Creating Win-Wins with Nonprofit Feasibility Assessments
Growing up, my mother introduced me to the music of Kenny Rogers. My sister and I loved twirling around our house, singing his songs at the top of our lungs. My favorite was “The Gambler” and its famous lyrics:
“You’ve got to know when to hold ‘em
Know when to fold ‘em
Know when to walk away
And know when to run.”
These lyrics come to mind whenever I hear about a new idea from a fellow changemaker. As I often say — “All ideas are good ideas, but not all ideas are viable and feasible.”
In many ways, social sector leaders are gamblers. While data informs our decisions, we also rely on instinct to determine which programs, services and advocacy efforts can help us achieve our mission. When I started in the nonprofit space 30 years ago, I acted largely on gut instinct. But now with an MBA and experience navigating entrepreneurial successes and failures, I’ve refined my market research toolkit to make better predictions. As a student of behavioral economics, I also know that I need to temper my enthusiasm (entrepreneurs call this “go fever”) and try to practice “intellectual humility” (knowing that I don’t know everything). This is where a disciplined process really helps.
While every venture still involves risk, I have found a tool that’s invaluable: the feasibility assessment. It is my go-to method for evaluating new initiatives before the cards get played. To help you use feasibility assessments to make smarter bets in your nonprofit, check out our breakdown below as well as our templates.
What is a feasibility assessment? How is it different from an opportunity assessment and a business plan?
Each of these tools provides nonprofit executives and social entrepreneurs with a degree of precision around a new business or program idea in the social sector. Think of them this way:
An opportunity assessment is a test of viability and desirability. It asks if the idea is right for you or your agency as well as the community you serve.
A feasibility assessment is a test of sustainability. It asks if the idea can be implemented right in your existing context.
A business plan (which can come in many forms — prospectus, plan, canvas) is a test of achievability. It asks how you can turn this idea into the right business model.
And with each step, you ratchet up the degree of market research (starting with secondary and moving toward primary as you refine the model) and its impact on decision-making (using the research to guide decisions on the business model).
What goes into a feasibility assessment?
If you did an opportunity assessment, you are halfway toward a feasibility assessment. Both require market research, but a feasibility assessment goes one step further — moving from “back-of-the-envelope” guesses to more data-driven forecasting and what-if scenario planning. Here are some of our favorite criteria and related questions to consider:
Market Potential
- Need: What are the clients’ (or customers’) needs? Why do they exist and persist?
- Size: How large is the potential customer/client base? What is the size of the market? Is it growing?
- Outlook: How favorable are the trends impacting the clients and marketplace?
- Profitability: What are the costs and potential revenues/income? What outside sources of money exist? Are they sustainable?
Social Impact
- Favorable Competitive Factors: What other comparables exist nationally? What is unique about their solution? How do they measure their impact? What can be learned?
- Community Benefit: Does the idea provide significant benefit to the community? What are the ways we could collaborate? Does it create a multiplier effect or is it duplication of something that already exists?
- Results: Does the idea have proven impact or is it still needing evaluation to prove impact? Is it easily scalable?
Organizational Fit
- Mission: Is the opportunity aligned with our mission? Should we partner with others?
- Skills/Expertise: Do we have the skills/expertise necessary to succeed?
- Resources: Do we have the necessary resources? Or can we build/buy them?
- Ease of Market Entry: What are some options to pursue that could best support the model? How easy will it be to launch? What are the necessities for this project to be successful?
- Risks: What are the risks and opportunities moving forward?
With a feasibility assessment, you want a higher degree of objectivity rather than the educated guess you often make with opportunity assessments. We like to use a rubric for each question and grade the answers on a scale of A-E based on the degree of favorability. So, we conduct the research in each area and record our findings on a scorecard. We have included a sample scorecard for your reference.
How do you know when something is feasible and should move forward to a business plan?
This is a tough question — and why I connect this topic to gambling. One organization may be able to play the hand easily, but another won’t be as successful. It is all based on individual circumstances. For example, how much money do you have in the bank to pursue it? What is your risk tolerance based on other initiatives you have recently started? How do the actions of your funders, government partners and other nonprofits impact this decision? How well is your culture and operations currently functioning and can you add more to your plate (without risk to your core)? A feasibility assessment can help you work through these questions and determine which opportunities to bet or fold on.
When do you use a feasibility assessment?
I use them most often before a venture starts or a capital campaign begins. I also use them for existing ventures to decide if and when to exit or improve a venture to test degree of sustainability. For example, if more competitors have entered your marketplace, your degree of feasibility is likely less favorable.
How is a feasibility assessment different from a needs assessment?
A needs assessment is a systematic process for determining needs and can include surveys, focus groups and other market research. A thorough needs assessment is included in a feasibility assessment (see related questions in the template). While valuable, the data then needs to be taken to the next level to determine what I call the “exist vs. persist” relationship — why does the need exist and why isn’t it being solved (a.k.a., why does it persist?). A feasibility assessment looks at the idea from all angles (one of which is a needs assessment) to see not only if the idea is warranted, but also if the idea will solve the identified problems and whether or not the idea’s implementation is sustainable. For example, in client surveys, clients say they need a lot of things, but that isn’t a proxy for supply and demand. You need a more refined process, like a feasibility assessment, to determine whether or not an idea is both viable and feasible.
How can you conduct a feasibility assessment?
Similar to business plans, we strongly encourage a high degree of staff involvement in feasibility assessments. You can hire a coach or consultant (or student intern!) to help you with the deep dive into research, but only you can interpret the results for your agency and make the decision. It is both an art and science — you can hire for the science, but only you can craft the final product based on your instincts and your internal pressure testing.
Because only 20% of ideas are viable, it is important to undertake these exercises to hedge your bets. In the short run, you will feel more confident in those bets. In the long run, you will have a better record of success. Or as “The Gambler” would say, “If you are gonna play the game, boy / You gotta learn to play it right.” We would love to hear more about your experience with feasibility assessments and whether they have upped your game in the social sector.
