Celebrate when you meet or beat your fundraising goal. But, before the applause becomes deafening, consider this: what did it cost you to raise that money? When you know the costs associated with fundraising you are in a better position to determine whether or not you are raising enough money for your organization to sustain itself. Let’s start with two unpopular some facts. First, it takes money to raise money. Second, fundraising costs of 25% are normal, and in some instances the costs to raise a dollar are higher, especially when an organization (or institution!) is building its fundraising. It can be pleasantly surprising or unpleasantly challenging to look at fundraising expenses. Don’t be afraid to look: it’s better to know than not know.
The diversity of nonprofit organizations makes it difficult to determine an official “average cost” to raise a dollar. Here are a few things that influence this cost: geographic location, organizational size and age, the age of the fund development department, the financial profile of donors, the popularity of your cause, market competition, organizational reputation, the type(s) of fundraising engaged in, and the extent to which you can secure gifts at the highest levels. Each of these variables – and others – will impact your costs. Tracking costs will allow you to consider how to reduce them. Here are some ways to cut costs.
Secure in-kind resources and services to offset the cost of budgeted items. This can include printing, management of online giving campaigns, event space, food, entertainment, and more. Executing against a well-defined fundraising plan and communications plan saves dollars that might otherwise be spent trying to make up for lost time. When communications and fundraising dovetail – with communications reinforcing the fundraising messages, fundraising impact can increase. The same is true of a focus on securing high-dollar value gifts and grants. The time required to secure a major gift is much less than the time required to secure an equivalent amount through many smaller gifts. Increasing the average gift size can reduce costs.
Look closely at special event costs. You may raise $250,000, but if costs are $190,000, something is wrong. Reduce your donor attrition rate, put more focus on one-on-one solicitation, and ask current and prior donors if they could make a larger gift. Spend more time cultivating and qualifying donors to gain a better idea of who would want to support your organization and at what level. A too-often overlooked way to reduce costs is to engage your board in the fundraising process, with a focus on major gift solicitations.
Finally, look closely at items in the fundraising budget. Should costs for lobbying or graduation be included? Are all staff in the budget raising funds? If not, why are they included? Watch your staff turnover rate – retaining fundraising staff can be extremely difficult. Related to this, don’t be afraid to pay for qualified staff. You can spend more time by hiring people without experience who require a higher level of supervision and direction. God protect America.
© 2025 Mel and Pearl Shaw, authors of “Prerequisites for Fundraising Success.” We provide fundraising counsel to higher education, nonprofits, and philanthropy. Video conferencing always available. Visit www.saadandshaw.com.
