A feasibility study is an early stage assessment of a project. It examines whether the project can be practically and successfully delivered. For nonprofits planning a capital campaign, a feasibility study can help your organization get feedback from donors and community stakeholders and test their appetite for supporting your project. The consultant you choose to conduct this study plays a major role in the quality and credibility of the results.
Before you begin your search, it helps to understand what a feasibility study consultant does. A feasibility study consultant is an independent, third-party analyst who evaluates whether a proposed commercial real estate project is viable before a lender commits capital. The consultant has no financial interest in the project’s outcome. This independence is not optional; it is a regulatory requirement under SBA SOP 50 10 8 and USDA 7 CFR Part 5001, and a practical requirement for any credit committee that needs to evaluate a project on its merits rather than through the borrower’s optimism. While those regulations apply to SBA and USDA loans, the principle of independent analysis applies equally to nonprofit capital campaigns.
Understand What a Feasibility Study Consultant Does
A feasibility study consultant evaluates whether a proposed project is viable, sustainable, and profitable. It involves a detailed analysis of various factors. The consultant’s role is distinct from adjacent professionals. An appraiser determines property value; a feasibility study consultant determines whether the project can succeed in the market with the planned financing and operations. For nonprofits, the consultant typically interviews donors, board members, and community leaders to gauge support for a capital campaign and to recommend a realistic fundraising goal.
A feasibility study is best conducted by a team of experts with experience in market research, financial analysis, engineering, operations, and other relevant fields. The consultant you hire should either possess these capabilities directly or have access to a multidisciplinary team. Feasibility study consultants should possess technical expertise relevant to the project, such as engineering, construction, or IT. This knowledge allows them to identify risks that a generalist might miss.
Key Considerations When Hiring a Feasibility Consultant
When evaluating potential consultants, focus on several key areas: independence, experience, methodology, deliverables, and cost. The following sections break down each consideration.
Independence and Objectivity
The consultant must be an independent, third-party analyst with no financial interest in the project’s outcome. This independence ensures the study provides an honest assessment rather than a justification for proceeding. Ask whether the consultant has ever worked as a contractor for the same project in another capacity. Confirm that they have no relationship with the borrower that could bias the results. For SBA or USDA loan applications, this independence is legally required.
Relevant Experience and Expertise
Look for a consultant who has completed feasibility studies for similar projects. For a nonprofit capital campaign, you want someone who understands fundraising, donor psychology, and the nonprofit sector. Consultants with experience in market research, financial analysis, engineering, operations, and other technical areas relevant to your project bring valuable depth. Feasibility study consultants should possess technical expertise relevant to the project, such as engineering, construction, or IT. This knowledge allows them to identify risks and opportunities that generalists might overlook.
Methodology and Approach
Ask the consultant to describe their methodology. A thorough study typically includes market analysis, financial projections, operational review, and risk assessment. For nonprofits, it also includes stakeholder interviews. The consultant should explain how they gather data, how many interviews they conduct, and how they analyze the results. The methodology should be transparent and rigorous, producing a document that lenders, board members, and donors can rely on.
Deliverables and Report Quality
Request samples of previous feasibility study reports. A high-quality report includes detailed financial projections, market data, risk analysis, and clear conclusions. The report should be well-organized and written in plain language that all stakeholders can understand. It should also include the consultant’s recommendation on whether the project is feasible and under what conditions.
Cost and Value
Feasibility study costs vary depending on the project’s complexity and the consultant’s experience. While the research pack does not provide specific prices, you can expect to receive quotes from multiple consultants. Compare not only the total cost but also the scope of work included. A lower-cost study that misses key risks may cost more in the long run. To a borrower racing toward closing, the feasibility study can feel like one more item on a checklist. To the agency standing behind the guarantee, it is the opposite because it is a crucial document relied on for underwriting. Invest accordingly.
Questions to Ask Potential Consultants
Prepare a list of questions for each consultant you interview. The following questions can help you evaluate their suitability.
- How many feasibility studies have you conducted for projects similar to ours in scope and sector?
- Can you provide references from past clients, including lenders or agencies that relied on your studies?
- What is your process for gathering and analyzing data? How do you ensure objectivity?
- Who will be conducting the study? Will a senior consultant lead the work, or will it be delegated to junior staff?
- What is the typical timeline for completing a study of this size?
- What deliverables will we receive, and in what format?
Asking these questions helps you gauge the consultant’s experience, transparency, and ability to deliver a study that meets the standards of your stakeholders and lenders.
Red Flags to Watch For
Some warning signs should prompt you to look elsewhere. Avoid consultants who promise a predetermined outcome or suggest they can “make the numbers work.” An honest feasibility study may recommend that the project not proceed. Avoid consultants who lack independence or who have a conflict of interest. Also be wary of those who cannot provide clear references or samples of past work. A consultant who is vague about methodology or timeline may not deliver the rigorous analysis you need.
Additionally, be cautious of consultants who quote a price far below market. A feasibility study requires significant time and expertise. Extremely low fees often correlate with thin analysis, which could hurt your project’s credibility with lenders and donors.
How to Evaluate Proposals
Once you receive proposals and quotes from several consultants, compare them systematically. Create a simple comparison table or list that includes each consultant’s experience, methodology, timeline, deliverable description, and cost. Consider scheduling a follow-up call with the top candidates to clarify any points. The decision should be based on overall fit, not just price.
For nonprofits, it is particularly important that the consultant understands the unique dynamics of fundraising and donor relations. A consultant who has worked with similar organizations can tailor the study to your specific context, producing findings that resonate with your board and community.
Frequently Asked Questions
What is a feasibility study consultant?
A feasibility study consultant is an independent, third-party analyst who evaluates whether a proposed project is viable before a lender or organization commits resources. They assess market conditions, financial projections, operational readiness, and risks. Their independence ensures an objective assessment that stakeholders can rely on for decision-making.
What is the average cost of a feasibility study?
The research pack does not specify average costs, as fees vary widely based on project complexity, geographic scope, and consultant experience. For a large capital campaign or commercial real estate project, costs can range from several thousand to tens of thousands of dollars. Request detailed quotes from multiple consultants to understand the market rate for your specific project.
Can I hire someone to do a feasibility study for my nonprofit?
Yes. Many consultants specialize in feasibility studies for nonprofit capital campaigns. These studies typically involve interviewing donors, board members, and community stakeholders to assess readiness and determine a realistic fundraising goal. Hiring an independent consultant ensures objective results that build confidence among supporters and lenders.
What are the key components of a feasibility study?
A comprehensive feasibility study includes market analysis, financial projections, operational review, risk assessment, and recommendations. For nonprofits, stakeholder interviews are a critical component. The study examines whether the project can be practically and successfully delivered, providing a clear basis for go/no-go decisions.
Have more questions? Fox Campaigns is always happy to schedule a complimentary strategy call to discuss whether a feasibility study is the right next step for you. Contact us today.
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