Thinking About Building? Introducing the Capital Project Calculator
The Capital Project Calculator is a simple tool intended to test assumptions and begin conversations.
Introduction
For many nonprofit leaders, the idea of undertaking a capital project—buying a building, renovating space, or constructing something new—can feel overwhelming before it even begins. The jargon and steps associated with developing real estate can be opaque, technical, and intimidating. That’s exactly why we built our Capital Project Calculator: not as a definitive budgeting tool, but as a way to help organizations start the conversation.
Why Nonprofit Capital Projects Are Different
Capital projects are financed very differently in the nonprofit world than they are in the for-profit real estate sector. For-profit projects typically rely heavily on debt, supported by strong cash flow, with equity filling in the gap. Nonprofits, by contrast, usually have limited cash flow and relatively little equity available. As a result, subsidy — public funding, philanthropy, and grants — often makes up the largest portion of the capital stack.
This distinction matters. It explains why many nonprofit projects can support only a modest amount of debt, and in some cases, no debt at all. Debt is not inherently good or bad — but it only works when an organization can reliably afford the monthly payments.
Capital projects are financed very differently in the nonprofit world than they are in the for-profit real estate sector.
Debt Depends on Cash Flow (Even for Nonprofits)
One of the most common misunderstandings we see is the assumption that debt is simply not an option for nonprofit-led projects. Debt is a long-term obligation that must be repaid with predictable cash flow. For organizations that are not revenue-driven, this concept may feel unfamiliar.
That’s why the calculator places real emphasis on monthly debt service. Seeing an estimated monthly payment helps boards and executive directors quickly assess whether a given level of debt is realistic. In many cases, this leads organizations to reduce assumed debt until the monthly cost aligns with what they can actually sustain—sometimes by comparing it to rent they already pay today.
What the Calculator Is Designed to Do
The calculator is intentionally simple. With a handful of adjustable inputs, it helps organizations explore three foundational questions:
- How much do we need to raise for a capital campaign?
This includes both public and private subsidy targets. - How much debt can we realistically afford?
Based on estimated monthly payments and operational assumptions. - How much space can we build (or renovate)?
Based on total development cost and assumed construction costs per square foot.
The tool uses sliders and visual feedback to show how changes in one assumption affect the entire project model.
Assumptions You Can Adjust
The calculator starts with typical assumptions—such as how development costs are divided among land, soft costs, construction, and financing—but every one of these can be adjusted. Construction costs per square foot, for example, vary enormously depending on project type, location, and complexity. The tool allows users to raise or lower this assumption and even reverse-engineer a budget based on known space needs.
Similarly, the split between public and private subsidy is not meant to be prescriptive. Funding sources for capital projects are often project-specific and relationship-driven. This input is best understood as a conversation starter, not a prediction — one that may lead organizations to consider fundraising feasibility studies or alternative project scopes.
This input is best understood as a conversation starter, not a prediction.
A Starting Point — Not the End of the Road
We compare this calculator to online car payment estimators. They’re incredibly helpful for understanding price ranges and monthly costs, but they don’t replace the need to talk to a human or take a test drive.
In the same way, our capital project calculator is meant to help nonprofit leaders and boards move from “We don’t even know where to start” to “Now we have better questions to ask.” From there, deeper work can begin — from program planning and feasibility analysis to due diligence and engaging teams.
If you’re considering a capital project, we invite you to explore the calculator, test a few scenarios, and see what the numbers reveal. And when you’re ready to go further, we’re here to help you take the next step.
Ready to take the next step? We’d love to chat with you!
