I always know when spring arrives. Not because of the weather — goodness knows it doesn’t feel like spring here in North Carolina yet — but because my mailbox starts filling up with invitations to nonprofit events. With people taking vacation in the summer, and winter months reserved for holidays and end-of-year appeals, the remaining seasons are chock-full of golf tournaments, galas, walks, bike rides, and other special events designed to generate revenue.
As someone who has frequently been on the organizing side of these happenings, I have a love/hate relationship with special events. Sure, well-executed (read profitable) events can be rewarding, but the time and effort that goes into them can be mentally, physically, and financially draining.
According to data collected by the Association of Fundraising Professionals, costs associated with production and staff time eat up 50% of a special event’s gross proceeds, on average. While we might claim the golf tournament that grossed $100,000 against paid-out expenses of $25,000 yielded a net profit of $75,000, that net figure drops to $50,000 when staff salaries and other ancillary expenses are factored in. In comparison, the loaded cost of procuring a $100,000 grant is $20,000 (or 20 cents per dollar raised). Acquisition of a major gift averages a 5% - 10% investment, so a $100,000 gift generates true net revenue of $90,000 or better.
In addition to higher costs, special events can introduce risk that is difficult to mitigate. When the guest who normally spends $20,000 in the live auction is unable to attend the gala, how do we make up that revenue? What happens when threatening weather deters would-be participants at an outdoor fundraiser? Or when a change in a company’s priorities means they will no longer spend money on sponsorships?
Don’t get me wrong: I believe special events do have a place in the development cycle. However, rather than relying on events to provide income, I would argue that they should be positioned to build awareness of, and engagement with, a nonprofit. The Benevon Model, a process designed to build sustainable nonprofit funding, views special events as points-of-entry for future major donors. In their model, these events are limited to an hour (which keeps costs low) and specifically designed to share the mission of the organization.
Every nonprofit is unique, so each must weigh the costs, benefits, risks, and value of special events. A well-designed development strategy — which may or may not include events — will ensure diversified and sustainable revenue streams to further the organization’s mission.
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