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.