Nonprofit Feasibility Study Scam – Don’t Be Fooled

Nonprofit Feasibility Study Scam – Don’t Be Fooled provides readers a “behind-the-scenes” look at how this outdated product hurts charities and damages their relationships with donors.

Please note this article has been written for “givers” (rather than nonprofit execs or consultants). The goal here is to provide philanthropists the information they require to make a sound decision when asked to participate in a feasibility study.

VISIT HERE TO SEE WHAT CHRONICLE OF PHILANTHROPY HAS TO SAY ABOUT JIMMY LAROSE’S FEASIBILITY STUDY SCAM

Before we get started let’s take a peek at how consultants define nonprofit feasibility studies: “A feasibility study is an objective survey of the community that assesses the likelihood of success for a fundraising project, and identifies strategies and specific individual givers for the campaign. A feasibility study can also be used to contemplate launching a new program, merging with another nonprofit, or taking a hard look at the effectiveness of the ways you do fundraising. If you as a board member were to ask others whether they would support a campaign, your friends might feel they need to be positive, so an independent consultant usually conducts individual private interviews with community leaders, prospective foundations and individual donors, and key friends (and enemies!) of your nonprofit. What you can learn by talking to people with history with the organization, and people with expertise in your field, may astound you.” ~ Burke Keegan

On the face of it, this definition makes sense and places a high value on the outcomes a feasibility study would likely supply. Why then is this article titled “Nonprofit Feasibility Study Scam – Don’t Be Fooled?” I intend to reveal some well-known insider facts that consultants don’t want you (the donor) to know about the feasibility study racket.

The Dysfunction of Triangulation

Consultants have convinced nonprofits that the “private interview” is not only priceless, but sacred. They will insist with great fervor that you (the donor) prefer the anonymity of a survey performed by an objective third party. They claim that you will be more transparent and share your true feelings. Here is a quote from a feasibility study consultant regarding anonymity:

When study interviews are done with the inviolable pledge of anonymity, donors are truly free to share what they might give, and also express reservations about leadership or vision that they might not otherwise reveal for fear of damaging relationships.

The number of things wrong with this statement are innumerable.

Major donors like yourself (who give five, six or seven figure gifts) share their concerns directly with leadership. Donors who make big gifts do not use a third party to reveal their secret anxieties. Feasibility study consultants brazenly sell the dysfunction of triangulation as one of the most important features of their product.

Triangulation, by definition, is a situation in which one family member communicates indirectly with another through a third party. The concept originated in the study of unhealthy families, but can describe behaviors in other systems, including work and management.

Incidentally, triangulation is the most addictive aspect of this toxic “high”. It cements the relationship between the dealer and the addict. The consultant promises the nonprofit they can reap the benefits of a relationship without having to actually be in one. Here’s the truth about the “anonymous” third party interview…it is a very powerful sales tactic. For it promises, with the ease of “just-add-water,” the impossible outcome of new dollars raised.

Simply put, triangulation is the enemy of intimacy, and has co-dependently fed the abnormality of nonprofit management for decades.

The Deception of Confidentiality

Feasibility study consultants will tell (or infer to) both the nonprofit and the interviewee that the meeting is being held in anonymity. Here’s a direct quote:

“Ultimately, outside counsel will always be needed to provide a donor the confidentiality they require to reveal their honest, unvarnished view of the organization and its vision.”

Here is the problem: the anecdotal information you provide during a “confidential interview” is shared word-for-word and in writing, even though it may not be attributed to you directly. I have seen a countless number of administrators and staff read through a feasibility study report and blurt out, “Well, we know who said that!” Furthermore, the gift amount you shared is not confidential, and ultimately makes its way into a future gift request.

When you are told that the interview is private, you’re being manipulated. The consultant has been hired to gather information from you and disseminate it DIRECTLY to leadership.

I recently spoke with a consultant who shared, “I recently finished up a series of interviews that revealed some real problems with the organization. The leadership had no idea!” He suggested that the privacy of the interview played a key role in uncovering what was really going on.

When a “feasibility study” comes back with some sort of “startling revelation” about leadership, a campaign, or the organization, it’s an indication that the staff of the nonprofit failed to be in any real relationship with you in the first place. Simply put, it is the first time the right questions have ever been asked, NOT that the privacy of the interview made you feel safer.

Donors that make significant investments do so as result of trust, built on a foundation of shared values, not because a fundraising consultant provided them “confidentiality.”

Nonprofit Feasibility Study Scam – Studies Are Sold to Charities That Don’t Need Them 

The problem with this point is the underlying assumption that THERE ACTUALLY ARE some nonprofits that could benefit from a feasibility study. Remember Art Franztreb’s statement, “90% are not ready.” His words could infer that 10% ARE READY, and that the remaining 90% COULD BE at some future point. However, if you read his work, you will discover that he developed methods that eliminated his use of feasibility studies as a tool.

Here is the rub. Even if you are able to somehow justify letting consultants cultivate your donors (which you can’t), consultants still sell this product to thousands of nonprofits…

…who haven’t developed a strategic plan
…who aren’t unified around a case for support
…who don’t have relationships with prospects to be interviewed
…who are run by a weak board of directors
…who have been destabilized by scandal or administrative departures
…who etc. etc. etc.

CONSULTANTS WILL CRY “THAT’S NOT FAIR!!! WE PERFORM CAMPAIGN STUDIES FOR SOLID ORGANIZATIONS LIKE UNIVERSITIES AND HOSPITALS WHO NOT ONLY BENEFIT FROM THEM, BUT CAN AFFORD THEM AS WELL.”

Large institutions flitter away funds more than most. In fact, because they’re well-funded, they waste these monies on studies with little or no financial consequence.

So, if you’re supporting a university president, and she is considering the value of a feasibility study, remind her that Princeton exceeded a $350 million dollar campaign goal without ever using a third party to interview their donors.

If you’re working with a hospital CEO who is going to hire a consultant to perform a “planning study,” stop them! The proper “NO” decision will prevent thousands of your dollars from being spent on an overpriced “hit-and-run” tactic that adds no long term value to the institution. Instead, make sure those funds are used to hire more field officers to build meaningful friendships with the families who financially underwrite the hospital’s mission.

ETHICS, ETHICS, ETHICS, ETHICS

In response to my industry best-seller RE-IMAGINING PHILANTHROPY, a leading planning study consultant wrote the following:

“The consultants I know subscribe to the rules of ethical conduct established by the Giving Institute or by the Association of Fundraising Professionals’ Code of Ethical Standards. The obligation always to act ethically is a powerful disinfectant and removes the taint of conflict…”

Powerful disinfectant? Evidently not! Ethics are subjective, and easily swept away when an entire industry is relying on a business model that generates personal income. Money (in spite of ethics) is the reason why 90% of nonprofits (Franztreb used that number, not me) are being sold a product that does not work.

Regarding the “codes” established by The Giving Institute or Association of Fundraising Professionals: there’s NOT ONE WORD regarding the buying or selling of “feasibility studies” (despite decades of controversy).

I once met with a regional board of directors who oversaw their denomination’s year-round camping and retreat facility. One of their veteran members was a feasibility study consultant, from a large consulting firm that performed studies and provided campaign support. Though this meeting was out of state, we were both members of the same chapter of the Association of Fundraising Professionals. Over the years, we had admired one another’s work from a distance.

Their board had come together to spend two days wrestling through a new strategic plan. Upon completion of the first day’s work, we meandered over to their dining hall for some dinner. At some point during the evening, the conversation turned to other nonprofits and what “was” and “wasn’t” working. My fellow AFP chapter member (whose entire cadre of fellow-consultants were also AFP members) then shared the dark realities his firm engaged in when performing a feasibility study.

He blurted out, “The truth is, the unwritten policy at our firm is to write every ‘report’ in a way that leads to the earliest possible start date.”

I asked, “So, how many reports return a ‘not ready’ finding?”

He replied, “None.”

I then asked, “How many organizations are actually ready?”

He hesitated, and then glibly replied, “Hardly any.”

I went ahead and confirmed what I thought I was hearing. “So, let me get this straight. You’re saying that every study report your consultants write comes back with some sort of finding that leads to more paid work?”

He replied, “Hey, I know it’s not right, but it’s the way we pay the bills.”

CONSULTANTS WILL CRY…

“FIRMS LIKE THAT DON’T LAST…THE MARKETPLACE TAKES CARE OF BAD BEHAVIOR THAT’S UNETHICAL.”

The incident I shared above took place twelve years ago. Since that time, that same firm has expanded, adding new consultants, despite the failed campaigns that followed.

CONSULTANTS WILL CRY…

“THAT’S NOT FAIR!!! JUST BECAUSE SOME ARE UNETHICAL DOESN’T MEAN WE’RE ALL UNETHICAL!”

Here’s a response from a consultant regarding the concerns I’ve outlined about ethics in RE-IMAGINING PHILANTHROPY:

“Are there still consultants out there who inflate the potential for a campaign in their study to get the consulting gig? Are there doctors who order unnecessary tests? If Mr. LaRose was serious about his professed concerns, he would be helping nonprofits research the integrity of their prospective consultants, not just shouting “the emperor has no clothes!”

Here’s the problem with the “doctors who order unnecessary tests” comment. In the world of nonprofits…IF the physician (fundraising consultant) who’s already been paid $25,000 to diagnosis (feasibility study) the patient’s readiness to run a marathon (upcoming campaign), declares the runner fit to race, the physician is THEN rewarded with additional work that pays $100,000, $200,000 even $500,000 in fees as a consultant to the race team. The temptation is too powerful.

Here’s what a study consultant wrote after reading about my concerns:

“I have to take issue with this notion of consultants being “prejudiced” because they may do the campaign implementation. I can’t think of a single study I’ve ever conducted where the assumption wasn’t that—assuming favorable findings—I wouldn’t be involved in the execution of the campaign. The real issue, I think, is whether the consultant’s desperation of a consulting engagement clouds their judgement. But that’s a failure of the consultant, not the study process.”

If you read his comment closely, he makes my point. I’ve seen too many “judgments clouded” by the monies that stand to be made if a favorable finding is reached.

Hey, even cocaine has a few “ethical” applications (e.g., numbing the cornea for optic surgery, etc.). However, its disadvantages and powerful temptations far outweigh any of its value when used by the masses.

When it comes to feasibility studies, I’m begging you to THROW THE BABY OUT WITH THE BATH WATER. Stop participating in them. Throw them out…baby and all (including the “powerful disinfectant” of ethics!).

CONCLUSION:

Believe it or not, the consultant is the lesser of two evils in this equation. Or, as one of my professors in college insisted on saying, “The evil of two lessers!”

The real problem is with nonprofit administrators, staff, and boards!

Charities who conduct third-party interviews view you (their donors) as Automatic Teller Machines that exist somewhere outside the organization. They believe you can be visited by a third-party hack, who promises to “drive thru” and extract as many of your dollars as possible using some sort of MAGIC PIN NUMBER.

Please remember the consultant’s quote I shared earlier,

The nonprofits we work with don’t have the staff capacity to interview their donors before a campaign, nor the will to make it a priority. In fact, we’re cultivating their donors for them. We could train their senior staff to conduct interviews, but most are not willing to invest the time and energy. Feasibility studies will continue to be necessary as long as nonprofits are unwilling to spend time with donors one-on-one.

For more information on the feasibility study scam VISIT HERE to attend one of National Development Institute’s Major Gifts Ramp-Up Seminars.

Nonprofit Feasibility Study Scam – Don’t Be Fooled was first posted at INSIDE CHARITY

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