Special Events Not So Special for Most
Thinking about running that 5K for charity this weekend? Sounds good, if you're doing it to show your support or lose a few pounds. If you're doing it because you think it's an efficient way for your charity to raise a few bucks, I have news for you.
It's a horrible way to raise money. In fact, most charities lose money on their special events.
One of my colleagues here at Charity Navigator, Emily Navarro, just spent several weeks analyzing the special event data for the 5200 charities on our site, and she found empirical evidence for what we've long suspected, that special events are, for the vast majority of charities in this country, an amazingly inefficient fundraising tool. (See the whole study here)
A few of the conclusions from our 2007 Special Events Study, which I believe is the first of its kind, in that no one has really poured through this much data, looking into this particular and pervasive aspect of non-profit life:
Special events are complicated, and it's true that many of them may lose money in the short-run, but (hopefully) yield long-term contributions from donors who are newly exposed to the charity and the good work they do. But it's also true that for most groups, special events are not only an inefficient way to raise money, but a proven way for charities to lose money!
So enjoy your 5K run if you choose, but if your goal is to help a charity and not just help yourself, you'd be better off staying home, jumping on the treadmill in your basement, and then sending a check to the charity of your choice.
It's a horrible way to raise money. In fact, most charities lose money on their special events.
One of my colleagues here at Charity Navigator, Emily Navarro, just spent several weeks analyzing the special event data for the 5200 charities on our site, and she found empirical evidence for what we've long suspected, that special events are, for the vast majority of charities in this country, an amazingly inefficient fundraising tool. (See the whole study here)
A few of the conclusions from our 2007 Special Events Study, which I believe is the first of its kind, in that no one has really poured through this much data, looking into this particular and pervasive aspect of non-profit life:
- About half of all charities (49%) use special events as a way to fundraise.
- Special events generate 15% of all contributions to organizations.
- Special events are inefficient in comparison to overall fundraising activities. On average, the charities we studied spent $1.33 to raise $1 in special events contributions, compared to an average overall fundraising rate of $.13 to raise $1.
- The most efficiently run special events are held by organizations that are the least likely to use special events as a fundraising mechanism. Religious charities, of which only 16% actually hold special events, spend $.71 to raise $1 of special events contributions.
- Health and arts charities are the most likely to hold special events. 71% of Health charities and 69% of Arts charities held special events in the last year to raise money for their operations.
- Charities in the Northeast are more likely than their peers in other areas to hold special events. 57% of charities in the Northeast reported that they use special events to fundraise.
Special events are complicated, and it's true that many of them may lose money in the short-run, but (hopefully) yield long-term contributions from donors who are newly exposed to the charity and the good work they do. But it's also true that for most groups, special events are not only an inefficient way to raise money, but a proven way for charities to lose money!
So enjoy your 5K run if you choose, but if your goal is to help a charity and not just help yourself, you'd be better off staying home, jumping on the treadmill in your basement, and then sending a check to the charity of your choice.
Labels: fun runs, galas, special events, telethons
posted by Trent Stamp at 10:31 AM
8 Comments:
This is a "must read" article for all new board members, especially at nonprofits with smaller budgets.
Hi Trent --
Ran across your blog as I was looking for event planning info. I've done tons of non-profit work and totally agree with your assessment. Glad someone is saying this!
Ed
First things first. This kind of study is superb and probably more valuable for charities who think special events can do their fundraising for them than it is for donors.
But, as Emily's italicized quotation almost said it: Some charities are not using special events to raise money but to defray public relations, cultivation and stewardship costs. To whatever degree events "pay" they are either allowing the charity to do something it couldn't afford to do otherwise, or reducing the cost of doing something it feels it must do. Fundraising "efficiency" is only meaningful if the purpose is primarily fundraising.
A most excellent analysis of the sham that special events have become. In most cases these "events" have become nothing more than another chance to primp and preen, flex and strut their largesse. Your study should be mandatory reading for presidents, deans, executive directors, and foundation board members. What philanthropy doees NOT need is another golf outing, high tea, or black tie gala. It's time to turn the page people.
I could not agree more.
However, while this may be true for traditional charities, Direct Change has found that special events have been one of the most efficient approaches to raise money for our African projects.
When Direct Change started just a few months ago, we focused on providing the tools for supporters to raise money online. However, since our approach is based on the idea that our supporters know what works best for their communities, when supporters started organizing special events we shifted gears to empower them through providing materials; compelling projects; online organizing tools; and most importantly the ability to learn from each other.
Through this approach, tens of thousands of dollars have been raised at special events in the last few months with virtually no expense on behalf of Direct Change.
The advantage of being a small charity that dedicates the vast majority of our funds to our partners doing the work in Africa is that the lack of a budget for special events forces our volunteers to be creative.
I remember once talking with a friend who ran a DOT COM when the money was flowing and I asked why they were so extravagant with their events. He responded that they did it because they could. Even if we could, we would not.
I'm glad Emily mentions the other functions a special event can serve. Our gala does generate a profit, but that's not why we have it every year. We've found that it's the easiest way for our donors and Board members to introduce us to their friends and colleagues -- a very, very successful way for us to make new friends and generate new donors.
If we thought about the event merely as a fundraiser -- dollars in versus dollars out -- we probably wouldn't continue it. But when you take a look at our Board, or a list of our top 200 donors, and then count how many of them first came to us as guests of other donors at the annual gala, the event's staggering impact on our current financial success becomes obvious -- and suddenly the gala is absolutely priceless.
I wonder if the final anonymous would let me quote her/him in a report and when I speak to my fundraising director? Perhaps you could contact me?
Thank you, Trent, for this very compelling article.
At about $.37 spent for every event dollar raised for our annual gala, our organization has about half of the overhead of what is cited here as the lowest among the nonprofit community. Like direct change, we also use a network of volunteer fundraisers: this was very successful last year for a New York dinner in which we invested nothing and used all of the proceeds for our programs. Still, since we strive to remain under a %4 fundraising overhead, we would not do staffed events at all if it weren't for the networking, media, and outreach opportunities. Since last year's gala brought the Cheneys, and this year's event brought Egyptian actress Yousra, well known to our core constituency, our galas have brought exposure that we would not have otherwise received.
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