I’ll be blogging more about the recent ”leisure trends” roundtable at the Getty Center this week, but wanted to take a break to flag a new report on special event fundraising from Charity Navigator. The analysis (also reported here in the Wisconsin State Journal, with the ”local” angle) suggests that special events, on average, are awful ways to raise money.
Says the report:
On average, the charities we studied spent $1.33 to raise $1 in special events contributions, compared to an average overall fundraising rate of $.13 to raise $1. Only 15% of the charities that held special events were more efficient when using special events to fundraise than they were in their regular fundraising activities on the whole.
Among health organizations, the study found special event costs of $1.84 for every dollar raised.
To make matters worse, the reported costs used in the study (from IRS tax documents) don’t include the person-hours, board time, volunteer effort, and staff distraction that such events require — suggesting the true cost of each dollar raised is much, much higher.
Admittedly, special events are not just about raising money. They provide public events, celebration of achievement, recognition of volunteers, donors, and community members, and gateways for new constituents to learn about your organization. These are all noble goals, as long as your organization is balancing its strategy and costs against all other opportunities to do the same thing.
But the report should nudge you to ask yourself, your staff, and your board the obvious but awkward question: Are the benefits of our special events worth their actual cost? And if not, why on earth are we doing them?
The emperor is wearing no clothes! Your article is so beautiful that I think I’ll have to join the Andrew Taylor fan club. Great minds think alike. I wrote more of an emotion piece to your think-piece. Really good stuff A.T.!
For a lot of people, the whole point of charities is to attend charity balls!
This seems like one of those things that people intuitively know, but don’t like to accept. Zealous’ comment, though, made me think of the flipside of hidden costs, i.e. will we lose other contributed income if we lost special events? If the ability to attend big, public special events is a significant motivator to the donor (and I think for some people — and maybe more than some — it is), and we take that motivator away, will we also lose some or all of the annual individual contribution they make, or the sponsorship monies their companies provide or even the somewhat more ethereal monies brought in by their using their own connections to solicit donations from individuals who might not donate otherwise?
This is a difficult thing to track, of course, short of actually canceling a standard big event and seeing what happens. And I don’t know this would happen. But it could be a consideration as much as the overall cost is a consideration.
An excerpt from an article on AFP’s website in response to this study: (full article at http://www.afpnet.org/ka/ka-3.cfm?content_item_id=24074&folder_id=2345
“However, a recent article in The Chronicle of Philanthropy has found that the research methodology did not include all of the funds generated by special events.
The article, “Critics Dispute Claim That Charities Lose Money on Special Events,” (May 10, 2007) reveals that the research based its findings on the amount of contributions charities received, but did not include sponsorship payments, admission fees and other non-philanthropic income generated by special events.
When those numbers are included in the overall amount of money charities generated, the numbers become quite different for many organizations that were ranked as least efficient by the study.”
I’m with Susan Zellner on this one. Charity Navigator’s report has been picked up locally by the Pittsburgh Business-Times and nonprofit execs, examining their methodology, have found it lacking. By relying only on 990s, without scrubbing the data or speaking with NPOs, the numbers are pretty useless. The results of many organizations’ events, as shown in their 990s, vary widely from year to year — perhaps because many small nonprofits have their audits and 990s performed by accounting firms that place different junior auditors onsite every year and their is little consistency in their presentation from year to year. In addition, it seems that organizations and their auditors don’t necessarily apply the IRS regulations on tax-deductibility uniformly.
In my 20 years in the performing arts, I’ve discovered that the best source of benchmarking information like this tends to be the national service organizations, which have made a special effort over the last several years to make their discipline-specific surveys of financial and productivity data more consistent across disciplines. Those organizations also tend to have staff tasked to review survey submissions and test respondents’ consistency from year to year.
Please let us know if you find anyone who disagrees that these events are awful in many ways. But if my group doesn’t do these events (as well as selling tickets and sending out donor letters – a diverse portfolio), my foundation and government supporters will not be as generous as they currently are. Those folks have made it clear that they do not want to be our sole source of income. Just because you’re right, doesn’t seem to mean that we can stop doing these special events, does it?
I think it is important to remember that these events are often funded by the corporate world who get advertising for their business at these events.
http://www.artmarketblog.com
The fund-raising events of which I am aware (all local) seem to be not so much about raising funds as they are about (1) raising awareness and (2) networking with like-minded people. They remind me of old-fashioned church box socials, which primarily supported a sense of community and secondarily raised a little cash and encouraged membership participation. Forget the money; focus on the camaraderie and feeling of mutual purpose.