Tracking and Return on Fundraising Investment

Any business investment needs to be carefully tracked and monitored to ensure that it is offering a decent return, even if it is meant for fundraising.

Return on investment or ROI, is one of the most important business concepts out there and fundraising is no exception. Whether you are fundraising for a non-profit organization or for startup capital, knowing exactly what your return on investment is should be a top priority.

Many people don’t think to keep careful track of just how much the fundraiser costs, but every penny counts when you’re in business. If you aren’t bringing in considerably more than you put out in order to fundraise, then you will need to change tactics. This applies to both long term and short term fundraising, though it is far more useful when you can change things slightly and continue to check the data to get the best results in a longer term campaign.

How to Start Tracking Everything

There are a number of programs that can be used to monitor the spending, but it’s also fairly simple to keep everything on a spreadsheet, if you prefer not to invest in software.

If you are interested in automating as much of the process as possible, here are a few of the best rated fundraising software programs available:

You can also use most financial planning software to keep track of things and to calculate the return on investment, which makes it much easier, particularly if running multiple fundraising campaigns at the same time.

Tracking Expenses

Keeping track of all money spent on a fundraising campaign is very important. It’s surprisingly easy to spend more than comes in if you aren’t very careful.

Expenses can be anything you pay for in order to hold the fundraiser. This can include a large range of things, including:

  • Rent
  • Catering
  • Employees
  • Decorations
  • Publicity
  • Flyers/printed marketing materials

Any costs, no matter how small, should be recorded. Keep in mind that you should also count the time spent by volunteers, even though they are working for free. Keep an eye on their hours and calculate the time put in by all volunteers, then multiply it by the usual hourly rate. This should be included in your expenses as a cost.

Tracking Income

The amount of money raised should also be counted carefully. This is much easier than tracking costs, but it is still something that can be complicated if you have more than one way of raising funds. You should also be sure to keep track of which campaigns earn how much, as well, since this can be useful information in the future. If you need to do another fundraising campaign, it helps to have the records from previous attempts so you know which campaigns were most successful. Simply use the same techniques to ensure success.

ROI Equation

To figure out exactly what your return on investment is, you need to follow these steps:

1. Add up the total costs of the fundraiser.

2. Add the cost of time. If you had volunteers, calculate what their time should cost.

3. Subtract the total cost from the total amount raised to get your net profit.

4. Divide the net profit by the cost of the fundraiser.

5. Multiply the result by 100 to get the ROI percentage.

For example: $50,000 is raised, but the event cost $10,000. Subtract the cost from the amount raised to get the net profit of $40,000. This is then divided by $10,000 for a result of 4. Multiply 4 by 100 and you end up with a ROI of 400%.

Ongoing tracking is necessary if you hold more than one fundraising event, so you can see whether ROI is increasing or decreasing. Make sure you track what you do differently with each fundraiser so you can check which changes correspond with the higher return on investment.

It can be easy to skip these steps and take shortcuts, but when it comes to successful fundraising, it is very important to track every penny. Not only does this allow you to pinpoint which campaigns are most successful, it is also handy if you need to apply for a bank loan or discuss finances with some of your stockholders, etc. It can also help you determine if it is worth it to continue with your fundraising efforts or if you need to change something.

There are many factors that can affect how well your fundraising does. From the season to the area in which the campaign is run, everything can change how likely people are to give money. By noting the exact results with each campaign, you should be able to predict which times and methods will result in the best ROI for future fundraising endeavors.