I am often asked by groups thinking about a capital campaign: “Do we HAVE to have a feasibility study done before proceeding with our campaign planning?” My answer, in some form or another, is “Yes.”

But let’s back up.

What IS a feasibility study?

A feasibility study involves a large number of structured interviews and a contextual scan conducted by an experienced, skilled and objective outside consultant, or by a consulting firm. The results are summarized in a formal report. These results are needed by your leadership in order to make a well-informed decision about whether to have a capital campaign, and if so, how large the goal should be.

The study takes about 2 -3 months to complete. It involves between 20 and 50 in-person interviews (sometimes more), including a number of your most generous and influential donors, along with community leaders, foundation reps, business reps and a few selected board members or former board members.

Here are some typical goals of a feasibility study:

Gather and assess the current views of the philanthropic community on the reputation and profile of the organization to implement a Capital Campaign
Gather information regarding the amount of money that could be raised in support of the organization’s project
Assess the current climate for fundraising
Educate and engage the community about the organization and this project as philanthropic investments
Identify key issues which might impact this capital campaign
Identify the potential level of volunteerism and prospective leadership for the campaign.
Identify possible sources for lead and major gifts in the community

Sounds like a good idea to have a feasibility study. After all, you want to be confident that your campaign will be a success.

But just how expensive IS a feasibility study project?

Most campaign consultants will hedge a bit on the answer, but it’s safe to say that most feasibility studies cost at least $30,000. The cost depends on factors such as 1) how many interviews are to be conducted; 2) where the interviewees are located (in case travel costs need to be incurred by the consultant); and 3) the availability of successful campaign examples in your community over the past few years. Some campaign feasibility studies cost more than $100,000 (much more – think $2B campaigns in the Ivy League).

For campaigns with goals under $2M, it can be hard to afford a feasibility study at all. Even if we use the campaign expense metrics I discussed in an earlier post (reserve between 10% and 25% of your campaign goal for fundraising expenses in the campaign), the feasibility study can consume a lot of your expense budget for the campaign.

Is there any way to approximate a feasibility study, but at lower cost?

Probably not. You could have the interviews conducted by phone rather than in person, but the interviewer misses a lot of nonverbal cues from the person being interviewed. These interviews involve sensitive topics, and the trust established by the interviewer is very important. In my fundraising assessment work, I do a lot of phone interviewing with good success. However, when I have tried to conduct a feasibility interview by phone, due to distance and scheduling challenges, afterward I questioned whether I should even include the results. The person’s answers were remote-sounding and unhelpful.

Besides the feasibility study, is there anything else we should be doing?

If your group has never conducted a capital campaign, there’s another critical assessment you should conduct in advance of the feasibility study – a campaign internal readiness study.

The campaign internal readiness study helps you answer the question: Are we ready, as a staff and board, for the demands of a capital campaign? Does your group have the investment funding needed for the expenses of your campaign, the dedicated (and experienced) staff members for a campaign, and the commitment of your board and other volunteer leadership? These are some of the questions addressed in an internal readiness study.

After all, it doesn’t matter how many generous donors are on your list if you don’t have the capacity to organize, plan, implement and document your campaign activities, and at the same time carry on all of your usual program, administrative and fundraising activities. A 2, 3, or 4-year long campaign can de-rail your core activities, especially fundraising for operations, if you’re not careful to build the dedicated resources needed for the campaign.

If your group has ongoing foundation funders, and those funders sometimes help fund capital campaigns, ask them for advice about the level of assessment needed. If you’ve never conducted a campaign, chances are they will recommend the internal readiness study as well as the feasibility study.

The internal readiness study should be conducted first so that you can start building the specific infrastructure and capacity required by a campaign, BEFORE you send someone to talk with your key donors and influential community members in a feasibility study. If you aren’t ready for a campaign, some of your more sophisticated donors will be aware of this, even if you haven’t yet faced it.

An internal readiness study for a campaign should cost much less than the feasibility study. Keep in mind that the internal readiness study and the feasibility study can be conducted by the same consultant or firm of consultants, as part of one project, separated in time by the capacity-building you may need to do in order to be credible as an organization able to conduct a capital campaign.

Remember the old saying: “It takes money to make money.” A cost of fundraising between 10 and 25% of your campaign goal is reasonable in terms of the metrics most funders apply to fundraising. Hiring a feasibility study and – if needed – an internal readiness study will make sure that your investment is well-considered. And meeting your goal in a timely fashion will become much more likely.