Editors’ note: This article, first published in print during May/Jun 2003, has been republished for Nonprofit Quarterly with minor updates.
You’ve probably heard the old adage, “You have to spend money to make money.” As good as that sounds in theory when putting together your budget for the coming year it can be difficult to allocate some of your hard-earned dollars toward fundraising instead of direct program work. However, supporting your development department (even if it’s a department of one) with a budget is an investment that will result in significant additional income and position your organization to raise even more money in the future.
Of course, some strategies cost more than others. A direct (postal) mail campaign, for example, is very expensive, particularly for acquiring new donors. But direct mail can be an important way to get new members. (Keep in mind, though, that it makes no financial sense to do direct mail without a strong major donor program to cultivate donors you do acquire to give larger gifts.) Foundation fundraising, on the other hand, doesn’t cost a lot in out-of-pocket expenses, but requires a lot of staff time. Special events might bring in a lot of money but they are labor-intensive and you can easily spend at least half of
what you raise to put on the event. Keeping these tradeoffs in mind will help you balance the relative costs of different strategies with your overall fundraising goals.
If you’re developing a fundraising budget for the first time, the guidelines in the chart on the next page will assist you in estimating what your costs will be, based on your fundraising plans. Remember that you can save a lot of money by spending some time searching for the best deal — it’s always worth it to call around to get two or three estimates.
Several fundraising strategies, including direct mail, house parties, and collateral materials, involve design and print costs. Since these are major budget items, it is useful to consider what influences these costs. Graphic design costs vary based on the experience and clientele of the designer you use, so look for someone who has experience with nonprofits and a fee scale to match. Your design costs will increase for larger or longer pieces, as well as for the number of images and photos you include. Just as important, the graphic design has a huge effect on your printing costs. A design using four colors is much more expensive than a design using one or two colors. Fancy elements such as odd-sized pages will increase printing costs, as will the type of paper the job is printed on, since some designs require expensive paper to make them look right. (For example, a design with photographs can require a more expensive glossy paper to make the photos sharp.) Your designer should know your printing budget so he or she can create
an appropriate design. Shop around to lower your printing costs (your designer can help get bids). Printing costs can vary wildly. For example, recently one of my coworkers got a bid of $13,000 and one of $9,000 for the exact same print job.
The chart on page 6 presents the likely costs of significantly expanding your organization’s ability to fundraise over the long term. Discuss whether it makes sense for your organization to invest in any or all of these areas. As long-term investments in your organization’s infrastructure, these expenses will be above and beyond an annual fundraising budget. They tend to be higher ticket items, but they also form the base of an organization’s ability to fundraise and you will reap their benefits for many years.
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It can be tempting to try to save money with in-kind donations or reduced rates for services. Although there are many situations when in-kind donations are a wonderful way to lower costs, I’ve learned the hard way that another old adage is often true: “You get what you pay for.”
Here are some examples: I’ve had a couple of experiences in which graphic designers who volunteered their design services missed deadlines because they were prioritizing their paying clients. My coworker and I once succeeded in getting all of the food donated for a 100-person party, but it was from four different restaurants. It took us several hours to drive around town and pick up the platters, which not only caused a lot of stress on the day of the event but also used time better spent on other important event
tasks. Another time, I got a very low bid from someone to custom-design a fundraising database. The first draft of the database was great, but needed some important tweaking. After his first big push, the volunteer did not respond to repeated e-mails and calls, and it was months before the database was truly functional.
The lesson here is to be sure to analyze the potential hidden costs of “free” stuff. If getting something for free might make your invitations late, exhaust your staff, or make you appear less professional, it’s probably not worth it unless you have no other option. Also, make sure you know exactly what you’re getting by setting down clear, specific agreements in writing with your donating vendors, including your expectations about the timing, scope, and quality of the product to be delivered. Here’s an example of a letter you might send:
Thank you for your generous offer to reduce design costs by 50 percent for the invitations and program for our upcoming event. Based on our telephone discussion today, I understand that you will be designing a 2-color invitation (including envelope and invitation, response card and return envelope) and an event program that is in character with the celebratory tone of our event. I also understand that we agreed the design work will cost no more than $1,000 and that you will be delivering the printable files to the printer. We also agreed on the following timeline:
- March 1 — we deliver final text to you
- March 15 — you submit draft designs to us
- March 17–23 — we give you edits, you return drafts to us
- March 24 — you deliver final draft to us — we approve the same day
- March 26 — you deliver printable files to the printer
If you must change the timeline for any reason, please let me know immediately. As we discussed, the last possible date we can get the invitations to the printer is March 28 or we will miss our mail date. Once again, thank you for your discount, which has helped to make this event more cost-effective for us. Finally, as you map out your fundraising plans for the coming year, consider the following questions: What are your priorities, or your most important fundraising projects? How can you accomplish these priorities while still being cost effective? How can you educate your coworkers and boss so they better understand the importance of allocating some money toward development? Fundraising, like every other department in your organization, requires some investment in order to produce good results. Good luck!