fundraising tactics efficiency an exploratory study using the irs forms 990 l.
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Fundraising Tactics & Efficiency: An Exploratory Study Using the IRS Forms 990. Thomas H. Pollak & Mark Hager Center on Nonprofits and Philanthropy, The Urban Institute. Patrick Rooney & Eugene R. Tempel Center on Philanthropy at Indiana University .

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fundraising tactics efficiency an exploratory study using the irs forms 990

Fundraising Tactics & Efficiency: An Exploratory Study Using the IRS Forms 990

Thomas H. Pollak & Mark HagerCenter on Nonprofits and Philanthropy, The Urban Institute

Patrick Rooney &

Eugene R. TempelCenter on Philanthropyat Indiana University

Association of Healthcare Professionals (AHP)

* * * * * * * * * *

September 2001

Chicago, IL

slide2
The ProjectNonprofit Fundraising & Administrative Costs:Assessing Current Practices & Developing a Framework for Reporting
  • Understand scope & sources of variation in fundraising & administrative costs, & identify problems or inconsistencies in their measurement and reporting.
  • Develop & disseminate accessible reports, tools, & guidelines to public, practitioners & policy-makers.
  • Initiate a fact-based dialogue on how to ensure comparable & uniform reporting of these costs.
slide3

National Charities Information Bureau

American Institute of Philanthropy

Philanthropic

Advisory Service

Overhead Efficiency

No more than 40% of Total Expenses to Administration and Fundraising

No more than 40% of Total Expenses to Administration and Fundraising

No more than 50% of Total Expenses to Administration and Fundraising

Fundraising Efficiency

Fundraising Expense should be reasonable in relation to the Contributions received

Fundraising Expenses should not exceed 35% of Contributions received

Fundraising Expenses should not exceed 35% of Contributions received

survey questions
Survey Questions
  • Use of staff and volunteers
  • Use of fundraising information systems
  • Fundraising tactics
  • Auditing and cost allocation
  • Professional fundraisers
  • Standards & requirements of donors & others
  • Indirect fundraising by affiliates or federated funding orgs.
research questions
Research Questions
  • Are some fundraising strategies more efficient than others? I.e., do they generate more direct contributions per dollar of fundraising expense?
  • Do fundraising costs vary by mission, size, age, and/or location (urban, rural, metro)?
  • Can the 990s be used to assess the efficiency of different tactics?
fundraising tactics and the irs form 990

Phone

Phone solicitation

Printing, and Postage & shipping

Mailings to donors/members and for donor acquisition

Professional fundraisers

Use of paid solicitors or consultants, typically for direct mail or phone solicitation

Comp. of officers, dirs., & key employees

Executive director & other “key employees,” directors, & officers’ fundraising activities

Special events

Annual dinners, auctions, and other special events that serve as focal point for fundraising efforts

Personnel costs

Personnel costs for fundraising staff and any other staff involved in fundraising efforts

Travel

Large donor, corporate and private foundation fundraising?

Conferences & meetings

Training of fundraising staff?

Fundraising Tactics and the IRS Form 990
limitations of the form 990
Limitations of the Form 990
  • New donor acquisition vs. renewal
  • Foundation vs. corporate vs. individual solicitations
  • Major and planned gifts
slide10

Efficiency defined as (direct public support + gross special event inc.) / (total fundraising expenses + special event expenses).

slide21

An Alternative Measure for Key Employee Fundraising

  • Does fundraising get the attention it needs from key employees?
  • 24% of organizations that reported fundraising expenses reported fundraising expenses for key employees
  • For organizations reporting key employee fundraising expenses:
  • 16 % of expenses for key employees were allocated to fundraising
  • 10 % is the median allocation of key employee expenses allocated to fundraising
slide22

Conclusions

  • Tactics matter
  • Type of service or beneficiary matters
  • Age matters
  • Size matters
  • Mission matters
  • Form 990 data appears to provide a useful tool for comparing fundraising tactics for different types of organizations
next steps
Next Steps
  • Use Herfendahl measure of tactic diversity
  • Assess breakout of sector into 3 groups using the Chow test
  • Other variables to test:
    • Management & general expenses
    • Executive compensation
    • Other fundraising “tactics” or line items (e.g., travel, meetings)
  • Trends in fundraising efficiency
  • Complete survey on overhead costs (Fall 2001)