Some simple math can help nonprofits increase fundraising efficiency and decide whether pursuing certain fundraising opportunities is worth it, according to Wen-Chih O’Connell from the Silicon Valley Community Foundation and Jessamyn Shams-Lau from the Peery Foundation, who recently spoke to our teams about fundraising from the corporate and foundation standpoints.
When calculating the value of different opportunities for fundraising, including foundations, corporations, individuals, and even earned revenue strategies, you must consider both the amount of money and the time required to get it.
- Take your annual budget or how much you need to raise in the next year and divide it by the number of hours you will spend raising that money. Cultivating relationships, not just writing applications, counts toward this fundraising time. This tells you your necessary $ per hour fundraising rate.
- For example, if you spend about 40% of your time fundraising and work 2500 hours a year, then you spend about 1000 hours a year fundraising. If you need to raise $500K then you need to average $500 per hour in fundraising.
- Take a look at your next fundraising opportunity, and estimate: A) how much money you expect to raise, B) what your chances of raising that money are, and C) how many hours it will take to close the deal (or to decide to drop the application). With this info you can calculate your expected $ per hour for this opportunity.
- If your expectation is well below the rate you need to hit your fundraising goal, then drop it (or: increase the $$$/decrease the time).
- Even if you’ve spent a few hours pursuing an opportunity, it might still be best to cut your losses – don’t get hung up on the sunk costs. Always be the gatekeeper of your own time.
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