replacement plans

Replacement Plans can be an invaluable tool to a Non-Profit Organization as it can be utilized in many ways to increase donations, save time & money and increase the efficiency of the organization with respects to building and asset expenses.

A replacement plan provides an organization a timeline of the long-term costs associated with maintaining, repairing and replacing of the building components that deteriorate over time. These building & asset costs are often overlooked as they are infrequent and not a big concern for the staff and volunteers who are steering their efforts into the Non-Profit’s core concerns. Nonetheless these building and asset projects are extremely costly, specifically to Non-Profit Organizations on tight budgets. We complete replacement plans for schools, museums, worship organizations, clubs, sanctuaries and many other types of organizations that have significant building assets. When utilizing a replacement plan appropriately, a savvy organization can use it to:

  • Aid in fund raising efforts
  • Reduce the long term funding requirements associated with buildings & assets repair/replacement
  • Guide in the Purchase & Financing of Buildings & Assets

Aid in Fundraising Efforts

Most Non-Profits will have annual luncheons, auctions or meet and greets to provide donors an inside look into the organization, meet the people running it and to raise funds. Usually there are efforts to show how much the organization needs to collect to operate annually, however the longer term building and site expenses are often overlooked. This can be attributed to most budgets being designed and implemented on an annual basis. Whereas longer term building & site expenses like roofing, siding, windows, HVAC, paint and flooring may only come up every few years or decades. A replacement plan provides a long term financial strategy to pay for these items and breaks down the funding requirements into easy to follow annual and monthly dollar amounts. These replacement plan figures can be included in annual budget proposals and as a tool in raising funds from donors – what better tool to show donors than an independent study of the “real” costs to the Non-Profit Organization.

Reserve Data Analyst can provide custom Donor Information Sheet to show the donors the results of the replacement plan in an easy to read and brief summary. This Donor Summary Sheet can be utilized in marketing materials, meet & greet meetings, budget proposals and public budget documents. The industry specific terminology and concepts that are utilized in the replacement plan are re-phrased to cater to those that have an interest in the overall funding challenges of the organization but are not interested in learning in depth about the “how” and “why” of the study. It has been our experience that most donors like to know that their money is being spent wisely and that the staff & volunteers are doing their best to prevent “surprises” that require a rush of funds. Providing them an easy to read, understandable and brief document puts the “where is my money going” sentiment at bay and usually makes it easier to solicit additional donations.


Using the Replacement Plan with Fund Raising Efforts

  • Host a “Barn Raising” Luncheon or Dinner and share the Donor Information Sheet
  • Accept Sponsorship of Building Components (e.g. roof sponsored by “John Doe Family”) and provide real estimated costs figures from the replacement plan as funding goals for building components & assets.
  • Include the Donor Information Sheet in a Pamphlet, Newsletter or on a Website

Reduce Long Term Funding Requirements for Building & Asset Projects

When used appropriately, a replacement plan will actually reduce the long term funding requirements associated with the expenditures of the building and assets. Since the replacement plan will break down the funding requirements into easy to follow monthly and annual amounts, a Non-Profit can begin to save for items years in advance with little additional effort and taking advantage of compounding interest on the saving or investment account established. We typically see organizations save 15%+ on total required funds when they plan ahead for replacement and repair projects; the earlier the funding strategy is implemented the greater the savings to the organization.

Additionally there is a timeline of expenses included in the replacement plan so a facility manager is able to plan well ahead for expected component replacement/repair projects. Shutting down areas of a facility can be problematic and costly to an organization; adequate planning by utilizing this timeline of expenses and projected project dates will help to minimize any negative impact on donations, on the staff, volunteers and the organization’s congregation.

A Facility Manager can utilize the timelines, costs figures and building & asset inventory in the replacement plan to first obtain numerous bids well in advance of the expected replacement date and secondly verify the bids are realist and accurate. Bids will have extremely wide ranges which are often the result of inaccurate measurements, “padding” costs figures and time restrictions. The Organization can utilize the replacement plan to become an informed Buyer and determine what vendors are providing realistic bids as opposed to those that are unscrupulous or have time restraints and providing high bids. Many of our Clients have saved many times the amount of the replacement plan just by being able to compare accurate measurements and costs figures from the replacement plan to those that are on the bid.

Replacement Plan – A Tool for Purchase, Lending & Construction Purposes

Organizations seeking loans to buy or build additional buildings will be able to utilize a replacement plan before, during or after the purchase or construction of a building. Facility Managers, Lenders and Boards will have a document to rely on for their approval and budget requirements.

As organizations grow they often have to make the decision to either buy existing buildings or build new ones. A replacement plan will provide the organization with the real longer term costs associated with buying old versus building new. More informed decisions can be made for questions like; does the lower purchase price of an older building make sense if the costs 5-10 years out are excessive?

The sooner the reserve savings account is established the greater the savings to the funding requirements. Non-Profit Organizations can benefit greatly from a replacement plan so whether you choose the services of Reserve Data Analyst or not, do your organization a favor and obtain one from a qualified and experienced expert. Lastly, the replacement plan should not sit to gather dust. Use it wisely and as a tool to in many areas of your organization. It is truly a money maker and time saver in the right hands.


Written by Joel L Tax - Professional Reserve Analyst - 05/28/2016