How to Budget for Nonprofit Fundraising
Raising money costs money and the costs need to be in your nonprofit’s budget. No nonprofit receives every grant or gift that it seeks. So it needs to be sure upfront that it can afford its potential fundraising costs and that the costs are appropriate in relationship to the possible return for the nonprofit. Fundraising costs should be a modest part of an organization’s budget.
A nonprofit needs a system allowing it to keep timely records on all its donors. This type of system is important because nonprofits need to remember when they receive grants, how much money they receive, when reports are due, and what kind of reporting is required.
Nonprofits also need to keep information up-to-date about individual donors: who in the organization knows them, how and why they gave their gifts, and whether any special recognition was promised when they contributed. Recording their spouse and children’s names, their interests, their business affiliations, and other pertinent personal information is important.
So the first investment in fundraising may be to acquire a recordkeeping system and donor management software. You also may have to budget for the time it takes to keep the system up-to-date. Current information about fundraising and accounting software can be found on the TechSoup and Idealware websites. Here are a couple software options:
eBase is a good, inexpensive option. This program runs on FileMaker Pro, but you don’t need FileMaker unless you want to customize eBase.
Salesforce.com offers a high-end product for free to nonprofits with up to ten users.
eTapestry offers free services for organizations that have up to 500 contacts in their databases. However, keep in mind that eTapestry costs do rise as the number of records in your system grows past 500.
GiftWorks is a reasonably priced software option with a reputation for being easy to use.
Some other fundraising activities and their costs include the following:
Grants and contracts: Most of the cost of securing grants and contracts are labor costs for planning and writing the grant proposal. Some proposals may require CDs or DVDs that illustrate your past work. Sometimes you may want to travel to meet in person with the agency awarding the money, and if that foundation is far from your location, you’re looking at another expense.
Individual contributions: Costs related to securing individual contributions stem from time spent by staff or volunteers compiling lists of possible donors, conducting research about those donors, and developing a script for soliciting a gift.
Solicitation letters are a common tool for reaching individual donors. Such letters can be a relatively costly form of fundraising unless you target a small mailing to your best prospects. Some organizations hire companies to handle telephone solicitation campaigns.
Another expense that may serve your organization well is adding capacity to your website so that donors can make gifts electronically.
Special events: Special events can be a great way to introduce new people to your organization, but producing such events can be one of the most expensive ways to raise funds. Spending 50 or 60 percent of the income from an event to pay for costs is common. Printing, advertising, food, and entertainment all cost money. Also, special events are labor intensive.
Planned giving: If a nonprofit isn’t familiar with tax laws regarding wills and estates, it should employ or hire on contract a planned giving expert. Bringing this person on board can be expensive in the short term, but doing so can yield important long-term support for the agency.