How To Calculate A Fundraising Event's Opportunity Cost

Large fundraising events can be fabulous ways to celebrate your cause and your mission. Too often, however, they are used as a main fundraising vehicle in an organization’s fundraising plan. While they can certainly bring in large amounts of money on one night, they come with steep opportunity costs that must be weighed to understand the true return on the event’s fundraising.

Assessing Fundraising Gala Impact on Goals

Let’s look at an example of understanding the impact of a big fundraising gala and the opportunity costs associated with it.

Say you have a fundraising staff of 4 and an annual goal of $2,000,000 in individual and corporate gifts, excluding any grants. If your staff works 40 hour weeks for 50 weeks a year, they will work a total of 8,000 hours a year. This equates to an average of $250 being raised per employee per hour over the course of the year. This organization raises $200,000 with its large gala every year. That’s 10% of their total fundraising budget! But putting on such a successful gala takes a lot of effort on the part of the 4 member staff.

• They spend 2 hours each month for 9 months in a planning meeting for a total of 72 hours of pre-planning time.
• They spend 1 hour each week for 12 weeks in preparation meetings for a total of 48 hours.
• One person on staff is the event coordinator and she spends 12 weeks straight of planning and prepping for the event for additional 480 hours.
• The development director spends an additional 16 hours a week calling people for sponsorships and table captains for a 10 week period, for a total of 160 hours.
• The two other associates spend each 8 hours a week for 10 weeks finding silent auction items that are appropriate for a total of 160 hours.
• All four staff members spend 20 hours the day of and the day before the event for set-up, the event, and break down for a total of 80 hours.

Calculating the totals the staff spends 1,000 hours and therefore only raises $200 for each of their hour of effort. That might not seem too terribly far off from the hourly average they are budgeted to raise throughout the year. But it comes with an opportunity cost of $50 dollars an hour for a total of $50,000 of opportunity costs lost when embarking on a big gala!

Here are a few ways to mitigate these opportunity costs.

• Leverage your board members and key donors by having them solicit for sponsorships and table captains
• Engage volunteers to assist with the various administrative tasks associated with the event including setting up and breaking down the event itself.
• Hire an outside consultant to do the silent auction. They will often be able to spend less time procuring items since they will have contacts with the right people at the shops you’re looking to get items from.

As you embark on next year’s big fundraising event, don’t forget to calculate what your opportunity costs are. Are you able to make your event more efficient and have a net gain from the efforts of your staff and board? If not, it might be time to look at other avenues to celebrate your cause and more efficiently use the output of your staff.