This is one of the two questions I put to participants who attended AWDF’s recent Boot Camp on ‘Developing a Resource Mobilisation Strategy‘. This workshop was held to give our selected grantees hands on training in developing a resource mobilization strategy. As part of the programme, I facilitated a session on budgeting for resource mobilization. During my presentation, the first question I asked was
“The cost of fundraising has become the basis of assessing whether a non-profit is behaving responsibly or not. Do you think that this is a fair basis?”
There were very interesting responses from the participants. Some agreed that it was fair because non-profits should spend money on programmes and not on fundraising others agreed that it wasn’t fair because fundraising requires resources.
My conclusion on the discussion was that fundraising costs alone are not enough to assess an organization because it is dependent on so many other factors such as;
- Age or maturity of the organisation and its fundraising capacity
- Size of the organization and its budget both overall and fundraising
- Popularity and nature of the cause
- Methods used
- Sources of fundraising income
- Skills of the fundraising staff
- Strength and involvement of the organizations board and senior staff as well as other external partners
- Use of volunteers
I followed this question with a second, which was, “Can non-profits raise funds without costs?”. Everybody agreed that this was impossible but when I asked participants what it cost them to raise the funds they raised in the previous year, no one was able to give me a figure. There were several reasons that accounted for this but the common reason was that they actually don’t budget for fundraising and therefore they don’t report on their fundraising costs because this is not an expenses that they track. One participant actually said that if they were to budget for their fundraising costs they will have no money to do other things. I then asked, “Are staff not paid for the time they spend to fundraise?” Obviously they are but that cost is captured differently.
The import of these two questions was mainly to set the pace for the discussion on budgeting for resource mobilization. Developing a fundraising strategy needs to be done together with action plans and a budget for the resources required to achieve each of the strategic objectives. Every non-profit raises funds to implement its activities and yet when you review the accounts of most small to medium sized organizations there is usually no information on fundraising costs.
Part of the reason is because of the fact that non-profits know that spending on fundraising is deemed as non-productive and so those costs are hidden in other costs. There are several implications for not capturing fundraising costs. One of the key reasons it that organizations are unable to measure the cost effectiveness of their fundraising strategies which has implications on overall organizational effectiveness.
Fundraising is an investment and like any other investment the returns need to be monitored and this cannot happen without knowing the cost of fundraising. Additionally, if you invest less in fundraising you are not likely to get much out of it. You may be doing an excellent job but you need to tell your story to different audiences in a compelling and captivating way and all this requires resources. A lot of organizations remain small, invisible, and ineffective and eventually die because they have not made the right investments in resource mobilization.
So whether your strategic focus, is growth, involvement, visibility, efficiency or stability, you need resources to achieve that and you need to budget for those resources.
I am an accountant and cost benefit analysis is a key part of the work I do so I know for a fact that you need money to raise money. So how much is it costing you to fundraise and when was the last time you did an objective analysis of costs per dollar raised for each of your organization’s fundraising methods?
By: Gertrude Bibi Annoh-Quarshie
Finance Manager
AWDF
