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Feasibility Studies for Non-Profit Organizations

written by: •edited by: Michele McDonough•updated: 12/8/2009

Does your non-profit business need a feasibility study? Often, prior to business plans, fundraising ideas, new ventures, or capital campaigns, a feasibility study is needed to determine if the new concept is feasible for your non-profit.

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    What Is a Feasibility Study?

    A feasibility study, or what is often called a case statement, reveals the answers to why you became a non-profit, who you will serve, how you will do it, and what strategies you will use. It is usually derived from research by the non-profit’s board of directors, however, a feasibility study can be written by an outside source.

    For most non-profits, there are usually two feasibility studies; one that remains the same and another that is produced when a certain venture is considered.

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    The Non-Changing Feasibility Study

    Anything Non Profit by Wastedinthekeys When a non-profit is first formed, its purpose, outlook, mission, and vision are usually part of a non-changing feasibility study or case statement. While feasibility studies are not financial documents, they are needed when applying for grants, fundraising drives, capital campaigns, and angel funding.

    This type of feasibility study should answer these questions:

    • What your organization does
    • Who will it serve?
    • Who are the directors and founders?
    • Why is there a need for your non-profit?
    • What is your mission and vision?
    • What makes your non-profit distinct?

    How you answer these questions will evolve into your initial case statement and should remain the same unless a part of your non-profit changes dramatically. For example, if you were a non-profit K-8 school and decided to add a high school, you would need to revise your original case statement.

    Your initial feasibility study not only helps you determine what your non-profit will do, but explains your beliefs and allows possible angel funders or grantors a brief explanation of who you are as a non-profit.

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    The Ever-Changing Feasibility Study

    The second type of feasibility study is revised often, especially when a new venture is suggested or your non-profit wants to seek funding. Again, this is not a financial document, but a fact-finding document that will identify if the new venture or the funding campaign is feasible. Again, the board of directors usually researches and writes the document, however, outside non-profit writers can help a non-profit for a fee.

    Include these items in your feasibility study:

    • New Venture or Opportunity – Once a new opportunity is suggested, this portion should contain what the venture is and why it is rational for the non-profit to proceed with the venture.
    • Venture Competitiveness – If there are similar non-profits already involved in the opportunity you want to seek, define them. Why is your venture different and what milestones do you expect to hit that other non-profits won’t?
    • Resources – This section should clearly identify what resources your non-profit will require for the new venture. It should include the cost of all the resources as well as identifying them.
    • Target Audience – Is there a target audience that your new venture will serve? Describe the target audience as well as how you arrived at finding your market niche.
    • Benefits – Will the opportunity be beneficial to the people it serves and the non-profit? Describe in detail how it will benefit as well as potential growth of the idea and the non-profit organization.
    • Disadvantages – Along with the benefit section, you should include disadvantages or roadblocks that may come up. Are there any risks associated with entering into the new opportunity? Legal considerations as well as the extent of your non-profit status should be determined.
    • Finances – Does the non-profit have enough finances to initially start the program? Items like cash flow statements and income and expense statements should be determined for at least 18 months into the new program.
    • Final Determination – The final determination in the feasibility study should help your non-profit decide if the venture is wise or not doable. Keep in mind feasibility studies do not always favor the new venture. This is the purpose of the study in the first place. If a final determination is favorable, you can use the feasibility study to help you write your non-profit business plan.
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    Using the Feasibility Study

    Remember that the study is a determination process and not a sales tool. If the study shows a project may work for your non-profit, the study should be included along with possible grants or pitches to angel funders. With each untried opportunity, a non-profit should research and complete a feasibility study to determine if the venture is needed, will serve a purpose, and have enough cash flow to run the program.

    SCORE offers great ideas for non-profits on business plans and feasibility studies. You can download a brochure from their website to help your non-profit creae a feasibility study.