Rule #3 for Board Members: Fundraising Has a Significant Return on Investment
As a board member, did you ever consider that your fundraising has a significant return on investment?
Your fundraising expenses bring in a large profit to your organization.
The ROI of investing in fundraising is something that many board members do not often consider.
Why fundraising costs matter.
Fundraising costs are not a black hole into which you pour money. Instead, they’re investments that generate money.
Just like you invest in the stock market – and you expect a return, your organization is investing in fundraising strategies that produce a generous return.
It’s hard, because the nonprofit mindset thinks of fundraising as a cost center, not a Revenue Generating machine.
Fundraising pays for itself many times over.
The smart board member knows that the more resources you invest in fundraising, then the more you will exponentially raise.
If you want to expand your programming and the reach of your organization’s mission, you would invest first in fundraising to bring in more funding.
Here’s a guideline for board members when you are considering a fundraising investment:
- You should expect to make at least 3 or 4 times that amount of money.
- You would want to pay back what you invested in fundraising, plus bring in a return of at least 3-400%.
Many organizations have endowments that are bringing in 4% return. Compare that to fundraising, which brings in a return of at least 100 – to 1000%.
Some people have suggested that it’s a smart move to borrow board-restricted funds, invest it into profitable fundraising strategies, and then pay the funds back.
Should you cut the fundraising budget to save money?
Cutting the fundraising budget is counter productive if you are trying to save money.
I’ve seen CEO’s and boards start squeezing the fundraising budget and then they’re unhappy when their contributions go down.
They don’t see the cause and effect.
They don’t understand that if they cut their direct mail budget and send out poor quality appeals, then the number of gifts will go down.
Bottom Line: Fundraising actually pays for itself AND it yields a substantial profit.
Investing more in fundraising will not take money away from your programming. Instead it will increase your revenue – and your ability to help people.
You can expect a measurable ROI from investing in your fundraising program.
This is Rule #3 from my video series: The Board Member’s Guide to Fundraising: 10 Rules for Success Every Board Member Should Know.
If you want to enlighten your board members, and help them understand that . . .
— investing in fundraising yields more money for the mission
— fundraising events are not a cost-effective strategy
— the big money is in cost-effective major gifts fundraising
— how they can help bring in more money for your important work
Then share this video education series with them about how fundraising really works:
Find out more and get this resource for your board today.
Here are the Board Member’s Rules for Fundraising Success posts to date:
Share these with your board members. Then get them the video series “10 Rules for Fundraising Success Every Board Member Must Know.”
Rule #1 for Board Members: Fundraising is Based on Relationships With Donors
Rule #2 for Board Members: Know Your Fundraising Roles and Responsibilities
Rule #3 for Board Members: Fundraising Has a Significant Return on Investment
Rule #4 for Board Members: The Easy Money is in Donor Retention
Rule #5 for Board Members: Major Gifts Bring in the Most Money
