Your Fundraising Event Raised $100,000. But Was It Worth It?

Every year, nonprofits across the country host galas, golf outings, auctions and other fundraising events. Some are enormously successful. Others? Not so much. But here’s the interesting thing.
Even events that appear successful may not be nearly as profitable as nonprofit leaders think.
A recent article in The Chronicle of Philanthropy examined why organizations continue hosting fundraising events long after those events have stopped producing meaningful returns.
One example involved a nonprofit that raised more than $25,000 through a fashion show. Sounds pretty good, right?

But over time, the event consumed enormous amounts of staff energy, required significant logistical effort and had little connection to the organization’s mission. Eventually, leadership decided it was time to move on.

I think there’s an important lesson here: it’s too easy for nonprofit organizations to become attached to events.

The annual gala has always been held in November. The golf outing has been around for 20 years. Board members enjoy the auction. And everyone looks forward to seeing the same people each year. Those are understandable reasons to appreciate an event. But they’re not necessarily good reasons to continue investing significant resources in it.

Consider a hypothetical example. Your annual gala generates $100,000 in gross revenue. Wonderful. But the venue, food, entertainment, marketing and other direct expenses total $45,000. That leaves $55,000. Now consider the hundreds of hours your executive director, development director and other staff members devoted to planning and executing the event. And the time your board members and volunteers invested. What did the event actually produce? And perhaps more importantly, what else could your fundraising team have accomplished with that time? Could those same resources have been used to cultivate major donors? Secure corporate partnerships? Pursue foundation grants? Or simply spend more time building relationships with your most promising prospects?

I’m not suggesting nonprofits should eliminate fundraising events. Far from it. A well-executed event can introduce new people to an organization, strengthen relationships, generate awareness and produce significant financial support. But every fundraising event should be evaluated against a clearly defined purpose.

Here are four questions I encourage nonprofit leaders to ask.

1. What is the event’s actual financial return? Look beyond gross revenue. Include direct expenses and the value of staff time.
2. What relationships are we building? Are we identifying and cultivating prospective major donors? Are attendees becoming more engaged with the organization? Or are we simply entertaining the same audience year after year?
3. What is the opportunity cost? Every hour spent planning an event is an hour that cannot be spent on another fundraising activity. That doesn’t make the event a bad investment. But it does mean the investment should be justified.
4. Would we start this event today? This may be the most revealing question of all. If your organization weren’t already hosting the event, knowing what you know about its costs, revenue and impact, would you recommend launching it? If the answer is no, perhaps it’s time to reconsider.

One final thought. Some events are primarily about relationship building, community engagement or donor appreciation. That’s perfectly legitimate. But let’s be clear about the purpose and measure success accordingly. A donor appreciation event shouldn’t be judged exclusively by how much money it raises. And a fundraising event shouldn’t be considered successful simply because everyone had a wonderful evening.

The goal of fundraising isn’t to host successful events. It’s to generate the resources and relationships necessary to advance the mission. Sometimes those objectives align beautifully. Sometimes they don’t. Good nonprofit leadership requires knowing the difference.