Is Your Nonprofit Ready for a Capital Project?


by Kate Stephenson

I have an almost-two-year old who just discovered Mega Blocks and how to stack them as tall as possible before they fall. That usually leads to some two-way negotiation about where the next block should go, to avoid a cascade of blocks and tears. (Sometimes the game is to build it high and knock it down, but that’s a Blue Avocado article for another day!)

Here’s where I tell you that nonprofit construction projects are something like negotiating with a toddler still practicing his stacking.

Fortunately, a real expert is here to move us from an awkward metaphor to some practical tips because a capital project — maybe you’ve outgrown your space or had a piece of land gifted to you from a donor — can be an incredible opportunity. But only if you are prepared. Kate Stephenson is a partner at HELM Construction Solutions in Montpelier, Vermont, and former nonprofit executive director herself. Here are her field-tested tips for your next capital undertaking:

Is your organization considering raising funds and investing in building or renovating a piece of property? If so, now is time to make sure everyone is on the same page about the goals of this major undertaking. Focused planning will save time, money, and (a lot of) headaches down the road.

Before taking the plunge, I suggest that you ask yourselves these ten key questions:

1. What’s your goal?
The first question when considering any capital project should be: How does this fit into your long-term strategic plan? You should be talking about where you see this organization in 5 to 10 years, and how the capital investment will advance your goals. Does the move advance your mission — or is there a risk it would detract from it?

2. What do you need?
Architects call this “defining the program.” But before you even bring an architect to the table, get very clear among your board, staff and supporters about the scope of the project. Here are some questions you can start the conversation with: Are we talking about cosmetic improvements to an existing space, an addition or a completely new building? Going back to the strategic plan, how many staff do we need to accommodate? What new programs do we anticipate? What services do we currently offer and how do we want to enhance them?

3. Is the organization financially healthy?
A strong financial track record and well-organized financial statements make all the difference in generating support from individual donors and foundations. Strong credit and assets will matter when you try to secure financing from a lender, too.

So ask yourself whether the board and staff have a strong grasp of the organization’s current financial situation and how this facilities project will affect it. If the organization’s future is up in the air in any way, then it is worth questioning whether it is prudent to invest in owning a facility, if renting or leasing might give more flexibility in an uncertain future.

4. Are we all on the same page?
Do you have a strong leader (or leaders) who will advocate for this project and push things to keep moving forward? You don’t want to stall out after you’ve started, and yet many organizations get stuck at this stage in the process. Some stakeholders are ready for growth and are excited to take on this new project and all of the potential that comes with it. Others are more risk-averse and don’t want…READ MORE