The Debate Over Fundraising Costs

Fundraising is a complicated business, one designed to help nonprofit organizations raise maximum net revenue to accomplish their vital missions.

What that means is …

Let's not be afraid to explain that:

• Like it or not, it costs money to conduct programs (e.g., to build houses, fight cancer, feed hungry families) and to manage a complex nonprofit organization.
• It costs money to find donors and raise money.
• Fundraising is hard. It's often far more cost-effective to spend a little more to hire experienced experts than to do it cheap and fail.
• Because of the cost of printing and postage, direct mail costs more than e-mail cultivation. But direct mail provides far more net income for the charity.
• Acquiring new donors costs more than cultivating existing donors. But charities need to do both to grow net revenue over time and achieve maximum impact.
• We may internally measure each campaign against its own goals. But for the purposes of calculating fundraising costs, it is rarely useful to do so by campaign. Charities need to calculate fundraising costs and ROI on an annual basis — at a minimum. That way, donors can get a clear picture that whether you contact them via acquisition or cultivation, through mail or e-mail or phone or TV or banner ads, at the end of the year, 70 cents (or whatever is true) of every dollar raised by your organization goes to accomplish your vital programs.

Shamefully, there are organizations out there that abuse the public trust. But there's a risk that the recent media coverage will wrongly tar all nonprofits with the same brush.