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Return On Investment
(ROI) is a fundamental business concept. It's also something that every
fundraiser needs to take into consideration.
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 solution.
Design your
organization to maximize your ROI and you'll position your group for
success for many years to come.
ROI for School
Fundraising!!
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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 on her website, FundraiserHelp.com. |
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