The Getz Development Group

Understanding the Feasibility Study . . .

The feasibility study is one of the most important and misunderstood of the tested ways to successful fund raising. We hope this writing will help clear the way for sound decision making for you, should you need this service. Having correct expectations is a real key to making the study work for you.

PURPOSES -

The study is first intended to test the various publics of an organization, regarding perceptions of the organization, and to determine willingness to support a specific campaign and at what levels. To accomplish this, a process has evolved over the past half century and more. The methodology has been developed to obtain the most candid and (where possible) objective data, which is one reason such studies must be conducted confidentially by impartial, outside counsel and not by staff or Board (the other issues obviously being experience and competency). When properly conducted, these studies are seldom wrong in conclusions drawn.

The second agenda in such a study is to persuade (where possible) for the case and to secure leadership pledges in an informal fashion. This is yet another reason that such interviews are conducted by outside counsel rather than by staff and/or Board.

The third and perhaps primary function of the feasibility study is to guard voluntarism and to protect the board and the institution from conspicuous public failure resulting from well-intended but ill-founded endeavors. This means that every feasibility study should include a component to test the abilities of an institution to even wage in a campaign.

METHODOLOGY -

It is usual for counsel to conduct about 5O face-to-face interviews. This number has proven over the years to amount to "critical mass".

It is also usual to interview only best prospects. We depart from the norm in this latter aspect in that we believe the opinions of detractors (if any exist) can also be valuable to a serious-minded organization.

There are two basic methods of questioning:

One method calls for the exact same questions to be asked of each individual, most questions being closed-ended (answers being yes, no or a quantity). This method is effective in basic opinion research polls, but not in feasibility studies.

The tested and true method is more flexible, calling for basic required information to be sought, but without the limiting exactitude of simple polling. We hold to this because the entire process is only partly objective, and relies heavily on the quality of the interviews, the position and relationship of those interviewed, the personality/ability of the interviewer, etc. In the "opinion poll" method, there are usually many raw statistics reported which are, more often than not, misleading to anyone not present at the interviews. We believe only statistics which are necessary, and which bear on the interpretation of the report should be offered.

WHO DOES WHAT -

The feasibility process is in three basic phases:

1. Case clarification and drafting, internal assessment, goal setting,

prospect targeting, and interview scheduling.

2. Confidential interviews by counsel with prospects.

3. Written (and sometimes verbal) report, with strategic recommendations.

The first phase relies heavily on your Board and staff, assisted by counsel. An area of frequent confusion pertains to prospect lists. List development cannot come from counsel. There are several logical reasons for this. First, no consultant, no matter how experienced, talented and/or informed, can possibly know everyone who will give to every cause in every community, in every state. Perhaps more important is the fact that there is a rather universal ethical prohibition (very understandably) against lists leaving the charity via any fund raising professional. Counsel can sometimes assist in some very limited areas, usually connected with foundations and/or corporations. The most important reason is that the feasibility study is, in large part, designed to test the ability of the organization's officers and volunteers to correctly target gifts. "Do they really know their constituents?" Lists should be developed by you, with target amounts for each prospect – very important!

Case Development is also a most misunderstood facet of fund raising. While a Case Statement (The Case for Support) can be and often is written by one person, the best way is to have sufficiently diverse participation (including Board, staff, volunteers, donors, etc.) to ensure that each participant is "imprinted" with ownership of the Case. This should be a most convincing, living document about an organization and its endeavors. This is the internal and external road map for the organization. This, too, is an internal responsibility of the officers, staff and Board. It is of the greatest importance to successful campaigning.

The second phase is the work of counsel. Counsel conducts personal, confidential interviews with about 5O of your constituents. These interviews are the key to unfolding the riddle of success/failure for your campaign. This is where the objectivity, professionalism, training, and experience of the consultant are key.

The third phase of the study is completed by counsel, with limited Board and staff input - input which would not change the findings or recommendations of the study. First, notes from the interviews are complied, opinions evaluated and weighed, and findings are measured against the collective experience of the profession. A full, candid written report is submitted, including strategic recommendations (where they emerge) and findings regarding the feasibility of the campaign as illustrated in the Case Statement. A verbal review usually follows.

RESULTS -

If planning and case development are part of the first step toward a campaign, the feasibility study is the first step in a campaign.

A proper feasibility study should help Board and staff answer at least the following questions:

How do current public opinions/issues affect the project?

How is our organization viewed by our various constituents?

Are we doing a good job, and how can we improve?

Is the project at hand a good idea?

Is the project budget appropriate?

How is our Board perceived?

Is our thinking regarding volunteer campaign leadership on target?

Are there sufficient donors properly profiled with appropriate targets?

Should we wage a campaign?

For how much?

When?

Interviews must be scheduled with the three basic constituent groups: individuals, corporations, and foundations, with individuals usually representing the lion's share. It is worth repeating that, other than some possible suggestions from counsel regarding corporations and/or foundations, the list of prospects is your responsibility. Your prepared Case Statement (and perhaps other materials) will accompany letters of appointment-request to the prospects. Quickly following the letters, etc., a member of your staff or a volunteer will call to set the interview appointments. Dates will, of course, be agreed upon in advance. It is usual to schedule an average of at least four interviews per scheduled day (more if possible). Interviews usually range from about fifteen minutes to over two hours - both cases being exceptional - with average meetings running thirty to forty-five minutes. All interviews should be face to face if at all possible. In addition to supplying prospect names with appropriate gift range targets, you should be prepared to assist counsel by suggesting topics you wish to test in the study.

If a feasibility study is to indicate that a campaign should be waged, ready prospects with appropriate gift targets should be confirmed by counsel for a major portion of the goal (from 3O% to over 5O%). Further, strategies for approaching some specific donors and/or appropriate timing of same should result.

If the percentage of interview refusals for a popular and publicly known cause is high, counsel should become alarmed and inform the client. Consequently, if at any time a conclusion regarding the campaign can be drawn, options as to how to proceed should be offered.

COMMON PRACTICES TO BEWARE OF -

There are some pricing irregularities which abound in our industry, and which must be explained.

One frequent and, in our estimation, reprehensible practice is for a firm to offer an extremely low price for the feasibility study, in the hope of making the client dependent on them for the management of the campaign, which is a much more lucrative type of work.

A second arrangement which makes no sense and saves no money for the client is that of pricing the study according to the size of the goal. The process is at least as demanding for the small campaign as for the very large. In fact, it is often vastly more difficult to study for a smaller campaign. Usually, larger donors and the most influential leaders are attracted to large goals. Organizations with large goals normally have the most sophisticated lists already stratified and tested, large development departments, solid Case Statements in place, and great exposure, which make the study process easier. We believe the goal, be it small or large, is of the same importance to any organization seeking to raise it . . . in fact the small organization's goal may well be more important to it than the larger goal is to the giant charity. Lastly, no client wants a "trainee" doing their study, just to save a little money while risking a lot. In any event, the amount of work done by counsel is exactly the same, or should be.

In the feasibility study process there is another pitfall, related to money. Frequently, counsel will discuss, and/or contract for the management of a campaign at the same time a contract is considered for a feasibility study. While there is some obvious continuity value in this, it also provides the temptation for counsel to compromise unrealistically in favor of the feasibility of the campaign (offering what the client wants to hear rather than what they need to hear). We have seen this reach the septic pits of morality with a firm urging in favor of a multi-million dollar campaign in a small community with no fund raising history, for an institution with no donor list and no development staff! This contemptible practice is aimed at securing income for the fund raising firm from the longer-term, and profitable campaign assignment. Campaign Management is where most firms make money and cover large overhead. You should not contract for any campaign work prior to the successful and satisfactory conclusion of the feasibility study. We won't even discuss campaign work until a study is complete.

Last, there are some firms that own subsidiary firms and lead the client to them for campaign materials and creative work, without divulging the relationship and without competitive bids. The profit margin here is often unfair to the client, as is the deception.

TERMS:

Fees for feasibility studies run from nothing (always worth the price), to over $60,000 (occasionally worth the price), plus expenses. We believe a sound study can be done for $20,000 in many cases. It is usual to pay one third of the applicable rate in advance (upon contract signing), one third in mid-study, and the balance (including expenses) upon receipt of the first report draft. Expenses should consist of normal meal and other out-of-pocket costs incurred in the process of conducting the interviews, plus travel. The fee should include a reasonable number of copies of the report.

TIMING:

A study may take from a rare minimum of six weeks to perhaps three months (or more, depending on availability of necessary information, appointments, etc.).

OTHER CONDITIONS:

If you need a formal working agreement it should include: a termination provision, a designated-consultant approval/rejection provision, costs for extra interviews and/or report copies, expense approvals and time limitations. The smart firms also have clauses prohibiting your organization from hiring away their professional staff. We provide assurance to our clients that, should there be solid evidence in mid study, either for or against a campaign, we will terminate the study at a lower fee. We do not require contracts from our clients. We only work for people we fully believe in and trust.

CONCLUSION:

A feasibility study is a must in properly preparing for a major campaign. Studies are best done by outside counsel, experienced in this specialty. Your organization will benefit from the conclusions drawn and can base the plan for successful fund raising on the findings of the study. Clearly, you can benefit most if you are prepared by knowing how a study works, what to expect, and what difficulties lurk for the unsuspecting.

The hallmark of good work is candor. Along with objectivity and experience, we believe these are all that can be offered by any consultant. We believe it is the job of counsel to tell a client what they need to hear rather than what they seem to want to hear. Be sure you're really ready for this.

Feasibility Q & A . . .

Q. Who should have a feasibility study?

A. A 5O1 (c) (3) organization faced with the need for a fund raising

campaign which is of unusual scope and/or beyond its regular fund raising potential – generally for buildings, equipment, or endowment.

Q. What are prerequisites for the organization to do a study?

A. A strong and committed Board, willing to contribute, to work, and to

ask for money.

A necessary, unique, known, and loved cause.

A well defined mission statement and a living CASE Statement.

Staff that believe in the organization and the project.

A well profiled list of regular donors and prospects.

A necessary, well defined, accurately budgeted, doable project.

The financial ability to pay for a study and at least the initial costs of a

campaign (and preferably staff experienced in fund raising) .

Q. Can we skip it and go right to the campaign?

A. NO! Organizations sometimes believe they can save a few dollars by

avoiding a Feasibility Study. This demonstrates that they have not been

properly informed about the objectives of a study. A well conducted

feasibility study is really a pre-public phase of the campaign itself, not

only gathering valuable data but effectively persuading for the case and

obtaining informal pledges. Avoiding the study courts big trouble.

Q. Who should conduct the study?

A. Only independent, outside professional fund raising consultants who

are especially trained and experienced in conducting such studies. The

use of outside counsel, and not Board or staff, encourages candor from those interviewed (because confidentiality is pledged), and provides the possibility of objective findings. It is important that you know the actual person who will conduct the study. Some firms send in the Chairman to make the sale and then provide "Willie off the pickle boat" to conduct the study.

Q. Who's list do we use?

A. Yours. The most likely people to make major gifts to a you are those

friends who are already close to your organization and have repeatedly

proved it by supporting your work. They have "made an investment"

in you and will be likely to want to protect that investment. Counsel is

often asked for "their list". Other than the obvious help with some

corporations and foundations which counsel may be aware of, the list is

your responsibility. In addition to it being impossible for counsel to

know who is likely to support all of the many different organizations

in all of the different locations, and there is an ethical prohibition on

any fund raising professional taking donor information from one

institution to another. Volunteers, regular major donors, Board, staff,

foundations and corporations comprise the list.

Q. What can we expect to learn from the study?

A. What your public thinks/knows about your organization.

Perceptions about your Board.

Evaluation of proposed campaign leadership.

Opinions regarding the need for the project.

Thoughts about proposed timing of the campaign.

Input regarding the correctness of the budget.

Subjective/objective advice determining chances for success.

The amount which may be raised and under what circumstances.

How much will come from what sources.

If and/or how much each interviewee will likely give.

Public relations ideas and feedback for the campaign.

Negative perceptions which may exist.

Q. Who makes the interview appointments?

A. The charitable organization. Generally using the most powerful

individual connected to the campaign to sign the request, followed by

telephone follow-up by a charity staff person or volunteer.

Q. How many interviews will it take?

A. Generally about 5O (+-) face-to-face confidential interviews.

Q. How long will the study take?

A. This depends largely on the condition of the CASE and/or willingness

and ability of volunteers to pinpoint prospects and target them for

possible gift amounts. Interviews take an average of about one half hour

plus travel time, etc. If five interviews are scheduled in a day, that is a

very full day. The time could run from a minimum of a few weeks to

over six months, depending on the above and other circumstances.

About three months is usual.

Q. Who decides how much each prospect is to be targeted for?

A. Volunteers and staff connected to the charity. Counsel may in some

special cases offer information regarding some corporate and/or

foundation possibilities (especially those located outside the usual

territory of the charity). The target list should mainly come from those

who have already given regularly and generously to the charity.

Q. How much does a good study cost?

A. Some of the larger firms are billing upwards of $60,000 plus

expenses. It is unlikely that a useful study can be produced for less

than about $15,000 plus expenses. Usual billing consists of a third

in advance, a third midway, and the balance upon the submission of

the report draft. The cost of the study should not be connected to

the size of the goal - small goals are often more important to some

organizations than very large goals are to others. The study should

take both with equal seriousness, and be conducted with equal

thoroughness. Beware the "low-ball" feasibility price; it is often a "hook" to obtain the more lucrative campaign fees later on.

Q. What if we don't like the conclusions of the study?

A. If the study is correctly done and the report well presented, it should be

convincing and of self-evident worth to an open-minded organization.

If, as is sometimes the case, the report offers counsel against a campaign (or for an amount different than targeted), counsel should be able to back this through the report. The function of the study is to tell it like it is, not as you wish it to be. Nonetheless, YOU are in charge and must make all decisions based upon the study and common sense, and be prepared to live with the consequences.