If you’re organizing an event or looking back at old ones, you need to know how much you spent. Costs for things like renting the venue and food, as well as paying staff and insurance, can really add up. In this article, we’ll break down the costs of fundraising and help you budget for those pesky hidden expenses. Let’s get started!
The costs of running a nonprofit quickly add up. Between donor communication, engagement activities, and organizational needs, your income needs to stretch quite far. And while fundraising events and campaigns are meant to raise money for your nonprofit, they can become expensive. Defining your goals is an essential step in managing your organizational expenses. Read on to find out more and explore the additional steps and tips we’ve put together!
The answer is two-fold. Fundraising has both direct and indirect expenses. Each may be necessary, but it’s essential to understand all the costs during an event to better analyze its effectiveness.
Direct expenses include things you’d normally have to pay for when organizing a fundraiser, like renting a venue and printing material. You might not realize it, but there are other expenses too, like renting AV equipment, paying for the website, getting T-shirts, and other items. If you’re thinking about doing a fundraiser, get in touch with the venue to figure out what it’ll cost. If not, you might be in for a shock. Here’s a breakdown of the direct expenses for fundraising activities and tools.
Some indirect expenses are expected, like paying staff, renting an office, electricity bills, and equipment. However, some other hidden expenses might catch you off guard, even though they’re still part of your fundraiser’s costs. This could include things like employee meals on the day, staff parking at the venue, utilities, marketing and branding costs, and more. While they may be considered indirect expenses, these costs are key to making your fundraiser successful and promoting your nonprofit. Indirect expenses could include:
When you’re mapping out your nonprofit’s annual fundraising calendar and strategic plan, make sure to set aside funds for each event and fundraising campaign. Making a list of all the expenses for your events is crucial to figure out if it’s worth the cost. Take a look at how your nonprofit spent money in the past, specifically on events and campaigns. This can offer vital insights on where you can save with upcoming events and campaigns.
Want to know how to manage fundraising expenses? Here’s what you can do.
Creating a budget is necessary for all fundraising activities. Fundraising events can turn into a money pit if you don’t keep tabs on expenses. Just a reminder, as you keep tabs on the funds you’re bringing in and spending, consider the non-monetary advantages as part of your ROI. For example, are you reaching new major donors, building a larger network of support with local businesses, or growing your volunteer base? While these benefits may not directly contribute to your bottom line, they’re important factors to consider when determining whether your event was a success.
Start by setting goals for your fundraiser. Raising money may not be your first priority. Sometimes, you need a fundraising event to get the word out about your nonprofit. It might seem pricey to plan these events, but the payoff of getting contact info from enthusiastic people and spreading the word about your mission is totally worth it. Make sure you can explain these benefits to your nonprofit board and other stakeholders. And remember, it’s crucial to watch your spending and not go overboard.
Analyzing costs for your event or campaign can help you show the effectiveness of the activity to crucial stakeholders. Review past campaigns to find areas where you can save money, and be sure to explain how these expenses didn’t contribute to the organization’s goals.
If you’re starting from scratch, a pilot program can give your board a real-life example to work with. This program shows how new fundraising activities can benefit the organization and help you save resources at the same time.
Technology is becoming more affordable with all the competition in marketing, fundraising, wealth screening, and donor management. There are many online donation platforms that offer free or low-cost tools to help you fundraise. But make sure you do your research to know the actual costs of these “free” programs.
Staffing is a major expense when it comes to fundraising. Fundraising events rely on people to handle tickets, run activities, and make sure everyone stays safe.
Nonprofits need volunteers to help out and save some money, but finding and training them comes at a cost. When you use volunteers, remember to factor in overtime and other staff expenses to prepare them for the event. Make sure to set aside money for volunteer appreciation gifts, too. Volunteer gifts aren’t required, but they can help your organization retain great people for future events.
Volunteers can’t solve all your problems. There will be moments when you’ll require some outside support. Using vendors and freelancers can help you cut staff costs. Third-party vendors can help with events, marketing, and nonprofit operations. These professionals can help you cut down on insurance and other expenses that come with hiring employees.
There are a few tips to keep in mind when working with vendors, including:
In-kind donations can be a huge help for your budget when you’re organizing a fundraising event. Many businesses and individuals are happy to help out their favorite charity by donating goods or services. Businesses are very motivated by the free marketing such gifts can provide. When your event needs a raffle or auction items, most nonprofits will contact local businesses for in-kind donations. Catering can be another option for in-kind donations. New restaurants and shops could offer free meals or treats at a small event to get their name out there in the community. Don’t hesitate to contact these businesses and let them know about the benefits of supporting your event.
Nonprofits that rely on one or two fundraising events or grants can find themselves in trouble if one of those events goes south. Make sure you have different channels to connect with donors and raise money.
Each of your donors is unique in their interests, passions, and financial abilities. If your nonprofit only does one event or relies solely on foundation grants, you’re not taking advantage of these incredible opportunities. Golf events, marathons, fundraising galas, and community fairs cater to different people. Some activities may work better for your donors, but others could help you reach new donors.
This is where a pilot program can be helpful to test out new fundraising activities. Also, fundraisers can be more than just events or grants.
With the rise of online and social media, fundraising options are limitless. Peer-to-peer campaigns, online raffles, and auctions can be equally effective and cost much less than traditional fundraising events. They can also save time and work better than grants. Look for ideas that match your donors’ interests.
No matter what event or activity you pick, there are always hidden costs. Recognizing donors and volunteers with gifts is a good way to motivate them, but it can be costly. Hosting fundraising events might mean extra costs for venues and staff that you weren’t ready for. When unexpected costs come out of nowhere, here’s what your nonprofit can do.
Event venues have contracts that must be signed. Make sure you read the fine print before signing to know all the costs. Unexpected costs and deadlines can hit at the worst of times. If you can, find someone with a legal background to check the contract so you don’t miss anything.
Anyone will tell you to expect to pay more when building a house. Well, fundraising events are no different. That is why a contingency fund is necessary when creating a budget. Usually, contingency funds are around 10-15% of the total budget. They’re for unexpected expenses. A contingency fund will save you from stress when unexpected costs arise and will make your board happy if you end up spending less than planned.
It’s ideal for every event to have an emergency fund, but for most individuals and nonprofits, it’s just not possible. A line of credit gives you quick cash for unexpected expenses that you can pay back right away. It can help eliminate stress by providing a safety net for times when funds are delayed.
Nonprofits have to spend money on fundraising events and campaigns, but in the end, the benefits should outweigh the costs. Expenses like venue rentals, audio and visual, and catering should be included in your budget. Make sure you account for unexpected expenses like staff insurance, electricity, and venue insurance – they’re important too!
When considering the costs and benefits of each fundraising event and campaign, make sure to include all direct and indirect costs. Take a look at past fundraisers to see how they factored in these costs and make sure you didn’t overlook anything.
When you propose a new fundraiser to your board and other stakeholders, be sure to include all the benefits your organization can gain. Many fundraising events won’t bring in as much as a grant, but outreach to new donors and the community can make a significant difference. Also, remember to include a contingency fund if possible so you and your board will not be surprised by the hidden expenses that inevitably happen.
Donorbox has several tools to help your organization with fundraising budgeting, including integrations with tools like Quickbooks and Jitasa. We’ve also written articles to help you raise more event funds with recurring donations and matching gifts. Sign up for more tips and resources for your nonprofit and fundraising needs, and visit our website to see why 80,000 other nonprofits have chosen Donorbox.
Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.
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Kristine Ensor