Getting the Best Return on Investment for your Fundraiser
Working capital, tangible assets, and the time of employees are all components of a business investment.
An organization’s return on investment (ROI) is the net gain that emerges from spending money and utilizing physical assets, as well as the expenditure of employees’ time, in an effort to generate tangible profits.
As a result, the investment in a fundraiser consists of the following components: any up-front expenses that are required; the costs connected with the assets that are utilized; and the value of people’s time spent fundraising.
Here are some important considerations to remember about return on investment in fundraising:
1- Calculate your up-front expenses in relation to your net gain.
2- Lowering costs increases your return on investment, but it may not increase your net worth.
3- Always keep in mind the hourly value of each volunteer’s contribution.
Calculate the return on investment (ROI) of upfront spending.
Consider all of your up-front expenditures in relation to the net gain from each expenditure. This is the most crucial aspect to remember. It goes without saying that money should not be spent if nothing is genuinely gained.
For example, reviewing advertising expenses for a capital campaign would be a good illustration. Run a modest number of test advertisements to gauge the response rate before making a final decision.
If you do not receive the expected reaction from your advertising effort, either alter it or consider not investing any further money on advertising.
Look for areas where the benefits on every dollar invested are significantly more than the costs. This typically entails effective publicity, high-quality communication, prospect lists that are targeted, and timely reminder efforts, among other things.
Calculate the return on investment (ROI) of cost reduction versus net earnings.
Lowering costs increases your return on investment (ROI), but a lack of investment might have a negative influence on your net worth. If there is an area where money has been spent in the past that has yielded outstanding results, make certain that the plan for this year includes additional investment capital for that endeavor.
A excellent illustration would be the possibility of reducing the funds for your capital campaign mailing. Yes, you can save money by not mailing to anyone who did not answer to your previous year’s mailing.
The law of vast numbers, on the other hand, will eventually catch up with you. The fewer people who are contacted, the less money that is raised.
Remember, it is not always necessary to spend money in order to create money, but failing to spend money where it is most needed might have a negative impact on your outcomes.
Put a monetary value on the time spent by your fundraising volunteers. Another key element to keep in mind when calculating return on investment is the value of each volunteer’s time. At the very least, each volunteer hour spent raising money for your fundraiser should be compensated at the federal minimum wage. Otherwise, your crew is squandering its time by failing to operate efficiently.
Consider the following scenario: you spend 1,000 volunteer hours planning an auction event that only raises $5,000 in total revenue. Many groups would likely be pleased with the $5,000 net, but the return on everyone’s time was negligible at best.
Put a monetary value on your merchant partners’ return on investment.
In this situation, you want to make the most of everyone’s time by assigning them particular duties and providing them with detailed instructions. Instead of approaching all of the local merchants and asking for donations of items, employ a more systematic approach.
Instead, build a relationship with those merchants by providing them with value throughout the year before approaching them with a major gift request.
Methods for increasing the return on your fundraising efforts
Ensure that your efforts are concentrated in areas where you will receive positive replies and avoid spending your time on fruitless attempts.
Each and every person who contributes to a fundraiser is donating their time in exchange for something that benefits the entire community..
Provide them with precise assignments that are geared toward achieving the best possible results. Don’t squander people’s time, or you’ll discourage them from participating in the future.
Why your fundraising ROI is important?
Keep an eye on your return on investment. It’s an excellent predictor of the health of your non-profit organization’s financial situation. If the number is too low, your group will be forced to regularly recruit new members to replace those who have lost interest in the activities.
It is likely that your contributors and volunteers will not return because their time was not valued, their money was wasted, and they witnessed penny-pinching when open purse strings would have been a more appropriate response.
Create your organization in such a way that your fundraising return on investment is maximized, and you will set your group up for long-term success.