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Dollars & Sense is a monthly series started over a year ago. Please email your questions...and be certain to look regularly for Dollars & Sense. Recent Questions How to Ask Faculty & Staff for Gifts? How Restrictive Is The HIPPA Privacy Regulation? What Happens When A Campaign Is Completed? Why Do So Many Fundraisers Become Consultants? What are the Pro and Cons of Creating a Bonus System? |
Dollars & Sense How Much Should You Spend for Campaign Costs? The other day, I read in the newsletter of a Professional Society, a question raised by one of its members— and the answer. I thought the response was not adequate, and in some ways inaccurate. The question was: We are interviewing firms to work with us in our upcoming capital campaign. What percentage is a good number to work with in determining how much to spend on the firm and additional expenses such as prospect research, materials, etc.? I have heard 8 percent up to 15 percent. What is your recommended formula? The italicized is their response.Here was part of the answer: The cost varies greatly based on a host of variables: The age of the organization (this is not significant), the size of the budget (not significant), the popularity of the cause (not certain what is meant here), the fundraising methods used (not certain what they mean here), the skills of the development staff (I would add to that the experience of the staff and the amount of time they are going to devote to the campaign) and the strength of the organization’s leadership (Amen!). Then they say: The greatest cost will be if you are planning a broad based campaign that involves more staff, more events, telephone situations, etc. (That’s quite true.) Then the respondent said: Cost statistics should always be taken with a grain of salt. (I’m not certain what is meant by that. We’ve done about 1800 campaigns and by now, we have a good idea of how much it costs to raise funds.) Most capital campaign consultants charge a flat fee not a percentage of dollars raised. (All consultants who follow professional principles charge a flat, pre-negotiated, contractual fee. It is against the ethics to charge a percentage of dollars raised.) For full-time consulting, you can expect to pay $12,000 to $20,000 per month. (But for how many months?) And finally: For periodic counsel, you may pay between $8,000 and $12,000 depending upon whether you are hiring a ‘firm’ or an individual. (Well, actually some individuals charge as much as firms. And mostly, the charge is based on a per diem. The per diem can be anywhere from $1,000 to $3,000. Therefore, the cost is really dependent on how many days a month are provided) Here’s perhaps a better answer to the question about costs. To begin with, there should almost always be a feasibility study. There may be exceptions, but not many. As a result of the feasibility study, the organization will know what the cost will be. Typically, costs should not exceed 10 percent— okay, 12 percent in some unusual situations. The cost includes the professional fees and all other campaign expenses (clerical assistance, printing, postage, entertainment, and so forth). Something that can dramatically boost the cost of the campaign is a video. In most of our campaigns (where we provide resident campaign services), the total cost is somewhere between 6 to 9 percent for goals of $2 million to Obviously, the larger the goal the more likely the percentages will be lower. If you would like to receive a document on How to Choose Fundraising Counsel, let us know (ideas@panaslinzy.com). – Jerry Panas |
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