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Fundraising Articles

Return On Investment (ROI) is a fundamental business concept.
It's also something that every fundraiser needs to take into

A business investment consists of working capital, physical
assets, and people's time.  ROI is the net gain that results
from a business spending money and utilizing physical assets
along with the expenditure of employees' time in an effort to
produce tangible profits.

So, the "investment" in a fundraiser consists of any up-front
expenditures that are required, the costs associated with the
assets that are utilized, and the value of people's time. 

Some key points about ROI in fundraising:

1) Analyze your up-front expenditures vs. net gain from each
2) Lowering costs boosts your ROI, but maybe not your net
3) Always consider the hourly value of each volunteer's time

The most important point is to analyze all of your up-front
spending versus the net gain from each expenditure.  Obviously,
don't spend money if nothing is actually  gained.

One example would be evaluating advertising expenses for a
capital campaign.  Before you commit to it, run a small series
of test ads to determine the response rate.  If you don't get
the desired response, either revise your ad campaign or consider
not spending any more money on advertising.

Look for areas where the returns are greatly magnified for every
dollar spent.  This generally includes effective publicity,
quality communication, targeted prospect lists, and timely
reminder campaigns.

Lowering costs boosts your ROI measurement, but your net can be
impacted by the lack of investment. If there is an area where
money spent in the past produced excellent results, then be sure
that this year's plan provides additional investment capital for
that effort. 

A good example involves possibly cutting the funding for your
capital campaign mailing.  Sure, you can cut your expenses by
not mailing to anyone that didn't respond last year.  However,
the law of large numbers will catch up to you.  Less people
contacted means less money contributed.

Remember, it doesn't always take money to make money, but not
spending money where it is really needed can seriously impact
your results.

Another important ROI point to remember is the value of each
volunteer's time.  Each volunteer-hour worked to raise money
for your fundraiser should at least be equivalent to minimum
wage.  Otherwise, your group is wasting their time by not
working smart.

An example would be spending a total of 1,000 volunteer hours
coordinating an auction event that only raised $5,000.  Chances
are that many groups would be happy with the $5,000 net, but
the ROI on everyone's time was marginal.

In this instance, you want to maximize the value of everyone's
time by giving them specific tasks and full instructions.  Don't
take a scattershot approach by going all the area merchants and
asking for donations of merchandise. 

Instead, develop rapport with those merchants by providing value
for them all year long before you ask them for a large donation.
Focus your efforts where you'll get positive responses and avoid
wasting your time on unproductive endeavors.

Each person who helps out in a fundraiser is offering their time
in exchange for something that benefits everyone.  Give them
specific assignments that focus on maximum results.  Don't waste
people's time or you will discourage future participation.

Watch your ROI.  It's a good indicator of the health of your
non-profit organization.  If the number is too low, your group
will be constantly recruiting people to replace those who aren't
interested anymore.

Your donors and volunteers won't return because their time wasn't
valued, they saw their money being wasted, and they also saw
penny-pinching where open purse strings would have been a better

Design your organization to maximize your ROI and you'll position
your group for success for many years to come.


Copyright 2002 - Kimberly Reynolds

About The Author: Kimberly Reynolds is the author of Fundraising Success, a best selling ebook on fundraising. You can read more of her fundraising ideas for fundraisers on her website, FundraiserHelp.com.

You may reprint this article as long as this resource box accompanies the article.


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