Are special events worth the costs?

Filed under: News |

Nearly every charity does flashy fundraising events. But the golf tournaments, galas, walk-a-thons, bike-a-thons and lunches often aren’t worth the time or effort expended for the money that they raise.
On average, charities spend $1.33 for every dollar raised at a special event, according to Charity Navigators.
“It’s just more expensive to put on these events,” said Sandra Minuitti, communications director for the organization, which evaluates nonprofit groups based on how efficiently they operate. “It’s not a way to enrich their bottom line.”
But several Colorado Springs nonprofit organizations claim the events do produce measurable bottom line results.
Special events generate 15 percent of all contributions to nonprofit organizations, totaling $40 billion in 2006, but are inefficient compared to other fundraising efforts, according to a Charity Navigators study.
“An average overall fundraising spends 13 cents to raise $1,” the study said. “Only 15 percent of the charities that held special events were more efficient when using the events to fundraise than they were in regular fundraising activities on the whole.”
Colorado Springs charities are, overall, very efficient. In 2006, the 35 largest charities in the Springs ranked first in the nation for annual revenue and program expense growth. Charities in the Springs also grew revenue by 8.1 percent, well above the national median of 4.7 percent.
Colorado Springs’ branch of the American Heart Association hosts three special events a year: the Go Red for Women luncheon and education day, the Heart Ball and a summer walk.
All three keep their expenses at 20 percent or less, said executive director Sandy Gregory.
“It’s a very effective way to raise money for us,” she said. “And we get a great deal of support from local companies and individuals. If it weren’t a good way to raise money, obviously we wouldn’t continue to do them.”
The 2006 Go Red for Women event raised $167,000 after expenses. But the benefit is about more than just money, Gregory said.
“The event increases our visibility, and the visibility of our mission,” she said. “About 500 women attend the Go Red event, and we’re hoping they pass out the materials to friends, so it has the potential to reach 2,500 women.”
Charity Navigators fundraising study focused solely on the financial benefit, Minuitti said.
“But we have many charities tell us that they gain much more than money,” she said. “They view special events as a way to recognize donors, increase name awareness and increase awareness of their mission.”
Still, the group says that a large percentage of charities — particularly health care charities — would benefit from shifting their focus.
“Those organizations were found to be the most inefficient in special events fundraising, spending $1.84 to raise $1,” the study said. “Health organizations also have the largest gap between their overall fundraising efficiency and the efficiency of their special events.”
But the Memorial Foundation, which raises money for the city-owned Memorial Health System, says that simply isn’t true, at least in its case.
“We’ve seen the opposite trend,” said Executive Director Patricia Peterson. “Our gala makes quite a bit of money for us. In fact, we receive $3.66 in donations for every dollar spent.”
The foundation’s annual gala grossed $327,000, with expenses of about $90,000, she said.
“Special events are costly in the amount of time and resources it takes to put them on,” she said. “But there’s no sense in doing that if they are losing money.”
In addition to the gala, the foundation also organizes an annual golf tournament at The Broadmoor. Last year’s tournament netted $37,000 for the charity.
This year, the foundation also is planning a bike-a-thon and the “Concourse d’elegance” — a show of expensive, antique cars.
But one local organization agrees: special events take lots of time, money and other resources. Care and Share Food Bank relies mostly on other methods of fundraising, but executive director Nicholas Saccaro said the group does hold one big event a year: the Taste of the Springs.
“They aren’t cost-effective ways of raising money,” he said. “We hold this because a third party does all the logistics work, freeing up the staff to concentrate on other things. They volunteer and put most of the event together – that’s the only way we raise money with the event.”
Taste of the Springs raises about $40,000 for the nonprofit food pantry, but without the third party involvement, it would not be worthwhile. Instead, the group focuses on direct mail — which raises nearly $3 for every dollar spent.
“We’ve also developed a more holistic approach to fundraising,” he said. “We’re concentrating on making relationships with people, letting them know what we do, who we are and then asking them to get involved. It’s been very successful.”
Charity Navigators, which studied special event fundraisers based on Internal Revenue Service forms, also noticed a reporting flaw: most charities are reporting their special events data incorrectly, with “no recourse” from state or local tax regulators.
Of the organizations that use special events to raise money, it “appears clear” that 46 percent report improperly, the study said.
In Colorado Springs, only six charities filed accurate reports, Minuitti said. Of those, the WAY-FM Media Group, a religious radio station, had the highest inefficiency, according to Charity Navigators. WAY-FM spent $8.25 to raise $1 at its special events. By contrast, Global Action spent 15 cents to raise a dollar during its fundraising events.