How to Calculate Event ROI
Events are the lifeblood for many nonprofits. They provide an avenue for both fundraising and stewardship. However, an event can't be successful if you don't keep an eye on the financial aspects. If the event will net too little money, it won't be worthwhile. An excellent way to ensure an event is worth having is to calculate the its return on investment (ROI). A simple ROI calculation can let you know if you need to change the scale of the event.
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Instructions
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Write down all of the items you will spend money on while putting on the event. These could include catering staff, space rental, musicians, overtime salary for staff, and food and wine.
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Estimate the event's attendance. This will affect how much you will need to spend on items such as food, the facility and other items.
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Estimate the costs involved. Gather competitive bids on food, facilities and other items based on your projected attendance.
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Estimate the price point for attendance, if your event will have an admission cost. Many fundraising events are free for donors, but for some events, attendees will have to pay to attend. Based on attendance, you should determine the non-gift revenue.
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Estimate the donations received. Use projections based on feedback from your development staff, the projected donation received for items at a silent auction and other donations received at similar events.
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Subtract the expenses from the donation. The difference is the ROI.
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Repeat the exercise. If the ROI is too low, change the parameters, gather new bids and recalculate. From there, you can decide whether the event will have a sufficient ROI.
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Tips & Warnings
Gather competitive bids from at least two vendors.
Determine attendance before seeking space to hold your event.
Be conservative in your calculations, especially on donations and silent auction bids.
Remember that you need to keep IRS tax rules for donations in mind when planning an event. Refer to IRS publications 526 and 1771.
Any game of chance or raffle removes the tax deduction from the donation.
