The Three Buckets Of Fundraising

  1. Events:  The MOST EXPENSIVE bucket.

Events are the most inefficient way of raising money.  Most fundraisers and volunteers are not aware of the cost of staging events to raise money.  We’re talking about dinner events, special speakers, galas, tournaments, doughnut sales, carwashes and the like.  

The ROI from an event is far less than other fundraising options.

The average cost of raising a dollar with events is fifty cents.

A nonprofit’s development cannot be driven by events.  

Many nonprofits zero in on events as their life-saving panacea.  It’s all they know. 

Famed fundraiser, Terry Axelrod says, 

“Somewhere along the line, good people who love the work being done by their favorite organizations got sidetracked into the entertainment business.  They figured that, rather than having to talk to people about the amazing and meaningful work of their organization, if they could just entertain people, give them some good, honest fun or a product in exchange for their money, they’d have a winning fundraising event.”  

“While those events may raise short-term money - in many cases a lot of money - they generally are not designed to grow and develop the base of people who truly support the work of the organization.”

Not only are there direct costs to do an event, there are indirect costs that are often not calculated.  What about the costs of the director’s time?  The staff?  The volunteers?

Many nonprofits zero in on events as their life-saving panacea.  It’s all they know. 

And too many events kill the existing staff.  Most are already underpaid and overworked.  The last thing they need is another event.  Why would we ask them to spend so much time and energy on something with such low return?  

2. Donor Development:  The MOST EFFICIENT bucket.

Organizations that work to understand their donors and help them accomplish their personal goals get the most efficient bang for their buck.  This involves walking side-by-side, partnering with, investing in, and working to bring them into our giving community in ways that consider their needs first.  

The average cost to raise a dollar through donor development is between 5 and 10 cents.  

Developing donors involves an organization taking the responsibility to understand their donors desires and interests and working to make them come true.  When a donor’s desire and interests cross with an organization, a relationship occurs.  It is this art of relationship building that releases donors to give in ways that events cannot.  In donor development, organizations listen their way to major gifts.  

3. Planned Giving:  The LARGEST bucket.

Planned giving is widely considered to have the highest ROI of any type of fundraising:  Fifty six dollars returned for every one dollar spent!  Some estimates put the ROI at 100:1!

According to Russell James, only 5% of Americans have made a charitable bequest commitment while 33% are willing to consider it.

As the Baby-boomer generation passes on, the greatest transfer of wealth in the history of the world will occur.  

Did you know that donors who receive a letter directly asking for a bequest are 17 times more likely to give a bequest than donors who are not asked?  That, donors who are asked and thanked give twice as much as those who are not thanked?

Another benefit to bringing developed donors into the planned giving bucket:  Their giving after leaving a bequest in their will increased by 75%.

Does your organization send that one letter per year asking donors to consider a bequest? Is there a special page on your website outlining your case for that gift?

Every nonprofit should have a clear plan to move from bucket one, events, to bucket two, donor cultivation and bucket three, planned giving. Without that plan they are cursed to do events ad nauseum.

Selah… Pause and think about that.