It’s critical to set the right goal for your capital campaign. When asking for money, you are making a promise to donors that certain things will get done. If you don’t deliver on that promise — if the campaign comes up short — there are serious PR repercussions.
That’s why nonprofits hire fundraising firms to conduct Fundraising Feasibility Studies prior to launching a capital campaign. A valid study gives you some assurance that the goal is attainable.
For example, let’s assume an architect estimates the building you want will cost $10M. Does that mean you set a campaign goal for $10M? No! The architect has given you a cost estimate. Now you need an income estimate. You need to determine whether you can raise $10M. Is a goal of that magnitude feasible?
Answering that question is the primary purpose of the study.
Let’s look at how Feasibility Studies are typically done.
Six failings of the ‘Traditional’ Fundraising Feasibility Study
There are six shortcomings to the traditional feasibility study. Despite this, the same method has been used by fundraising firms for decades. Why? It’s structured to minimize the time investment of the fundraising firm, and thus protect their profits.
1. Most fundraising firms do not research and compile a major gift prospect list.
The heart of any Fundraising Feasibility Study is interviews with 40 prospective major gift donors. Why? Because as few as 10 – 40 donors are responsible for 80 – 95% of total dollars raised. Therefore, these are the select, wealthy people who must be involved in the study. That presumes they have been identified prior to conducting the study.
Unfortunately, most firms forego this critical preparatory step: identification of major gift prospects. They have an economic incentive to minimize their time investment, so they rely on the client to identify the top 40 prospects.
Therein lies the problem. On a practical level, most Catholic schools and parishes have never developed a list of their 40 wealthiest potential donors. Further, they don’t know how to do that.
Consequently, the firm moves forward with a feasibility study that fails to interview the most important major gift prospects. The result? An invalid study.
There has to be a better way.
Need advice on how to identify major gift prospects among your constituents?
Greg Jeffrey – 30 Years Experience
2. Lacking a major gift prospect list, the traditional Fundraising Feasibility Study often interviews the wrong people.
Without a well-vetted major gift prospect list, clients often turn to volunteers and friends as interview subjects. These are people who love the Church, give generously of their time, but haven’t the capacity to make a major gift.
Thus, traditional Fundraising Feasibility Studies often interview the wrong people. The process overlooks many of the people who have the capacity to make the goal possible!
Consequently, the study lacks validity. Moreover, it misses a critical opportunity to engage key donors in the run-up to the campaign.
So before you conduct a Fundraising Feasibility Study, you must first develop a major gift prospect list.
Why don’t fundraising firms invest time to identify the top 40 major gift prospects prior to the study?
Because that is real, time consuming work. It could require 80 – 160 hours, depending upon the constituency’s demographics. Investing that much time would kill the firm’s profits.
There has to be a better way.
3. The traditional Fundraising Feasibility Study limits the time and place of the interviews. That limits the willingness of high-end prospects to take part in the study.
Most firms require the client to set up the interviews. For the sake of efficiency, the client is told to ask interviewees to come to the church or school to meet alone with the consultant on one of the few days he’s in town.
To stay on schedule, many firms aren’t too particular about who they interview. They may tell the client, “We want to visit with your top 40 prospective major gift donors.” But as I pointed out, does the client truly know who they may be?
Complicating matters: if someone has the potential to make a gift of six or seven figures, what are the odds they will be willing to come to the church or school, and do so on one of the few days the consultant will be on site? Slim odds, indeed.
The traditional Fundraising Feasibility Study is designed to minimize the fundraising firm’s time and protect their profits.
There has to be a better way.
Need advice on how to secure appointments with wealthy, busy people?
Greg Jeffrey – 30 Years Experience
Consequently, unable to secure appointments with prospective major gift prospects, the client begins to panic. The pricey consultant will be here next week! As the interview dates draw near, the client pads the interview roster with people willing to take the interview — volunteers, former teachers and employees, etc. These are good people with a deep history of the parish or school, but not the ones you need to interview if you hope for a multi-million dollar campaign.
Padding the interview list keeps the process on schedule. That’s good for the fundraising firm’s productivity and profits. But it’s bad for the client.
There has to be a better way.
4. With the Traditional Feasibility Study, disappointing income estimates are sometimes a foregone conclusion. Why?
I’ve seen many studies that were worthless from the get go.
Here’s why.
Let’s say a Catholic school dreams of a $15 million campaign to fund new construction. They contact various fundraising firms. All tell them the same thing: you first need a feasibility study to see if it’s possible to raise that amount of money.
The firm charges $25,000 or more for the study. Two or three months later, the study is completed. The firm reports, “We believe you can raise between $2M and $3M.”
What? Why were the results of the study so far off the hoped-for mark?
It was a foregone conclusion, and an experienced, honest consultant would have told them so without taking their money.
Here is what happened.
The client presumed the first step toward a capital campaign was a feasibility study. It’s not. The first step is developing a major gift prospect list.
Despite this, fundraising firms tell clients the first step is a feasibility study. So that is what the client asked for in their Request for Proposals.
When interviewed by the Board, the fundraising firms were only too happy to sell a feasibility study — no questions asked. After all, that is what the RFP said the client wanted to buy! So right or wrong, why not sell it?
Pumped up by an enthusiastic salesman, the client chooses a fundraising firm.
The study gets underway. Plans are laid to interview 40 households, presumably the most important major gift prospects.
Some disappointing studies are a foregone conclusion.
Why?
Because there weren’t enough major gift prospects to make the hoped-for goal a possibility worth testing.
Here’s where things get sticky. Upon review of the proposed interview list compiled by the client, the firm discovers there aren’t enough seven-figure prospects to bother testing a $15M campaign. The math just doesn’t add up.
But the firm keeps that juicy nugget to itself.
Instead, the fundraising firm ‘goes through the motions.’ It proceeds with the study, collects its fees, and comes back with an estimate that is a fraction of what the client was hoping to hear.
Again, the result could have been foreseen. If you don’t have the requisite number of seven-figure prospects, why test a goal that is mathematically impossible to attain? The firm should have known that and said something before proceeding with the study.
Now what? The client just wasted $25,000+ on a pipedream, and the fundraising firm didn’t bother to tell them until they had cashed the check.
It’s disheartening to see the Catholic community repeatedly make this mistake.
There has to be a better way.
Are you wondering if you have enough major gift prospects to attain your desired goal?
Greg Jeffrey – 30 Years Experience
5. The Traditional Fundraising Feasibility Study fails to engage donors from the perspective of ‘friend.’
Let’s reflect on how nonprofit organizations plan capital campaigns.
Typically, a small group of administrators and board members spend months planning major expansion projects. They meet with architects and consider a variety of plans and options. From the Board’s perspective, it’s exciting, enjoyable work.
Pause here. View that planning process through the eyes of a major gift donor. How might they see the Board’s work? With each architectural drawing, the Board is essentially dreaming about how they plan to spend other people’s money.
Remember: In Catholic school and parish capital campaigns, as few as 10 – 40 donors are responsible for 80 – 95% of total dollars raised. To the detriment of subsequent fundraising success, Boards rarely involve these critical constituents in the planning process. The Board expects the vast majority of money to come from people who had no part in planning expenditures.
The traditional Fundraising Feasibility Study does not treat major gift prospects as friends.
When you think about it, the process is actually a bit rude.
There’s a better way.
Common sense dictates that the people who will pay for it — top donor prospects — share in the dreaming and the fun. But that’s not how it’s usually done.
Instead, major gift prospects are finally introduced to the project when all that’s left to decide is, “Who will pay for it?” At that point, a fundraising consultant is hired to meet with constituents to inquire if they will support it.
This is how the ‘traditional’ Fundraising Feasibility Study is usually conducted. To some, that process might seem reasonable. It’s not. Let me use an analogy.
I love to ski, especially in March at Brighton Resort in Utah. But imagine if a friend called to suddenly announce, “I booked a trip to Salt Lake for 5 days next March. I took care of all the arrangements. You’ll need to take a week’s vacation. Could you send me a check for $1,000?”
As much as I love skiing, and want to be part of the trip, it’s a little rude for him to do all the planning without consulting me, then simply ask that I “pony up.” That’s not how friends treat friends.
Yet that is precisely how charities, guided by fundraising consultants, have run traditional Fundraising Feasibility Studies for decades.
There has to be a better way.
You are probably wondering how to engage major gift prospects in planning, without creating a situation where “the tail is wagging the dog.”
Greg Jeffrey – 30 Years Experience
6. Much of the survey data returned by fundraising consultants is of limited value.
In an effort to distinguish themselves from the competition, fundraising consulting firms pad their feasibility studies with promises of focus groups, on-line surveys, and other methods to reach the widest audience possible.
That’s like adding rice to the beef to make the sloppy joes go further. These add-on services don’t hurt, but they are of very limited value. Why? Because they are directed at hundreds of households who will comprise just 5% of total campaign gift revenue.
What matters are things that take real time and effort: (1) have you identified the 40 wealthiest and most promising constituents in your database? (2) are you willing to do everything possible to include them in an eye-to-eye conversation prior to the campaign?
The most important thing in preparing for a capital campaign is identifying your top 40 prospects, then making best efforts to have conversations with each of them.
Everything else done under the guise of a Fundraising Feasibility Study is just ‘filler.’
It bears repeating: In Catholic school and parish capital campaigns, as few as 10 – 40 donors are responsible for 80 – 95% of total dollars raised. If you have invested the time to identify who these people are, then engaged them in a heart-to-heart conversation in the Feasibility Study, you will have accomplished something that directly relates to 95% of your ultimate success.
Everything else is ‘filler.’ The fundraising consultant may report that 76% of 400 on-line respondents think the proposed project is ‘moving in the right direction.’ Nice to know. But those 400 respondents likely represent just 5% of total campaign revenue. Keep some perspective.
Here’s the real issue: Sometimes fundraising consultants spend so much time on ‘filler’ activities that the real work of the study — identifying and meeting with the top 40 prospective donors — gets short shrift.
In these cases, the study is actually invalid. You can’t accurately estimate a goal unless you interview a majority of the major gift prospects who will fund 80-95% of the project.
Happily, there is a better way to conduct a Fundraising Feasibility Study