Does the Gala Have a Future?

Thanks in large measure to Donald Trump, during the last year there has been a lot of attention focused on charity galas. It got rolling when it was reported that The Arc of Palm Beach County had held its 2016 Cowboy Ball at the President’s Mar-a-Lago estate, where “the posh of Palm Beach, the grandeur of Texas and the thrill of Vegas come together.” Attendees were promised, “a gourmet meal in a gilded ballroom, an exciting live auction, exhilarating casino action and mesmerizing entertainment.”

The live auction featured yacht excursions, lunch with Bravo’s “Real Housewives of Miami” star Lea Black and a “power breakfast” during New York’s Fashion Week with a branding expert.

Credit: The Arc of Palm Beach County

The blowback following the publicity surrounding this and other nonprofits’ galas resulted in more than 25 charitable organizations cancelling their plans to hold events at Mar-a-Lago. They included the American Red Cross and Dana Farber Cancer Institute, which has held its annual gala at Mar-a-Lago every year since 2011.

A review of charity tax records and local fundraising permits shows that the price tag to hold these types of events at Mar-a-Lago usually ranges between $200,000 and $350,000, and even luncheons and receptions can run in the neighborhood of $100,000. In an otherwise cost-conscious business, glitzy galas stick out like a sore thumb. What makes CEOs sign off on them year after year? How do they justify the costs?

It’s Where the Money Is

When the famous criminal Willie Sutton was asked why he robbed banks, his response was direct: “Because that's where the money is.” Nonprofits follow the same philosophy. They hold galas because that’s where the money is, or at least where they hope it will be. To get the right people to attend, they have to keep the entertainment factor high. Ginger Berman is the president of events with Ginger & Company, based in Westfield, NJ. She plans events for some New York City-based nonprofits. Like Sutton, her logic is simple: “How are they coming back year after year if you haven’t made this night special?”

Berman’s comment is revealing. A gala is a transaction. It is a social networking opportunity with a three-course dinner, auction and raffle. Casinos give away food and drinks to gamblers in order to get them to spend more on the slot machines and blackjack tables. Similarly, nonprofits operate on the belief that the more enjoyable a gala is for attendees, the more they will donate to their causes.

And they are correct; research supports the contention that “event satisfaction” is related to increased contributions. Perhaps surprisingly, the effect of event satisfaction was stronger for attendees whose primary motivation for attending the event was unrelated to supporting the cause. Yes, you read that correctly: People who are less connected to your mission may provide more revenue in the gala environment.

When people are having a good time with their friends and peers, they will give more. This is especially true if they believe that others there are making large contributions; they will tend to make large contributions themselves. Peer pressure and competition kick in. Not to dismiss the good feeling that a person gets from donating—psychologists talk about the “warm glow effect” from engaging in prosocial behaviors. And it’s not a crime if the glow is a little warmer courtesy of a few Grey Goose martinis.

Was It Worth It?

In the end, the question that nonprofits have to ask themselves is: Was it all worth it? After the last balloon has been popped, many signature events lose money or barely break even. Anyone who has held a gala knows about the dedicated staff time that is required, but is usually not figured into the revenue equation. What is the opportunity cost associated with your staff? It’s bound to be pretty high. How much could you be making if they were doing something else for you?

If an event fails to raise significant dollars, the argument is usually made that it was worthwhile, because it raised awareness or that it built the organization’s brand. But this argument turns out to be problematic. Without a personal connection to the mission, awareness rarely translates into dollars. And the brand doesn’t monetize itself; that takes work.

So, let’s accept the fact that galas are usually an inefficient vehicle for fundraising. But maybe you’ve got someone on your board who thinks that philanthropy starts when they put on their tuxedo or pearls and that galas are indispensable ways to connect with major donors. Still, there are ways you can restructure the events to make them more desirable to your accountant, who owns neither a tux nor pearls.

Some nonprofits are opting for shorter, less formal events, like sit-down breakfasts, luncheons or hors d’oeuvres-only functions. Others, like the Memphis Metropolitan Interfaith Association, have held “un-galas” or “no-go galas” where virtual attendees pledge donations in return for not having to attend.

Credit: Twitter

Galas are prime opportunities to take those who showed up and show off. To make them cry. Tawdry and melodramatic perhaps, but evoking emotion works. The real magic to evoking emotion is immediately following up—to do what? Ask for another donation? No. To provide them with a chance to connect to your mission. Ask for nothing. Give them meaning.

Last year, The Arc of Palm Beach County followed up the Cowboy Ball with the WILD Pants Party. Promotional material read, “The WILD Pants Party is a fashion show filled with the best male business leaders, philanthropists, local celebrities and more in our community. Be there as our wonderful male models strut their stuff on the runway.”

Whatever the fate of your signature event, keep one thing in mind. In order to be profitable, galas are entertainment. They just are. If you are going to put on a successful event, embrace this fact. But at the same time, remember that even the board member with the tux may prefer to be a crusader, not an entertainer.