Most nonprofit organizations rely on income from fundraising events to some extent. When planning fundraisers, it’s important to have a realistic idea of what the costs will be. Many other funding sources (grant making foundations, for example) will ask for the expense per dollar raised for your fundraising activities, and they will judge your financial health accordingly. A ratio of 3:1 is generally considered healthy. This means that you raise three times as much money as you spend to raise it. For example, if your expenses are $5,000 and you raise $15,000, you’re in good shape.
However, this is not a hard and fast rule for every event. New events are notoriously harder to promote than established annual events. It may be worth it to make less money and generate interest if it will pay off in the future. You should think of all of these things while deciding what kind of event to have. You should also consider how much time and effort you and your staff will be putting in. Here are some common expenses you can expect to encounter:
- Venue, Catering, and Bar. This will usually be your largest expense. Choose a venue carefully and make sure you understand what’s included. Some venues will provide everything you need, whereas you will have to pay for everything separately with others. Venues that don’t provide their own catering or bar service often have a list of approved contractors you must choose from for food and drink. Start your research early so you can get everything you need.
If you’re selling tickets to your event, you can sometimes make up this cost or even profit from it. For example, if the total cost to you for each person who attends is $40 and you are charging $65 per ticket, you are making $25 for every person who attends. Just make sure your attendees know that only $25 of the ticket cost is tax deductible, as they are receiving a meal valued at $40. Use the same formula to determine tax deductibility of sponsorships. If you’re providing 5 tickets with a $1,000 sponsorship, for example, the sponsor is receiving goods valued at $200, so $800 of their sponsorship is tax deductible. - Marketing materials and design. Typically, you will offer advertising opportunities to your sponsors as a benefit of sponsorship. These generally include logo or advertisements in a program or brochure and on signage, as well as on social media. You want these materials to be high quality so your sponsors are happy. This means having signs and other materials professionally printed, and may mean hiring a graphic designer if no one on your team has that skillset. Depending on your event and the age of your audience, you may also want to print Save the Date cards or invitations, and budget for mailing.
- Costs associated with auctions or raffles. Silent auctions and raffles can be big money makers, but you’ll want to make sure you know how much they will cost you. Some states require a gambling license for charity events that involve any sort of raffles or games. You will also need to secure donations for the items being auctioned or raffled off, and you may have to buy some yourself to supplement the donations. You may need auction software or a mobile app (again, depending on your attendees), and you will almost certainly need a way to take non-cash payments on site. Don’t forget to have paper raffle tickets or printed auction materials on hand if needed.
- Items for the event itself. You will likely need decorations, event tickets, and audio-visual equipment for any presentations you’re planning.
- Volunteer giveaways. If your volunteers are eating, don’t forget to include meals for them. You may also be planning to provide tee shirts or hats or some other kind of giveaway.
- Stewardship costs. Don’t forget you’ll need to buy cards or write thank you notes to sponsors, donors, guests, and volunteers. This may include mailing costs or the cost of gas if someone will stop by in person.
- Insurance. Make sure you check with your insurance company to see if you need coverage for the event.
- Payment for other professionals. You may want to hire a photographer or videographer for the event, and you may want to provide live music or a DJ. You might need to hire someone to clean up after. The event You may also want to hire a fundraising professional to plan the event if you are finding yourself overwhelmed. Just remember that most fundraising professionals follow a code of ethics that prohibits them from working for a percentage of the funds raised, so be prepared to pay a flat rate.
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