Fundraising is essential to your nonprofit’s strategy. You raise money to directly fund and support your various programs and projects. Therefore, it’s important that you do everything you can to make sure the fundraising campaigns you host are as impactful and productive as possible.
Even if you run a successful fundraising campaign and have incredibly generous donors, things can still go wrong! If you don’t have the right goals in mind, ineffectively plan your campaign, or report on your earnings incorrectly, your nonprofit’s financial books may still end up in the red.
So how can you avoid this? By establishing a data-driven fundraising plan ahead of time and ensuring effective accounting practices. In this guide, we’ll dive into three different accounting ideas that will help your nonprofit ensure a positive fundraising return that will support your organization’s goals, including how to:
Accounting is more than just inputting numbers into a spreadsheet. You also use accounting practices to ensure your campaigns are well-planned and will fit into your vision for the organization at large. Let’s get started.
1. Create a Detailed Campaign Budget
Your organization creates an annual budget to help determine your overarching financial health and goals. This living document includes both your anticipated annual revenue, your regular and anticipated expenses, and notes on how you arrived at those figures.
To keep track of your finances for specific, individual campaigns, according to Jitasa’s nonprofit financial management guide your organization should also create a detailed budget for those campaigns that covers your anticipated revenue and expense sources for individual campaigns. For example, let’s consider a nonprofit that’s hosting an annual fundraising fun run event. This organization will likely need to account for the following expenses:
- Renting the space where the fun run will take place
- Designing t-shirts and other merchandise for each of the attendees
- Investing in event registration software so attendees can easily sign up for the event
- Purchasing bibs, safety pins, and labels for the racers
- Hiring a DJ or other entertainment to make the event fun
- Purchasing insurance for the event
- Investing in marketing software and incurring advertisement costs
- Providing refreshments and water for the racers at the event
While these are just a few examples, showing that even a seemingly simple event like a fun run can incur many overhead costs that add up. Similarly, you should recognize your various forms of revenue and estimate how much will come from each source. In this fun run example, here are some of the revenue generation methods the nonprofit might use:
- Individual registrations to participate in the fun run
- Additional donations made to the organization for the event
- Matched gifts provided by employers of the event participants
- Sponsorships from local businesses in the community
- Merchandise sales that are made at the event
For each campaign, make sure you know what fundraising data to track to keep an eye on your various revenue sources during the campaign. For instance, you may have different funding goals associated with donations, merchandise sales, and other revenue streams. Track each separately in addition to your overarching fundraising goal to ensure a successful campaign.
2. Compile the Resources You Need
Now that you’ve chosen your fundraising idea, start thinking about the resources you’ll need to make the campaign possible. To create the best experience for the audience, choose software designed specifically for your chosen type of campaign.
There are a wide variety of fundraising solutions out there. To start your research, use referral lists like Re:charity’s top fundraising software recommendations or strategy guides like the Fundraising Coach’s advice on how to create the perfect online donor experience.
However, be sure to factor the costs of each platform and resources before you start investing in expensive software left and right. Look back at your budget to see how much you’ve allocated to these resources. Then, when you research technology and other resources, consider the prices so you don’t overspend on this overhead expense.
For example, if you’re hosting a dance-a-thon, you will probably need to invest in registration software, a donation page builder, a powerful sound system, and music platforms. When researching your options, determine which solutions:
- Provide the best bang for their buck.
- Are within your predetermined budget.
- Equip you with all of the features you need.
Once you’ve narrowed down your list of potential resources, reach out to providers to ask further about pricing, ensuring you learn about any possible hidden fees like implementation and training expenses. This will provide a holistic view of the actual overall cost of the resources you need.
3. Analyze Your Campaign Results
For most nonprofits, their long-term fundraising strategy is to accumulate enough revenue to sustainably grow their organization. Growing your fundraising campaigns over time helps your organization increase its impact on the community. Not only should each campaign be profitable, but you should also be actively tracking campaign data to advise future opportunities and continue improving your strategy.
Consider the metrics that will best help your organization grow its fundraising over time. Then, track these metrics between each of your fundraising campaigns. For example, you should track analytics such as:
- Your donor retention rate. It’s more cost-efficient to retain your existing supporters than it is to acquire new support. Thanking donors, stewarding them, and otherwise showing appreciation will help this metric increase over time.
- Average donation size. Track the average gift size among your supporters and among your supporter segments. This will help you better understand your audience and communicate with them for each campaign you host in the future.
- Donor engagement. Along with giving rate, keep track of donor analytics that will help you build a relationship with donors. This includes information about what campaigns they interact with, what events they’ve attended, and which channels they prefer your nonprofit to message them on.
- Overhead expenses per campaign. Track your investments in resources, venues, and other costs of hosting fundraising campaigns. The goal here isn’t to get to 0% overhead (there are important investments your nonprofit needs to make to ensure the success of the campaign), but to be aware of where the money is going so you can make informed decisions for the future. For instance, was the space you rented large enough for number of supporters that showed up? Maybe a larger space for next year to grow the size of the event is something to consider.
All of these metrics will help your organization to grow over time, but there’s another reason to keep a close eye on campaign data. Tracking your financial results throughout the year helps when it comes to future financial audits.
After each campaign, consider which analytics and metrics you’ll need to add to the financial reports included in these audits. Organizing that information now will prevent your staff members from scrambling to find all of this information down the line.
As a professional fundraiser, you understand how challenging it can be to conduct the perfect campaign. Be sure to work closely with your accounting team to make sure you’re in-line with your operating budget and have effectively planned out each campaign for maximum profitability.