Feasibility Study for an Association Investment Project: Investment Campaign Licence Attachments

Many Saudi non-profit associations are building a sustainable income stream through an investment project, such as buying an existing property or constructing a new building, financed by a fundraising campaign. In the 2023 Fundraising Licences User Guide issued by the National Center for Non-Profit Sector Development (NCNP), this case falls under the "Marketing Campaigns for Investment Licence" service, and one of its required attachments is, verbatim, "a feasibility study for the project approved by the board of directors". This article sets out what the guide says, as it is, and explains where a feasibility study for an association's investment project sits among the other attachments.

What conditions does the guide set for this service?

• A governance assessment score of no less than 50%, except for newly established associations.
• No amounts from the campaign may be allocated to the marketer.
• Approvals from the relevant authorities are to be obtained after the licence is issued.

Required attachments as listed in the guide

We grouped the thirteen attachments for easier reading, keeping their wording:

General assembly and board decisions

• Minutes of the board's approval to buy or build the investment and raise donations for it, including the cost.
• A copy of the general assembly minutes authorising the board to use the association's surplus funds to buy, sell and establish investments and endowments in the association's interest.
• General assembly approval of the investment rules.
• General assembly approval of the plan for investing the association's surplus funds.

Account and property

• The IBAN of the bank account dedicated to the fundraising.
• A copy of the title deed of the association's land or property, or of the property to be purchased.
• A copy of the latest certified public accountant's report.

Purchase-specific attachments

• Building completion certificate, in the case of purchase.
• Building plan from an accredited engineering office assessing the condition of the property, in the case of purchase.
• Proof of the current value of the property to be purchased from 3 accredited valuation companies.

Construction-specific attachments

• Building plan from an accredited engineering office.
• Building permit.

The study

• A feasibility study for the project approved by the board of directors.

Where the feasibility study fits

The guide requires the study to be approved by the board, so the board reviews and approves it before it is attached. It also requires board minutes approving the investment "including the cost". The cost figures in the study should therefore match the minutes and be consistent with the investment rules and plan approved by the general assembly.

Roles should be kept distinct: property valuation comes from accredited valuation companies, and the building plan and condition assessment come from an accredited engineering office. The feasibility study replaces neither; it builds on their outputs to analyse the project's financial and operational feasibility.

What does such a study usually include?

The guide does not define the study's content. The following is our usual professional methodology, not a regulatory requirement:

• Project description, purpose and link to the association's objectives.
• Market study around the property, such as rental demand and occupancy levels, from verifiable data.
• Investment costs, based on the attached valuations and engineering reports.
• Expected operating revenues and expenses under stated assumptions.
• Cash flows and financial indicators, with sensitivity and risk analysis.

Purchase or construction: how does the study differ?

For a purchase, the completion certificate, condition report and 3 valuations are available, so the study focuses on comparing the price with the valuations, expected maintenance costs and achievable income. For construction, the building plan and permit are available, so the study focuses on construction cost, timeline and the period before revenue begins.

A suggested order for preparing the file

In our experience, this order helps avoid rework: complete the general assembly approvals (authorisation, investment rules and plan), obtain the valuations and engineering reports from accredited bodies, prepare the feasibility study on that basis, then have the board approve the study and issue the approval minutes including the cost. This is a practical suggestion, not a sequence imposed by the guide.

Governance and newly established associations

The guide requires a governance score of at least 50% and exempts newly established associations, without further detail on how they are defined or what is required instead. We advise checking your status with the Center before applying.

Important note

The above is taken from the 2023 Fundraising Licences User Guide; guides and procedures may be updated. The Center's "Issuance of Fundraising Licence" service page explains the online steps and requires the documents for each licence type, without detailing investment attachments, so confirm current requirements on the platform when applying. The licensing decision rests solely with the competent authority, and a feasibility study is not a promise of a licence or of any specific return.

How Googan can help

Googan has worked on feasibility studies for the Saudi market since 1996, has had an investment presence in the Kingdom since 2013, holds ISO 9001:2015 certification, commercial registration 7036270002, and is based in Al-Masif, Riyadh. We prepare the study on the basis of the valuations and engineering reports the association obtains from accredited bodies, for submission to the board for approval. Non-profit associations receive a special discount of up to 25%, stated in the quotation. For other study types, see our Feasibility Studies Guide for Charities and Awqaf. To request a quotation, contact us on WhatsApp.

Sources

• NCNP, Fundraising Licences User Guide 2023.
• NCNP, Issuance of Fundraising Licence service page.