Be honest. How much are you dreading planning your annual benefit this year?
When I see a gala on a nonprofit’s fundraising schedule, I cringe. I want to blurt out “cancel it.” But I know someone will give me a litany of arguments for why they should do it. If I had a dollar for every reason why they should host a gala, I could sponsor one myself.
The rationales for a big event, however, turn out to be rationalizations:
“My community loves it.” Have you asked them? Would they enjoy something simpler just as much?
“My board wants to invite people.” Which people though? Are they real prospective donors? Or simply a table of their casual acquaintances?
“It will get our name out there.” Out where? For what purpose? Have you ever measured that?
“It’s the only way we can get unrestricted funds.” Unrestricted, sure — but most are already spent on this gala.
Well, I say it’s time to wake up. Resource-constrained nonprofits should be sure their fundraising gets enough bang for the buck (meaning, ultimately, enough bucks). All too often, though, hosting a big bang of a benefit is likely to end with a whimper.
Let’s Count the Ways
If you do an honest cost/benefit analysis, you might find that a benefit would be — well, more costly than you realize.
In addition to the obvious expenses, you need to account for the hidden ones, particularly in the form of staff time and morale, and volunteer burn-out. Add up the time your team spends checking off their to-do lists, from repeated outreaches to donors to seating chart discussions. You’ve probably expended at least two FTEs — not to mention the distraction from their day job.
“But the costs are worth it,” I hear you say. OK, then let’s look at the other side of the ledger! Is the return on investment a net positive?
For the sake of argument, let’s suppose you secured 20 sponsors and you sold every ticket (despite the temptation to give them away when numbers look low). Say the auction revenue exceeded the target.
It looks good, right? Well, let’s get real. How many of the ticket buyers and donors will return next year? How many will become major supporters? I've heard that only 19% of benefit attendees end up being repeat donors. If you end up there or below, you spent a whole lot of time acquiring one-time donors who don't give back.
And that’s a best-case scenario. Things don’t always go as planned. There’s crowd-stopping weather or run-on speeches that drive away guests before dinner. The ledger is clear — the average benefit has negative ROI.
Let’s Flip the ROI
The most important cost is the opportunity cost. Not only does an annual event consume massive time, effort, and expense, it also takes your attention from where you want to invest: your major donor program.
Despite using the transactional term “ROI,” I firmly believe that fundraising is fundamentally relational. The path to money is not about shortcuts and quick wins; it’s about cultivating and stewarding meaningful, long-term connections with individuals and organizations.
The time you spend chasing one-time donors and screening lists of the “100 most generous corporations in your city” could be put to better use building a community of champions who will continually invest more in your mission, your leadership, and your programs.
If you don’t have a strong major donor program, or you are not leveraging it to the highest extent through the event, consider ripping off that Band-Aid. Deploy the resources currently gobbled up by the benefit toward the relationships with people who want to go the distance with you.
Calling off a gala might feel drastic, but there’s no shame here. Many organizations canceled or minimized their benefits during the pandemic, and they survived. Some even thrived after taking this moment to change course.
If you have already sent out the Save the Dates, don’t panic. But don’t keep the status quo either. Cut the expenses: prune the pomp, streamline the workload, minimize external hires. Keep it classy, mission-driven, and simple.
Then put more activities for your major donor program in your annual plan. After you have built it up, and your passionate gift-givers are ready to be part of a benefit, that’s when you’ll be ready to revisit the idea.
And I’ll revisit this topic next month to explain how.
Not My First Rotary
My husband and I were driving back from a trip with the kids when I blurted out that the slick new tent we bought was a “red albatross” because it was too big to warm up during that 18° night in the mountains.
After recovering from his bout of laughter, he explained the difference between a red herring and an albatross.
But sometimes they go together. In deciding your most effective fundraising strategies, don’t let the red herring of $100,000 revenue make you overlook the albatross of raising it!
***
Comments