Professionals brainstorming on a glass covered in sticky notes.

Whether your nonprofit is thinking about building a new facility, expanding your current space, or retrofitting an existing building, successful capital projects start by assessing your readiness, needs and capacity before you sign a contract. We’ve outlined key steps to guide you through the planning and budgeting phase of your capital project.

PLANNING & BUDGETING

Overview

Your organization has lots of options when it comes to capital projects and it is important to consider them all. The space that helps your organization fulfill its mission may be one that you buy, build, rent, expand, renovate or one that allows you to merge, share, or consolidate programs in your existing space. This Key Things to Consider document walks you through a framework to help you determine the right option for you.

Although your project may not be fully defined at this stage, it is a good idea to know what your organization's financial expertise, fundraising capacity and construction experience is. It is also important to ask yourself if you have the expertise or funds necessary for the planning process itself. Later, as your project becomes more clearly defined, you will continue to compare funding requirements to your fundraising capacity.

A fundraising campaign plan organizes and coordinates the strategy behind the campaign, and the specific steps to be taken to reach the campaign goal. Organizations that lack significant fundraising experience should consider hiring a fundraising consultant to assist in developing a campaign plan.

Once you’ve assessed your organization’s program and space needs, the next step is to create a master plan. The goal of this process is to make sure the final size and configuration of your building meets all of the program needs identified during the needs assessment process. Many organizations hire an architect to help them develop a master plan.

Before you can raise money for a capital project, you have to have some idea of what the project is going to cost and how it will impact your operating budget. You don’t have all the details for your project yet, but it is time to get started identifying some of the possible costs. The project budget will continue to be a moving target for the duration of the campaign and the project.

Having a clear and effective project management system in place early in the process can prevent significant problems later in the project. This may include an Owner’s Representative, a schedule for reports and presentations, and a plan to address problems or conflicts. These systems will help to ensure proper oversight of the project while continuing to focus on the daily operations of your organization.

Expert Tips

Malik Robinson, President and CEO of Cleo Parker Robinson Dance

In 2024, Cleo Parker Robinson Dance broke ground on a 25,000-square-foot addition to expand their original space – the historic Shorter AME Church - into a 49,000-square-foot community facility. This addition enables the organization to ensure sustainability and impact for many years to come. With the new addition, the campus grows to include two theatres and seven studios for the internationally acclaimed Cleo Parker Robinson Dance Ensemble, Dance Academy performances and classes, youth job training, arts education programs and community events.

Nonprofits may rely on board members, consultants, staff or ad-hoc committees to guide them through the capital campaign process. If you are relying on volunteers, make sure they have the expertise you need and are willing to commit their time, talent and money throughout the process. If you are assigning staff, be realistic about how much time they will have to dedicate to a capital project.
The cost of a project depends greatly on when the project starts and how long it takes to complete. Project costs will increase over time due to a number of factors including inflation of construction costs, interest expense on financing and project management expenses incurred for a longer period of time. You should always include contingencies in your budget for this type of cost escalation.
You may find your project in a place where it is over budget and behind schedule. The two most common reasons projects go over budget are delays that extend extend the project schedule (i.e. permitting) and scope changes that add expense to the work. While you can’t always avoid these issues, having a good sense of predevelopment costs, early recognition of problems and a well thought out contingency budget will help you avoid being caught short.
New buildings and expansions are just the start. As you plan, think about future maintenance, capital expenses and repairs. Build them into your long-term budget forecast.
Many tasks you’ll encounter during the capital project planning process may require outside expertise from consultants, temporary staff or volunteers. Consultants can help with feasibility studies, fundraising campaigns, facility/master plans, budgeting and project management.