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Importance of Fundraising Efficiency
- The nonprofit’s total expenses should not pass 35 percent on fundraising. Keep overhead around 35 percent or below. Most fall between 10 and 35 percent.
- Spend at least 15 percent on fundraising or hurt your success. You must spend to fully fund programs.
- Have an annual fundraising plan.
Criteria for Acceptable Costs of Fundraising
- What is an acceptable cost of fundraising? An acceptable cost depends on the organization’s size and type of fundraiser. Most watchdog groups recommend keeping costs below 35%.
- The Better Business Bureau specifies executive pay should stay under 10%. Charity Navigator says spending under a third of budgets on programs risks failing missions.
- Many options exist to plan fundraisers efficiently. Research to find the best platform for your needs. Consider all related costs like advertising and staff time, not just direct expenses.
Strategies for Fundraising Success
- Examine return on investment, not just department budgets. If you spend $1 to raise $1, you’ll slowly lose ground. Compare to other activities – a major gifts officer who raises $500,000 on a $100,000 salary costs 20 cents to raise $1.
- Spend money to make money. Budget building relationships that support fundraising, not just direct costs. Opportunity costs from failing to properly invest dramatically impact fundraising success.
- While standards exist, acceptable costs are relative to each nonprofit. Smaller groups often rely more on major donors and have greater variability in costs. Willingness to invest in sustainability influences costs more than anything.