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Facilities: Building Acquisition and Construction Projects

A typical capital campaign supporting a bricks-and-mortar building project is a familiar scenario. Such an endeavor is a huge commitment for a small or midsize organization and should be undertaken only after a great deal of preparation. An organizational self-examination to ensure that the staff and board infrastructure can sustain the additional workload and fundraising effort is highly advised, in addition to a thorough feasibility study to ensure that the community can, and is willing to, support the endeavor. It will be necessary to create a multi-year budget for the project projecting sources and uses of funds and timing, and a capital campaign plan to raise the required resources. In the case of a new or expanded building, a multi-year business plan reflecting the financial impact of operating in the increased space will need to be developed.

Many organizations find themselves operating in the red for the first one to three years after implementing a facility project, and they may also find themselves in debt for construction costs that were in excess of capital campaign revenue, rendering the organization financially fragile just when it needs to be strongest. Years of very careful planning, research on financing options, and a great deal of caution are advised.

The Nonprofit Finance Fund offers a Facility Project Planning Guide that describes what a facility project is, and what factors to consider in deciding to embark on one, as well as outlining the dangers and pitfalls of doing so. The impact of a facility project on small and midsize organizations cannot be underestimated.

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