Funding feasibility studies – when do you need one?
Before launching a major appeal, it is common practice to reduce risk by firstly determining if a successful appeal is actually possible or not. The standard approach is to conduct a funding feasibility study to answer some key questions before a final decision is made to launch an appeal and certainly before any public fundraising is undertaken. If the Trustees subsequently decide to run the appeal, the charity is then able to do so on a firm footing, aware of the key issues it faces before going public. The aim is to avoid the possibility of a failed appeal, with the resulting embarrassment and the practical problem of having to offer money back to donors.
Feasibility studies are most commonly undertaken when charities are considering capital appeals, for example to buy, build or refurbish a building. However, they are also undertaken when planning an endowment appeal or a major revenue appeal that is on a different scale from a charity's normal fundraising activity.
Feasibility studies typically cover the following:
·How the organisation is perceived among potential appeal stakeholders (trustees, donors, advocates etc.)
·How the charity and the appeal are perceived externally
·Current/past income and fundraising effectiveness
·An assessment of the potential for raising the appeal total, along with outline recommendations for key sources of funding
·Suggestions for the content and presentation of the Case for Support
·Details of any potential campaign leaders, committee members, patrons or advocates who emerge during the feasibility process
·Resource analysis: internal capacity and recommendations for resourcing the appeal if it proceeds
Specific questions to be investigated include:
·Is the money actually available for the project in question?
·If so, where is it and how much could the charity realistically expect to raise?
·Where might some early wins be achieved (with cash flow in mind)?
·Is the Case for Support strong enough ? Could it be strengthened in any way?
·Does the charity have the energy, capacity, contacts and determination to deliver a successful appeal?
·What contact networks are available to support an appeal?
·Where might a lead gift come from?
·How long would an appeal be likely to take?
·Who would lead the appeal ?
·Do the current stakeholders have the time and energy to support the appeal ?
·Do external volunteer leaders need to be recruited?
·Can the total be achieved in one push, or should it be phased?
·What resources will be needed to make the appeal succeed, in terms of people, information, contacts, administration and budget?
·What are the key risks involved?
·What are the critical success factors?
·Is a successful appeal likely or not?
·What specific recommendations are appropriate?
The output of the study is a detailed written report, setting out the findings and identifying the key issues to consider. The report comes to one of three conclusions, as follows:
a) Green light - the appeal is potentially viable and should proceed to the planning stage;
b) Amber light - some important issues need to be addressed before an appeal can be launched;
c) Red light - the appeal is not viable and should be abandoned.
While a "red light" conclusion is disappointing, it is always better than launching an appeal that has no real prospect of success and so, even in these circumstances, it is still a worthwhile exercise which can avoid a major problem down the line.
In the case of a "green light" or even an "amber light", the feasibility study will unearth much useful information and contacts that will feed in to the next stage of the appeal, which is the development of the appeal strategy. We will look at this in our next e-news.