Non-Profit Chas

Every non-profit fundraising and marketing consultant I’ve met recommends hosting a single “signature” event each year. This event becomes part of your brand and continues to grow in revenue over time. Many organizations rely on this event to produce their entire operations budget, even without any program fees.

When I started at Camp Fire, we had a dozen or so events each year. These ranged from program- to fundraising-oriented events that usually took place over a few hours or a few days. We held a yard sale where we collected and sold all kinds of donated goods. It took a month to collect stuff, most of it never sold, and in the last year we did it we brought in something around $750.

That’s $750 more than we had before. Not bad, you say?

How much did we spend on this fundraiser?

Say we had 10 people average 20 hours to collect, organize, price, set up, and run the event. I believe it was far more time than that, but let’s just estimate.

So for 200 hours, we made a whopping $750. That’s $3.75/hour. Given that the people running this included a handful of paid staff, we lost a lot of money running such an event. Not only did we lose money, we wasted valuable time that could have been better spent marketing, developing programs, and more efficiently raising money.

Crunch the numbers

In order to make a wise decision about fundraising, consider some basic factors:

• What is the profit we’ll make from this event on an hourly basis?
• Are the people who do this work worth more per hour than this?
• What other activities could we focus on that would generate more revenue?
• Are there indirect or intangible returns: marketing, publicity, relationship building?

Why an Hourly Rate?

Federal minimum wage right now is $6.55 an hour. So at the very least, you could get a minimum wage job and donate all of the paycheck to your organization. So your baseline should start at $6.55. Now hopefully you’re talented enough to get yourself a job that pays more than minimum wage. Now that baseline goes up again. Say you’re at $10/hour. But in reality, that’s only a $20,000/year salary. Your board members probably make more than that, right? So they don’t want to work for $10/hour for your organization – their time is worth more than that. In fact, if given a choice between working for $10/hour and simply paying you the $10/hour (because they make a lot more than that) they might just pay you instead. See where I’m going with this?

If your board member is a lawyer who makes $300/hour, is he going to volunteer for your fundraiser all day to make a measly $100? Or would he just offer to work an extra hour and just donate the extra cash?

You have to determine how much your fundraiser will make per hour worked and, if that’s acceptable, then get the right people to do that job.

I’m not an MBA, but I play on one my blog

Let’s look at a sample model I drew up for a small fundraiser. We assume two staff members both making $10/hour and an additional six volunteers. Everybody would work 48 hours each.

Expected revenue: $10,000

$10,000 from 384 hours of work means that our hourly rate is $26.04. That’s not trivial, especially since we can pay a couple of staff members $10/hour to coordinate and recruit another 6 volunteers to help for free. We still make a profit on the staff members, and the volunteers’ time is pure profit.

What else could we do?

The real question is whether this is enough to warrant doing the fundraiser. Would the staff and volunteer time be better spent developing our fee-for-service programs, or sending appeal letters to our mailing list? How about making visits and calls to schools to promote our camps? One of our board members responded to this by offering to just pay $26/hour to not have to work the event. He’s clearly not the right person to be working at it, but in the past the board was the de facto source for volunteers.

What you don’t know can definitely hurt you

What staff or volunteer activities are more profitable than others? How can we maximize the return on our time and payroll? Unfortunately, many organizations don’t even ask these basic questions. The answers aren’t always easy, but they’re worth pursuing.

Take the time to create a budget, project revenues, and evaluate even your smallest events. Because sometimes, you’ll find that the same amount of work goes into the tiny events as the biggest ones, with very different outcomes.

When I joined the board of Camp Fire USA River Bend Council, I was warned by a mentor: “If you’re a workaholic, you’re going to be a volunteeraholic. Be careful.”

Eight months later, I agree entirely. Don’t let yourself get burned out.

I’ve long wondered just what the penetration of feeds (RSS or Atom) might be among different audiences. Especially among non-profits and in higher education. Do college students understand and use feeds? How about staff and faculty? Alumni? Non-profit workers? Donors?

I’d love to do some research on this. If anyone has data, feel free to share it!

In the meantime, I can look through some of my clients’ stats and gather some data. One site in particular is a great example of the changing landscape in web content consumption.

Here are their web traffic stats, via Google Analytics:

And here are their feed subscriber stats, via Feedburner:

Whoa! Huge difference. The web traffic is pretty even. They publish daily during the week, so the drops in traffic correspond to the weekends (when there’s no new content). But the feed subscribers are a huge part.

Interesting note: the main audience for that site is University alumni, typically older faculty. So it’s not surprising that over 90% of these subscribers are actually using the email feature within Feedburner. They don’t use a feed reader at all.

While they don’t necessarily understand the concept of feeds, they certainly want the main feature: to consume content the way they want.

Three of my favorite bloggers just wrote about a particularly sensitive spot for me: reactive email time.

Yesterday, I tweeted about trying to get down to inbox zero. After two hours, I was down under ten emails, but had run out of time. Some of those emails have been sitting for weeks now, waiting for my response to move them ahead. And the problem I still find is that the emails come in faster than I can respond.

Katya, Beth, and Seth all write about the destructive, depressing, and demoralizing effect of spending your day simply reacting to emails as they come in. Too many days I feel that all I do is play switchboard operator, connecting emails from one person to another. I might only have to answer five-second questions, but those five seconds add up to hours throughout the day. By the end of the day, I can’t figure out what I accomplished and I feel depressed about not getting anything done. Since I track my time, I often end up with deficits…only accounting for five or six hours each day. This is even more frustrating; I know I worked hard all day and am stressed out for some reason, but I can’t even get credit for that because my hours look like I slacked off. If I’m only going to get credit for six hours, I might as well come in late and leave early.

To counteract this effect, I work from home once a week. No phone calls, no walk-ins, no meetings. I use these days to clear my inbox, get my proposals done, and actually do work. In one day, I get a week’s worth of work done. The rest of the week is reacting and meeting.

I need to find a way to flip this on its head: one day for reaction, four days for work.

Your mission, as a not-for-profit organization, is something other than profits. But if you don’t have enough money coming in, you can’t keep sending money out. This means creating income streams to offset your costs. For most non-profits, that’s fundraising. But for many, fundraising isn’t enough. And this means charging for your service.

Charging a fee for your work is basically the equivalent of company charging for their product rather than giving it away. There’s a major hurdle when you convert a free service to fee for service.

Yay, More Problems!

It’s not the fact that you’re asking for money. People are used to this – they pay for stuff all the time and are often wary of anything “free.”

The hurdle is your customer base—can they afford your service? The answer lies in two words: pricing and segmentation.

Pricing is the art and science of maximizing profit. Since your goal isn’t necessarily profit (though many non-profits may be working hard to establish a surplus for growth or stability), you might consider pricing in terms of maximizing mission. What price allows you to serve the most customers in a sustainable way?

Uh oh, some people can’t afford it. So what do you do when you need to charge for service, but you want/need to provide the service to people who can’t afford the service?

Imaginary example

Let’s imagine your product is priced at $10. While many people will pay $10, some people would be willing pay $14 and some will only pay $7. But how can you get people to pay as much as they can/will pay?

One approach is to simply ask people to pay what they can. This only works as long as people are honest about what they can afford, and even then most people aren’t honest with themselves about what they can afford. It’s also not very predictable.

Another approach lies in something called price discrimination. This isn’t a negative thing, it’s just the term for charging a different price for different customers. Give customers a way to pay less than the full price and the ones who can’t afford full price will take those options. It’s also an excellent way to balance out a price increase, in case you’ve already been charging for your service.

Give me real world examples

One example is coupons: people who clip coupons are less likely to afford your full price. They use coupons to bring prices down to an affordable level for their budgets. But people who can easily afford your service will rarely bother – it’s easier to just pay full price.

Another example might be an “earn your way to camp” approach. At Camp Fire, we offer ways to earn money toward camp through various fundraisers – a car wash, selling pizzas, etc. You don’t have to do these things, but they’re fairly easy ways to cut the price down. Another way is through referrals, where each referral results in a discount.

Finally, we offer the campership program for our customers who have demonstrated financial need yet wish to come to camp. We’ve worked hard to raise money for this program. I’ll write a post about this later, but it’s all part of our pricing plan.

The Role of Fundraising

As a non-profit, one of your advantages is in pricing. As you’re not focused on profits, you may charge less than a for-profit counterpart (if such a thing exists). Fundraising is one way to balance this. If your annual operating budget is $100,000 but you can bring in $30,000 from fundraising, then you can knock 30% off the price and still break even.

The Moral

Pricing and “price discrimination” are important concepts to consider as you charge for your organization’s services. As a business focused on your mission, you have to develop a healthy source of income. It doesn’t make sense to charge for all services – some just won’t work that way. But many can find a healthy mix of fundraising and fees to build a stable, growing organization.