Free Isn’t Free

When Free Isn’t Free

We recently worked with a new client that had used a volunteer auctioneer for their fundraising gala for ten years. The board of directors was very cost conscious and was afraid donors might object to paying for an auctioneer when they could get it done for free. Their gala grew a little each year, more people, more meals, larger venue, but the net money raised mostly stayed the same. Income growth barely kept pace with the rising costs of producing the event.

It happened that one of the board members of this organization attended another gala where Legacy Auction Professionals was working. This event was smaller than the one their organization put together each year, but they immediately noticed it was very professional. At the conclusion of the event they approached one of our team, stating that they were “blown away” by the amount of money that was raised and that they wanted to inquire about using us for their gala next time.

Three weeks later we were seated with their Executive Director and several board members, listening to a familiar story about the lack of energy at their event. They showed us their meager net income, less than $100 per person in attendance. We detailed what services we provide that make a fundraising gala exciting, energetic and successful. Even though several board members remained hesitant when we discussed our fee, they decided to engage us for their next event, nine months away.

We Don’t Do It That Way

Once we engage with a new client, the most common thing we hear is, “We don’t do it that way.” Yes. We know. We were not at all surprised when this new client repeated the oft heard words. We reminded them that they engaged our services because their way of doing things wasn’t working. We showed them our six categorical checklists totaling over 650 unique tasks, items, that should be included in planning a fundraising gala. They immediately began to see what they had been doing wrong.

One Million Dollars

The short summary is that the first year we worked with the client we increased their net income by 372%. The production costs were just 11% more than the previous year but the revenue increased fourfold. When we met with them for our customary follow-up two weeks after their event they told us that their board members concluded that their free auctioneer had actually cost their organization about one million dollars over the ten years they accepted his volunteer services.

Is it more prudent for a nonprofit to focus on costs or focus on income? The answer is clear.