How to calculate a return on investment in fundraising
When fundraising, it's important to calculate the return on investment, or ROI, to be sure that the money you spend is working for your organisation. If you're spending more than you earn in fundraising, your organisation isn't going to go very far.
Successful fundraising involves minimising expenses and maximising returns. But this doesn't mean that you always need to hold cheap fundraisers–an expensive one may be able to generate more donations.
- When fundraising, it's important to calculate the return on investment, or ROI, to be sure that the money you spend is working for your organisation.
Add up your total costs for a fundraiser. For example, this may include the cost of a location rental, supplies, food and entertainment.
Factor in the cost of time. Even though your volunteers are offering their time for free, you should still consider the cost of the time that they volunteer. Take what would be the volunteer's hourly wage and multiply by the number of hours worked. Do this for each volunteer and add this total to your costs in step one.
Subtract the costs from the money earned through fundraising. This is your net profit.
Divide net profit by the cost of the fundraiser.
Multiply the result by 100. This is the return on investment for your fundraiser.
Maggie McCormick is a freelance writer. She lived in Japan for three years teaching preschool to young children and currently lives in Honolulu with her family. She received a B.A. in women's studies from Wellesley College.