Assess your capital project readiness

For many nonprofit executive directors, facility construction and expansion requires skills and expertise that might not be developed in the course of day to day jobs. Yet, so much of the success of a capital project depends on obtaining quality information and data before the design even begins. Here are 10 questions you should be able to answer before looking for a capital funding.

From time to time, Alaska nonprofits undertake large capital projects such as purchasing, constructing, or renovating a facility. And for many nonprofit executive directors, the successful completion of new facilities requires skills and expertise that might not be developed in the course of their day to day jobs.

Yet, what we have learned is that effective planning in the pre-development of a large building project will dictate the long-tem success of the project. (Pre-development is the phase of a construction project between the idea that a facility is needed through to the initiation of design.)

Help in meeting the challenges of this critical phase is available. The Pre-Development Program, a partnership of Rasmuson Foundation, Alaska Mental Health Trust Authority, Denali Commission, Mat-Su Health Foundation, and The Foraker Group, was created to provide nonprofits with the exact expertise and planning assistance needed to launch capital projects toward success. The Pre-Development Program ensures that selected projects meet a community need; that they are adequately prepared to pursue capital funding; and that operations will be sustainable.

We asked Chris Kowalczewski, program manager for The Pre-Development Program, for a list of the top 10 things nonprofits should ask before deciding to embark on a capital project. Here is what she told us:

1. Is our organization sustainable and does it have the capacity to manage a capital project?

• To assure its sustainability, the organization should operate in accordance with The Foraker Group Nonprofit Sustainability Model© – that is, it should be well established and focused on its mission, with a stable and engaged staff and board of directors, adequate unrestricted funding to carry out its mission and partnerships that help it operate more efficiently.
• If no in-house capacity exists to manage a construction project, a plan exists to acquire project management services.

2. Does the project meet a documented public need?

• The project should provide some public benefit beyond meeting the internal needs of the organization.
• There should be hard data demonstrating the need for the project.

3. Is the project part of our organization’s strategic plan and consistent with the community’s development?

• The organization’s strategic plan should indicate how the project fits into its mission and overall facilities planning.
• The project should fit within community development plans and reflect community priorities.

4. Have opportunities for partnerships been explored?

• Opportunities for co-location, shared programming or shared administrative functions have been investigated to ensure the best facility is developed to meet the community’s needs.

5. Is the project the right size?

• The project’s space requirements have been professionally evaluated to meet the organization’s needs and the total size is affordable.

6. Has site control been established on a suitable site?

• A site for the project has been selected that meets the space requirements, is in an appropriate land use zone, has no insurmountable environmental issues, and projects reasonable development costs.
• The organization has ownership of the site, a legal agreement to purchase, or a long-term lease agreement.

7. Is there a valid project cost estimate?

• A professional cost estimator, contractor, or experienced project manager prepared the cost estimate.
• The project cost estimate includes not only construction costs but also all associated “soft” costs – usually 30% to 50% of construction costs.

8. Is there a realistic plan of capital funding?

• A plan exists that identifies realistic sources of funding for the project, including local contributions and other non-state sources. This plan should be appropriate to the human capacity and infrastructure of the organization and should ensure that it does not jeopardize current operational funding.

9. Is there a business plan for sustainable operation of the facility?

• The cost of operating the programs to be housed in the facility and operational costs of the facility itself are known and adequate revenue identified to cover them on a sustainable basis.

10. Is there a realistic schedule and development plan?

• A plan has been established for procuring design and construction services in accordance with funding requirements.
• The project schedule realistically reflects the time required for design and construction.

The Foraker Group offers webinars that explore these topics in detail. The next set of classes will be offered in January. Watch the class schedule for information on dates and how to sign up.