Charity Navigator logoWhat is your fundraising return on investment (ROI)? The Standards for Excellence®: An Ethics and Accountability Code for the Nonprofit Sector provide clear guidance in the area of fundraising revenue and expenses and honoring donor intent. Section 7A of the code states, “A nonprofit’s fundraising costs should be reasonable over time. On average, over a five year period, a nonprofit should realize revenue from fundraising and other development activities that are at least three times the amount spent on conducting them.” This 3:1 ratio is the minimum standard required to maintain the Seal of Excellence from the Institute.

According to CharityWatch, spending $35 to raise $100 is acceptable, which means it will get you a “C” in fundraising. Charity Navigator recognizes that there are differences based on the type of organization and incorporates those differences in their rating system. The chart below shows that, generally speaking, if you want to be above average, you need to be spending less than 20 cents of each dollar you raise:

Chart shows acceptable amount of money to spend on fundraising in various nonprofit industries. According to CharityWatch, spending $35 to make $100 is acceptable but would give you a fundraising grade of "C", for example.

So how do you get there? Well it is not by doing another event or one more mailing. The fastest and most efficient way to increase your fundraising ROI is to adopt a major gift mindset. A recent study shows that “the cost spectrum for fundraising methodologies ranged from a low of $0.12 per dollar raised to a high of $1.50 per dollar raised. Major gifts, partnerships, capital campaigns, planned giving and sponsorships were in the lower cost range, while acquisition mailings, special events, and telemarketing were in the higher cost range, with direct mail to existing donors and earned revenue in the medium cost range” (Spears and Morrison, Philanthropic Trends, 2005). You are lucky if you get to keep half of every dollar you raise from an event (before allocating staff time), and the return on mailings will never get you to that 4:1 revenue to cost ratio you should achieve.

It is not easy to adopt and effectively execute a major gift mindset throughout the organization. It takes leadership buy-in, patience and expertise.

The Fundraising Resource Group recognizes these challenges as we work with organizations across the country to help them adopt this mindset and effectively implement or enhance a major gift strategy. To help get you started, or at least thinking about it, we offer a FREE WEBINAR called Significantly Increase Your Fundraising ROI: A Major Gift Mindset. While there is no way to get all that you need in a one hour webinar, we will give you some practical tips and tools to:

  • Identify a major donor for your organization
  • Create and manage major gift portfolios
  • Develop individual major donor plans
  • Solicit major gifts
  • Measure and track major gift fundraising success

Fundraising executives, CEOs and board members should all attend this webinar to understand the importance of major gift fundraising and what it will take to adopt that mindset. After all, a mindset is a terrible thing to waste, and so are precious financial resources given by generous donors.  A recording of the webinar is also available to nonprofits upon request.

For more information about The Fundraising Resource Group’s relational fundraising and marketing services, visit our website at www.thefundraisingresource.com.

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