The Problem with Special Events

Opportunity Cost, Transactional Displacement, & the ROI on Staff Time

A word on the origins of our dependence on events: in terms of fundraising tradition, this dependence arises  from a grassroots board and a lack of staff. I advocate that we talk about mission instead. When I hear of a strong dependence on special events, the warning flags go up. We have to look at the opportunity cost of events–of what I call transactional displacement.

Transactional displacement is the displacement of mission-based, purposeful cultivation by event-related fundraising transactions. This includes “selling tables,” “selling sponsorships,” and rounding up auction items. It can become similar to a retail transaction, unrelated to the mission-based story of changing and transforming lives.  And when event participants are done with the event, they are sometimes done with you until next year. They think they’ve done their part.

And we have to look at the ROI on staff time. It usually is lower with events than with other forms of direct cultivation. The higher your gross, the greater your dependence, the more difficult it will be to shift your paradigm. At a certain revenue point, change becomes nearly impossible; you are locked in.

So unless you are raising a lot of money on events, you might want to rethink your reliance on them, and instead think about raising money using the collegiate development model.

Nine Rules for Special Event Success

If you’ve read my book you know I’m not a fan of special event fundraising in a community college advancement program. I know that special events can play a limited role in four-year college programs that have already mastered the core programs of the collegiate advancement model. Those events serve a variety of niche purposes in the college or university program.

Despite these reservations, I have run many special events in my fundraising career and have formulated a few rules on how to make them successful. So, especially for those readers who do not come from the higher education sector, here are the nine rules for special event success…

1. Make the event FUN! (…or otherwise emotionally compelling.)

2. Know your audience and appeal to their tastes. (Cowboys don’t do opera. Culture vultures don’t do tractor pulls. And nobody likes boring speeches.)

3. Recruit a large event committee (20 or more).

4. Make sure 3 or 4 core volunteers own the event.

5. Have board members make a ticket pledge.

6. Create the widest possible reach for ticket sales. (Call your mother. Ask her to bring friends.)

7. Sponsorships are where the big money is. (Start with your vendors.)

8. If there is even the slightest chance you are going to lose money, forget it. (An event must have a minimum return on investment of 100%. And 500% is optimal.

9. Be very clear about why you are doing the event. If the purpose is largely PR, it’s impeding more lucrative fundraising opportunities.

 

Avoid Over-Reliance on Special Events

One of the premises of my book is that a community college advancement program that is heavily dependent on special event revenue will yield a lower return on investment than one that uses what I call the collegiate model of advancement. This advancement model focuses on direct, person-to-person cultivation of major gifts and a varied Annual Fund program featuring five to seven product lines.

That said, I know that most community colleges are dependent on special events for a significant portion of their annual revenues. That worries me when I look at areas like major gift development and even employee annual giving.

Some community colleges make almost nothing on employee annual giving, while top performers raise more than $40,000 a year. What makes for the difference? Sometimes it’s little more than culture and tradition. Sometimes it’s the special event, especially when there are many staff and faculty attendees paying for premium tickets to attend the event.

Mark Drozdowski, former executive director of the Fitchburg State College Foundation, a four-year college located in Fitchburg, Massachusetts, referred to this dynamic in analyzing a golf tournament for The Chronicle of Higher Education:

“…When all the dust settles, we net anywhere from $5,000 to $15,000…That irks me for two reasons. First, we dedicate an inordinate amount of time to raising 10 grand. If you calculate the number of work hours involved, we barely break even. Staff members running the tournament spend months planning every detail, gathering auction items, selling sponsorships, producing brochures, and managing logistics…

Second, we cannibalize our own donors. Instead of asking a small company to contribute $750 for a day of golf, of which only $100 will be added to a scholarship pool, why not just ask them for the $750 outright?”[i]

So why not just ask our employees for stretch gifts outright, and not rely on them too much for the special event? I think it is a useful goal to target a 60 percent participation rate with a yield of over $30,000 in an employee giving program. Let the event budget recalibrate itself. I like to see 100 percent of the employee gift going to support the mission of the foundation, rather than perhaps up to 50 percent of it going to support dinner and event décor.

The same dynamic is at work in a community college major gifts program when an event, or multiple events, dominate the calendar. The ability to focus on major gifts cultivation and solicitation works better when the prospect is not being hit up for repeat, relatively low-value sponsorship gifts.

Kathy Breslin, executive director of Delaware County Community College Foundation, has come up with what I consider to be a best-in-class solution, one that I recommend in my book. She has formatted her special event function as that of a high-end donor recognition event. While she has a few sponsors, invitees are invited because of their record of support to the college, or because they are under cultivation as donors of potentially significant gifts. They don’t pay for dinner. Kathy can offer a number of stories about guests who make significant gifts after being exposed to this level of cultivation.

Cultivation events offer the college a venue to tell its story. Students, the president, donors, and other leaders can all offer unique, inspiring stories that motivate donors to give outright gifts, which produce return-on-investment yields far higher than those seen in special event-dominated advancement programs.

I’m not saying ditch your event without a plan. I’m saying that there are more avenues available to you than we might think to simply—as Mark Drozdowski puts it—ask for the gift outright.

It takes time and cultivation to accomplish that, but major gifts, based on direct, face-to-face asks, can equal the net of a special event by way of a single gift.

 

[i] Drozdowski, Mark J. “Teed Off.” The Chronicle of Higher Education, 53(10), October 27, 2006, C3.