This works as a napkin message – It’s powerful and simple.
I don’t do the ‘standing-on-a-podium’ thing, but I’m not above shouting IN ALL CAPS to make a point:
NO MORE SPECIAL EVENTS!
I get the occasional challenge, “But Nick, events are how we build relationships!” Or, “Our event gets the word out!”
In years and years of doing this, no one has ever said, “Our event is our CASH COW!”
WHY are you doing the event? Is it to raise money? Or, is it for MARKETING? (Start with WHY.)
It’s really helpful to make a distinction between MARKETING and SALES. Here is a great nugget to bridge the relationship between MARKETING and SALES:
It is the job of marketing to provide qualified leads for sales.
I hear many people who want to defend events with a marketing rationale. If you want to run events as a part of your MARKETING STRATEGY – great! Just don’t PRETEND your events are great fundraisers. And if MARKETING is the end goal, then how much are you telling your story at that golf outing?
Also, if you’re going to do an event to ‘BUILD relationships’ then it begs the question – what is your strategy to MAXIMIZE relationships?
NB: We’ve been on this rant for a few decades now. There are events that raise money – a lot of (net, net, net) money. Here are some examples:
The EVENT is the IMPACT. There are some organizations whose impact is using a community’s ability to raise money. For example, Pelotonia here in Central Ohio, which has raised over $100M for cancer research. They are in the event business: the money they raise from one event a year is given directly to cancer research (read: curing cancer!). Pelotonia is in the EVENT BUSINESS – most organizations (i.e., you) are not.
But what about WALL STREET?!?! Those ‘guys’ (I think, often citing Robin Hood as a model) all get in a room and give MILLIONS! This is an anomaly, not a model. When you can get a bunch of hedge fund titans in a room to throw their egos behind your philanthropy, have at it!
RECOGNITION EVENTS. These are events where the money was not raised, but simply RECOGNIZED, at the event. In all of these cases, I submit that more money could be raised if we were clearer on the WHY. While the organization might be ASKING because of an event, people aren’t GIVING because of the event; they are giving because of the IMPACT!
Reposting one of our most popular nuggets from Tom about how to measure success and productivity in your Development Operation.
RETURN-ON-INVESTMENT: What every Investor wants from their investment and what every For Impact organization should want from its development/advancement/fundraising effort.
I feel this concept is completely absent or totally misunderstood from our sector – Something I want to help change.
With all due respect to the industry, I just don’t get it. An organization invests money and resources in their development/fundraising operation (whether it’s a one-person shop or 50 people in the college advancement division) but doesn’t measure that RETURN-ON-INVESTMENT. I’m not sure how else you would measure productivity or success without making ROI the #1 barometer.
ROI is very simple to calculate. It’s a numerator/denominator math problem:
Here’s how much money we Raised (the numerator).
Here’s how much money we spent/Total Expenses (denominator).
R – TE = NET, NET, NET CHECK/FUNDS to support IMPACT!
In the For Impact approach, the development function ‘write checks’ to the IMPACT.
R ÷ TE = ROI and COST OF FUNDRAISING.
For example, if you are a hospital foundation raising $2M a year in ‘fundraising Revenue and your total expenses are $1M then your ROI is 2X or 100%; and your cost of fundraising is 50%.
There are two ways to increase your ROI and decrease your cost of fundraising:
Increase the Numerator (Revenue)
Decrease the Denominator (Expenses)
In our For Impact world, our own benchmarks are as follows:
3X is minimum model/benchmark.
4X is great.
5X is something you should be very proud of.
If you’re running a Campaign within an existing development operation or as a separate initiative, I believe the cost of fundraising should be a nickel (five cents on the dollar.) That would give you a 20X ROI.
If you are a For Impact leader, senior staff, executive director or a board member, I hope the above gives you some sense of comparison.
Note: One last example of why ROI is a completely different level of thinking than simply “This is how much money we raised this year.” I can guarantee a small not-for-profit organization an additional $100,000 this year – Hire two ‘major gifts officers’ at $50,000 apiece. Send them to For Impact Boot Camp. I guarantee that they can go out and raise $100,000 in the next year (combined.)Same thing would be true with a larger organization at $1M. Hire five major gift officers at $200,000 each. I’m fairly confident if they followed any sales process they would each be able to raise $200,000 in the next year for a total of $1M.