| When most people think about fundraising, they | | | | you have your net profit. |
| actually think about fundraisers, as in "Let's throw a | | | | But as we all know, the devil is in the details, and the |
| party." | | | | detail that most nonprofits ignore is the indirect costs |
| In development-speak, a fundraiser is a special event, | | | | of their "fundraiser." Just as you would assume, these |
| but what is often special is not how much it raises | | | | are costs that cannot be laid solely at the feet of |
| but, rather, how much it costs. Surprised? You | | | | this event. So, the salary of your executive director, |
| shouldn't be-special events are about the least cost | | | | who does so much more than this one event, isn't |
| effective way to raise money. | | | | counted. Not even the percent of time she spends |
| Events are wonderful for bringing people to your | | | | on the event. Likewise for every other staff |
| organization's table, to thank donors, to gain | | | | member in your organization. But the truth is, these |
| recognition. And if you are going to have a special | | | | are real costs of your event and to your organization. |
| event, it makes sense to try to earn some money | | | | And if you want a real accounting of your special |
| (or at least not lose any) from it. But organizations | | | | event, you must include these expenses. |
| are fooling themselves if they think that an event is | | | | Salaries (and benefits, by the way) aren't the only |
| a great, or even a good, way to raise significant | | | | indirect costs you are incurring. Do you use the office |
| amounts of money. | | | | phones, copier, printers? Don't think, "Oh, we are |
| "But we do well," I am constantly being told by | | | | already paying for these things so they don't count." |
| organizational leadership. "Our events bring in....." and | | | | Couldn't you be using all these for other purposes? |
| then some amount, generally a sizeable percent of | | | | Which brings us to another, very real and generally |
| the operating budget, is mentioned. | | | | uncounted cost of all special events-opportunity |
| "Net or gross," I always ask, though I know the | | | | costs. In economics, this refers to the cost (or the |
| answer will always be "net" even if the person with | | | | benefit) of what you might have chosen to do |
| whom I am speaking doesn't have a clue. So my | | | | instead of what you did chose. Figuring out that cost |
| next question is: "That's net of your direct costs, | | | | is extremely difficult. Perhaps you could realize more |
| right? What about your indirects?" And generally I | | | | dollars by focusing on major gifts, but perhaps, also, |
| get a blank stare. | | | | you will have lost some very real benefits of bringing |
| Which is why so many otherwise intelligent people | | | | new people to your table. |
| really believe that special events are a good way to | | | | The point is not so much to make an exact |
| raise funds. | | | | accounting, but to be aware of your options and to |
| Direct costs are those that are directly and only | | | | consider them from all sides. Just because you've |
| connected to your project, which in this case, is your | | | | been doing an event doesn't mean you must always |
| event. It's what you pay for invitation design and | | | | do one. Or that you must always do it in the same |
| printing, the flowers on the table, room rent, the | | | | way. |
| meal, the honorarium for your emcee. If you've hired | | | | The point is to know what your real costs are, and |
| a consultant to work only on this event, whatever | | | | to make decisions that pay for your organization. |
| you pay that consultant is a direct cost. And typically, | | | | Fundraisers, you may discover, are not the yellow |
| nonprofits add all these expenses up, subtract that | | | | brick road to your fundraising success. |
| total from the total of what was brought in and voila, | | | | |