The most valuable resource at a nonprofit is the time of its paid employees and volunteers' time. It is often helpful to analyze how this time is used in fundraising projects and ongoing mission-related operations. Here is a typical example.
Once a fundraising event or activity has been successful for the charity, organizations tend to repeat these activities year after year. Often they do so without thinking hard about the amount of time invested by both staff and volunteers in the fundraising event. What does the event accomplish in terms of revenue relative to other activities? Moreover, over time, membership demographics can change, donor profiles can change, and other charity events can begin siphoning off attendees to your event. That activity or event that once yielded large donations and brought in large numbers of new donors may barely pay for itself.
Time Volunteered is never 'Free.'
Similarly, we as managers have a terrible habit of viewing something we receive for free, such as volunteer time at nonprofit organizations, as not having value. We may give it a low cost when its value is relatively high. This misunderstanding is one of the more difficult challenges in managing nonprofits – – learning to understand the importance of volunteer time, how to manage it best, and the overhead costs needed to generate it. When analyzing the returns from our fundraising activities, we need to give volunteer time value and add it to the expenses of fundraising costs.
Reality Check
At the end of each year, developing a quantitative analysis of staff and volunteer time dedicated to fundraising activities is often useful. An example of such a report appears below. Using Excel, we develop an X/Y bubble chart. The y-axis represents paid staff time and direct expenses, and the x-axis is volunteer time (an imputed cost to account for different skill sets may be helpful). The bubble is the relative amount of net revenue generated by the activity.
If everything works as it should, the biggest bubbles will appear in the graphic's uppermost right-hand quadrant. (See Telethon and Direct Solicitations bubbles), where large expenditures of time on the part of both paid and volunteer staff are rewarded with large amounts of net revenue (shown by the bubble's size.)
Suppose the opposite should hold and those activities which generate the least amount of income occupy a disproportionate amount of time on the part of the staff. In that case, the smallest bubbles will appear in the quadrants showing the most significant commitment in staff and volunteer resources.
In cases like these, there is an opportunity to reallocate resources. (For example, see the relatively small net revenue bubble for Direct Mail). Nonprofit leaders here can either focus more time on higher return activities than Direct Mail or dig down into why the source of funds (like Direct Mail) isn't earning its keep. We can grow the Golf Outing and the Gala.
Summary
Thinking of your fundraising activities as a portfolio with actual, imputed costs for donated hours will allow nonprofit leaders to make more intelligent resource allocation decisions about how we spend time in the organization.