feasibility studies include:

Internal Staff: In particular, this means those with expertise in project management, research, and analysis. This could include program managers, financial officers, or strategic planning staff.
Consultants: External professionals who specialize in feasibility studies and strategic planning for nonprofits bring an objective perspective and specialized skills that may not be available internally.
Board Members or Advisory Committees: Experienced individuals from your board of directors or specially formed advisory committees can provide oversight and strategic input. They can contribute insights based on their understanding of the nonprofit’s mission and goals.

Overall, it’s crucial that the team or individual leading the study has the necessary skills, objectivity, and understanding of the nonprofit’s goals and the community it serves.

How Far In Advance Should We Conduct A Feasibility Study?

For a nonprofit organization, the ideal time to conduct a feasibility study is well before committing significant resources or detailed planning to a proposed project, especially for large-scale initiatives like capital campaigns or major program expansions.

Typically, this means conducting the study at least a month or longer in advance, depending on the project’s complexity and scope. This lead time allows for thorough research, stakeholder consultation, and strategic assessment, enabling the organization to make informed decisions and adjust strategies based on the study’s insights. What’s more, it provides a window for addressing any identified challenges or aligning the project more closely with the organization’s capabilities.

Benefits of Conducting Thorough Feasibility Studies

Essentially, a feasibility study helps nonprofits make informed decisions by providing a thorough analysis of the practicality and potential impact of a proposed project. It’s critical for ensuring effective resource use and alignment with the organization’s mission and goals. Graham-Pelton’s guide to capital campaign feasibility studies explains that these studies identify how you can move forward with the campaign, rather than only if you can.

Here’s a rundown of the benefits of conducting a feasibility study when considering substantial projects or new initiatives:

Informed Decision-Making: A feasibility study provides comprehensive data and analysis for evidence-based decision-making while identifying and strategizing against potential risks to prevent costly errors.
Clear Planning and Execution: A thorough feasibility study lays out a roadmap for project implementation, including timelines, milestones, resource needs, and management structures.
Strategic Alignment: Conducting a feasibility study ensures that the proposed project aligns with the organization’s mission, goals, and strategic plan. This alignment is crucial for maintaining focus and ensuring long-term success.
Stakeholder Trust: Demonstrating a commitment to due diligence through a feasibility study can build confidence among donors, board members, corporate partners, and community members. It shows that the organization is prudent and committed to maximizing its impact, helping to increase supporter retention.
Performance Benchmarks and Evaluation: During the study, you’ll establish clear benchmarks and indicators for measuring the project’s success, facilitating ongoing evaluation.

Overall, a well-conducted feasibility study is a valuable tool for guiding your nonprofit through complex decisions, ensuring the effective use of resources, and maximizing the chances of project success. That way, you can be an effective steward of donations by not wasting resources on an unsuccessful initiative.

Suggested Elements to Include In Your Feasibility Studies

Any time a nonprofit conducts a feasibility study, they’re looking for specific elements, so they can make informed decisions about their upcoming initiative. The specifics of what the study focuses on depends on the nature of the project. Here are common elements organizations include in their feasibility studies:

The executive summary includes an overview of the project and the main findings of the feasibility study.
The project description gives a detailed explanation of the project, including objectives, scope, and intended outcomes.
A market analysis assesses the demand for the project’s offerings by identifying target demographics, community needs, and existing competition or similar services from other organizations.
The organizational capability evaluates the nonprofit’s ability to execute the project, considering factors like management skills, staff capacity, operational resources, and organizational structure.
A financial analysis provides detailed financial projections, including costs, potential revenue streams, funding sources, and overall financial sustainability. This may also include an analysis of fundraising potential for the project.
Risk analysis identifies potential risks associated with the project, along with strategies for risk mitigation.
Legal and regulatory considerations review any legal, regulatory, or compliance issues relevant to the project.
A stakeholder analysis provides insights into the perspectives and potential reactions of key stakeholders, including donors, corporate sponsors, community members, and beneficiaries.
The sustainability assessment evaluates the project’s long-term sustainability, including ongoing operational, financial, and environmental considerations.
An implementation plan outlines how the project will be executed, including timelines, milestones, staffing needs, and management structures.
Outcome and impact metrics define success key performance indicators (KPIs) and how the project’s outcomes will be measured.

Collectively, these elements provide a holistic picture of the proposed project’s feasibility, helping the organization make informed decisions about whether and how to proceed.

5 Steps to Conducting a Fundraising Feasibility Study

To get a complete picture of your organization’s current ability to conduct your large-scale campaign, you’ll need to conduct a thorough feasibility study. Let’s walk through the five major steps you’ll need to take to conduct your study:

1. Conduct a preliminary assessment.

The preliminary analysis in a feasibility study is a crucial early step that helps determine whether a more detailed study is warranted. It involves these key components:

The initial idea assessment involves a basic evaluation of the project idea to determine its viability. It includes understanding the project’s purpose, the goals it aims to achieve, and the problem it intends to solve.
Market research helps you understand the market size, current trends, and competition. It’s intended to assess the current demand for your service or project.
A technical analysis determines the availability of required technology, necessary technical skills, and achievability within the desired timeframe.
A financial analysis assesses the project’s viability by estimating the costs and projected revenue.
A risk assessment identifies potential risks early on, such as technical limitations, budget constraints, or market volatility.
A preliminary conclusion is drawn about whether the project appears feasible and whether it makes sense to proceed with a more detailed feasibility study based on the above findings.

The preliminary analysis doesn’t require a deep dive into data, but instead, it provides a high-level view to determine if your project warrants further investigation. It helps to filter out unfeasible projects at an early stage, so you don’t waste time and resources. Once you’ve concluded your preliminary analysis, you can determine if a larger feasibility study is needed.

2. Identify key supporters and stakeholders.

Without a substantial number of supporters to back your campaign, you’ll struggle to meet your goal. That’s why one of the first steps in conducting a fundraising feasibility study is identifying your key supporters and stakeholders.

Involving key stakeholders such as donors, community leaders, beneficiaries, and partners can be crucial. While they may not lead the study, their input and feedback can provide valuable perspectives and data.

Of course, you likely already have some supporters that come to mind, like your board members, long-time major donors, community stakeholders, and local business owners. Learn more about them by conducting prospect research.

Prospect research is the process of identifying new potential donors (or, at this stage, getting to know existing supporters) who have both the capacity (wealth) to give large gifts and an affinity (warmth) for your cause. Prospecting will involve leveraging your current donor database, prospect generator tools, government records, and more to learn about your supporters.

Once you’ve identified a prospect likely to support your project, it’s time to get to know them. During this stage, take your time identifying your key supporters. After all, building a genuine relationship with a prospect is far more valuable than scurrying to secure a one-time donation.

3. Create a case for support.

The next step in a feasibility study is to draft up a case for support (also known as a case statement). This document explains the purpose of your campaign and gives compelling reasons why your supporters should help you with your campaign.

According to our guide to fundraising feasibility studies, your case for support should include:

An overview of your organization’s mission, story, and larger goals
An explanation of why the project is needed
Specific challenges and solutions that may occur during the campaign
Projected costs and a timeline
Reasons your supporters should help fund the project

Once you’ve created a compelling case for support, you can use it in the interview phase of the feasibility study to gather feedback on your campaign from your key supporters.

4. Interview your key supporters and analyze your data.

During this step of the study, you’ll find out how your supporters feel about your campaign and how viable your project is given your organization’s current capacity.

For the interview portion of the study, you should prepare thoughtful questions that help you better understand why your key supporters back your organization and what they think about your project. Here are some questions to add to your list:

Do you believe there is a need for this project in our community or target area?
How relevant do you think this project is to our mission and the community we serve?
Would you be willing to support this project? If so, in what ways (e.g., financial, volunteer, advocacy)?
Are there any aspects of the project that you think could be improved or revised?
Do you believe that the resources required for this project could be better used in other ways?

Many nonprofits hire a fundraising consultant to conduct these interviews, so they can obtain objective information from key supporters. For the data analysis process, you’ll take a critical look at the results of your interviews, your donor data, and the information you’ve gathered from prospecting.

5. Evaluate the results of your study.

Once you have all of the information from your feasibility study compiled, it’s time to evaluate the results. Typically, your results will point to four options:

Move forward with the campaign.
Adjust your working fundraising goal up or down depending on the results.
Adjust the timeframe of the campaign to allow for a longer donor cultivation process.
Hold off on conducting the campaign.

If your organization is ready to move forward, it’s time to make any necessary adjustments to your campaign plan and present it to your organization’s leaders.

However, learning that your nonprofit isn’t quite ready for a large-scale campaign can be a tough pill to swallow, especially after investing time and effort into a thorough feasibility study. If this is the case, you can use the feedback and data you’ve gathered to begin refining your organization’s strategies and planning for a bright future.

An Example of A Feasibility Study

Now, let’s look at those steps in action with an example. Reviewing examples of feasibility studies offers valuable insights into practical methodologies, demonstrates real-world applications and outcomes, and helps identify common challenges and effective solutions.

Examples serve as a learning tool, providing a reference for best practices and potential pitfalls. That way, you’ll feel empowered to conduct more effective feasibility studies for your own projects.

Let’s explore an example we created to help you better understand feasibility studies. While fictional, this example emulates real nonprofit projects and how a thorough analysis can help determine plausibility.

Feasibility Study Example: Urban Gardens

Project Name: Green City Gardens

Background: Green City Gardens is a project proposed by a nonprofit focused on community development. The project aims to create community gardens in urban areas, bringing life to spots that lack green spaces. These gardens would be muli-purposed: provide fresh produce to local residents, foster community engagement through gardening, create natural habitats for wildlife, and offer educational opportunities for students.

Need for A Feasibility Study: Given the multifaceted nature of this project, the nonprofit recognized a comprehensive feasibility study was necessary to assess viability. Key considerations included:

Community interest, including willingness to volunteer and maintain the gardens.
Land availability and suitability to identify potential garden sites, considering soil quality, sunlight exposure, water availability, and urban zoning regulations.
Funding and resource acquisition which involved estimating the cost of creating and maintaining the gardens. This also included exploring potential funding sources like grants, donations, and partnerships.
Environmental impact to pinpoint the environmental benefits of the gardens, such as increased biodiversity and improved air quality, and any potential negative impacts.
Partnerships with schools, businesses, and local governments to support the project’s implementation and sustainability.
Legal and regulatory compliance to ensure the project complies with all relevant laws and regulations, including land use policies and environmental guidelines.
Long-term sustainability, which involved creating a plan for ongoing maintenance, funding, and community involvement.
Impact measurement to establish metrics and methods that quantify the project’s impact on community well-being, environmental health, and educational outcomes.

The feasibility study involved conducting surveys and interviews with community members, consulting with urban planning and environmental experts, and researching potential funding sources. The outcome of this study would determine whether the nonprofit should proceed with the Green City Gardens project, modify it, or explore alternative initiatives.

Working With a Fundraising Consultant to Conduct A Feasibility Study

Many nonprofit organizations find it helpful to call in the help of a third-party expert—a nonprofit fundraising consultant—when conducting a feasibility study. While these professionals will get to know your organization’s unique goals, they can also help you take an objective approach to the feasibility study and set you up with the fresh strategies you need to succeed with your campaign.

Specifically, they can help with the following:

Conducting thorough prospect research
Facilitating objective interviews with key supporters
Assisting your organization with data analysis and interpreting the results of your study
Helping your nonprofit determine the next steps after a feasibility study

Feasibility studies are an important part of preparing your organization to dive into a large-scale campaign. Make sure to allow yourself plenty of time to collect all the information you need to evaluate your organization’s capacity and to lean on the help of outside experts as you conduct your own study!

Other Resources to Explore

Feasibility studies stand as a cornerstone in any nonprofit’s strategic planning. They provide clarity, direction, and a sense of realism, ensuring that passion and purpose match practicality and potential for impact. They are critical in guiding organizations like yours through informed decision-making, optimizing resource allocation, and ultimately fulfilling worthwhile missions more effectively.

To continue learning about effective nonprofit management, explore these educational resources we think you’ll love:

200+ Amazing Fundraising Ideas to Help You Reach Your Goals – If your feasibility study found that you need additional financial support for your project, explore these out-of-the-box fundraising ideas for nonprofits.
Fundraising Strategy for Beginners: How to Create Your Own – Looking to streamline your entire fundraising strategy? This guide shares common questions and in-depth steps to create a foolproof strategy.
Choosing the Right Prospect Research Consultant: 5 Factors – Prospect research helps you learn more about potential donors in your community. In this article, you’ll learn what to consider when hiring a consultant to assist you with prospecting.