That pesky ROI

ROI_Balance

When the Association of Fundraising Professionals surveyed its members for its 2014 Special Events Report, an astonishing 21 per cent said they didn’t know the cost per dollar raised on their galas. A further 26 per cent just didn’t answer the question. Did they not know, or were they ashamed to report?

Either way, that’s almost half of the respondents. Now you may focus entirely on the bottom line, holding your gala to the thrifty standard of less than 20 cents per dollar raised, as 13 per cent of respondents did. Or you may decide that the goals of friendraising and publicity are just as significant, and allow a higher cost ratio. Then there’s the question of how well and how long you track gift outcomes – when someone is introduced to your charity at your gala and makes a major gift five years later, can you trace the connection?

But what matters most is that you know what it costs to plan and execute your gala, including the value of time that could have been spent on other work.

The Both/and Perspective
Calgary Urban Project Society (CUPS) Senior Director Robert Perry sits comfortably in both camps. “Our gala is a seed, even if guests don’t write a cheque that night,” he explains. “They might influence corporate donations, for instance. Invitations are distributed entirely through our Board members, so the room is full of Calgary movers and shakers. Those people are linked to significant giving decisions, both personal and corporate.”

But Perry has an eye firmly on the bottom line. Several years ago, CUPS replaced its usual silent auction with an auction of items needed for CUPS, such as a new bus. When that became stale, he explains, they just asked straight out, selling outcomes such as “X dollars will improve the health of x children in our programs in the following ways.”

Unlike some special event fundraisers, he’s not worried that the average age in the room is well above 40. The gala is expected to raise significant money. Since tickets at $200 to $250 are just the beginning of the opportunities to contribute that evening, he seeks the demographic that can afford such an outlay.

 

“Our gala is a seed, even if guests don’t write a cheque that night…They might influence corporate donations.”

Numbers to Think About 
Here are a few things to consider when you evaluate the worth of your gala:

Have you captured all the costs, including staff time? Have you considered the opportunity cost of what those staff members and volunteers could have accomplished instead of a gala?
Do in-kind gifts make your gala financially feasible – space, food, decorations? How much would they cost you to replace? Do you have alternative sources or  different plan in case you lose that support in the future?
How many guests are committed donors? How many become committed donors? What is your strategy for using your gala to increase your fundraising beyond that one night? How will you track the connections between the gala and future gifts?
Is your revenue diversified, or are you unduly dependent on one special event that could be torpedoed by anything: glitzier competition, changing demographics and tastes, an economic slowdown, even bad weather?
If you mount a gala primarily for branding reasons, how do you measure its success? When people are “more aware” of you, how will their behaviour change in ways that help to achieve your strategic objectives? Are you sure that a gala is the most cost-effective way to achieve that result?.