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April 16, 2008

Measuring the Results of Spending on Fund Raising

In bad economic times, some charities cut spending on fund-raising and other efforts not directly related to providing charitable programs.

But a new study by an organization that represents hospital fund raisers shows that spending more on fund raising produces a significant increase in revenue. And trying a diversity of fund-raising approaches works better than sticking to just one or two fund-raising techniques, researchers say.

The analysis by the Association of Healthcare Philanthropy found that for every $1 a hospital spends to raise money, it receives a median $4.45 in return — meaning that half do better and half do worse.

The return on investment for each organization studied ranged from $1.63 per dollar spent to $23.80 per dollar spent, according to William McGinly, the association’s chief executive.

Among the other association’s findings:

• Investment in new fund-raising programs and staff takes three to five years to pay off, especially when seeking planned gifts or large gifts from wealthy donors.

• Fund-raising departments with lots of employees don’t necessarily raise more money than those with just a few, but organizations that thrive give a lot of responsibility and autonomy to their fund raisers.

• Neither the location of a hospital nor the wealth of its local donors limits an organization’s ability to raise money, Mr. McGinly said. Hospitals in poor areas can raise money as effectively, sometimes more effectively, than those in wealthy urban areas, he said. The perceived quality of the hospital exerts a greater influence on donors other factors, he said.

The hospital association is one of a growing number of organizations seeking to figure out out how to make their fund raising more efficient. For more details, see How Much Fund Raising Really Costs, from The Chronicle of Philanthropy archive.

— Elizabeth Schwinn

Wednesday April 16, 2008 | Permalink

Comments

1. Elizabeth, You might be interested to know that the topic of “Cost to Raise a Dollar” or “Return on Investment” will be the subject of an extensive study that CASE is initiating this year around costs and investment in fundraising, alumni and other constituent relations in higher education. This was last done in the form of the famous CASE/NACUBO “Lilly Study” that was published in 1990. Contact Chris Thompson who is Director of Reseach at CASE if you would like to learn more. Don Fellows, Marts & Lundy, Inc.

   — Don Fellows    Apr 17, 04:15 PM    #

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