Important Secrets - Investment and Fundraising
Sunday, May 31st, 2009
If you are an executive or key volunteer leader of a not for profit who has been in your position less than a year then you need to know that one of the many issues you want to address is the concern that so much of your fundraising time, energy and resources are spent planning fundraising events. In fact it may seem like the mission of your agency has changed, and staff as well as volunteers spend more time planning parties than delivering service. It goes without saying that fundraising events play an important role in many not for profits. But the truth is that too many organizations do not fully realize how to increase their fundraising efforts.
Now some of you are probably thinking that this may seem like blasphemy, but events should primarily be utilized to attract new donors, cultivate existing donors and volunteers, say thank you to your donors, volunteers and staff, or to provide community education. The other fact that should be mentioned here is that for most organizations, most events should not be undertaken if they are expected to provide a good financial return on the organization’s investment of time and resources to produce the event.
Due to the AAFRC Trust for Philanthropy, 78.3% of all charitable contributions come from individuals. The other well known fact is that 80%-90% of all funds raised from those individuals are from the top 10% of donors. Speaking differently, it simply means that major giving is where it’s at. This is not to preclude the importance of broad based memberships and giving at all levels, but rather to focus your fundraising energies on the best return on investment (ROI) of time, staff, volunteers, and other resources, facilities, and so on.
While calculating best return on investment (ROI), it is important to take into consideration the indirect costs associated with fundraising. For instance staff costs are not just for those who are directly involved with fundraising. Other staff and administration typically are involved as well, albeit to a lesser extent. The costs associated with staff and volunteer time, facility usage, overhead expenses, as well as out of pocket direct costs should all be factored into determining best return on investment (ROI).
It should be also pointed out that from the best return on investment (ROI) perspective, it costs less and produces more income to raise major gifts than to use other possibilities of fundraising. While a variety of methods should be used in each organization, all too often, nonprofits tend to utilize, to a disproportionate degree, those methods which produce the lower returns, rather than those that are more effective.
Needless to say that particular event can provide enjoyable opportunities for volunteers but they typically cost too much to produce to justify the amount of money they raise. The obvious result is that most organizations are decreasing the number of events they hold and are putting more emphasis on major gifts and planned giving.
To conclude it all there is a need to admit that using the return on investment approach to analyze fundraising performance is a perfect way to engage leadership and staff on how best to plan your future fundraising activities.
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