When planning a fundraising event, an essential element to consider is budgeting. For those new to the process, a budget is simply a quantified, planned financial course of action over a period of time. It attempts to estimate costs and revenues.
Creating a working budget for a fundraising event is important for many reasons. First, it forces you to consider the expected demand for your products and services. Considering demand makes you aware of the resources you need to meet your goals. Budgeting for fundraising events also highlights problems you may face in meeting your goals and allows for sufficient time to correct the deficiencies. Lastly, budgeting creates a standard against which results can be compared and is vital for event evaluation (Gordon, Hilton, & Welsch, 1988).
A thorough budget must be developed prior to approving the event and must include both operating and material costs. Operating costs include the cost of staff, sales expenses (e.g., automobile gas, telephone usage), and administrative tasks such as choosing the fundraising activity, developing the proposal, implementing the activity, evaluating the project outcome, and reporting the outcomes to the organization. People taking on administrative or coordinative roles will need time to develop and implement the project. They will also spend many hours coordinating and leading staff. Each event requires a committed administrative staff and at times their efforts may require a financial reward. At other times, these administrators are offering in-kind assistance, which is their way of donating to the fundraising campaign. So make sure during the planning stage to address what costs will be levied by any administrators.
Materials are the other regular budget item for fundraising projects. Costs that typically fall under the materials category include stationery supplies, mailings, copying expenses, phone calls, gas for transportation, web page design and maintenance, up-front cost for products used in the activity, advertising or promotion fees, and electricity. These line items differ depending on the activity, but generally will be your primary financial concerns. Insurance policies are required for some activities.
You need to be as thorough as possible with your fundraising budget: it should show all sources and quantities of cash flow expected for each event. The budgeting process can be broken into the following seven simple steps (Vohwinkle, n.d.):
1. Gather every financial statement you can. This generally includes bank statements, recent bills, and any other information regarding past sources of income and expenses. The main purpose of gathering this information is to compile averages from prior events and to use them as a basis for evaluation.
2. Record all sources of income. Compile all sources and quantities of income expected from an event including all revenue sources as well as interest income from notes, debt recoveries, and credit saves. This revenue budget is simply a forecast because it is based on projections of future sales rather than known, substantial figures. When compiling a revenue budget, take into consideration your competitors, advertising budget, sales force effectiveness, and other relevant factors. From the various projections assembled, attempt to select the most feasible price to charge your consumers for your event.
3. Create a list of expenses for events. Compile all sources and quantities of expenses from a future event including wages for employees as well as the costs of utilities, entertainment, promotions, data processing, and miscellaneous items. Expense budgets list the primary activities undertaken and assign monetary amounts to each of them. When compiling expense budgets, pay particular attention to the fixed expenses as addressed in step 4.
4. Separate expenses into two categories (fixed and variable). Fixed expenses are those that are required for each event and remain stable from event to event. They are essential to the budgeting process and are very unlikely to change. A good example of a fixed expense is utilities. Variable expenses, on the other hand, fluctuate greatly depending on the event and include categories such as labor wages, entertainment, and promotional fees.
5. Total your income and expenses for each event. If your calculation shows more income than expenses, the event is off to a good start. You can disburse the excess income to other areas of the budget. If, however, there is a higher expense column, you will need to make some changes.
6. Make adjustments to expenses. If expenses are higher than income, search through your variable expenses for the discrepancy and look for possible areas in which to cut back. It is much easier to cut variable expenses than it is to cut fixed expenses because variable expenses are generally nonrecurring.
7. Review your budget frequently. Budget reviews should be conducted often to compare projections to actual outcome. They will show where you did well and where you need to improve for the next event.
When formulating budgets for fundraising events, a preliminary budget may be superseded by the actual budget. A preliminary budget is a premature estimate of the total time and funds required for the event. The final budget will be a precise financial evaluation of your fundraising campaign to use for future similar events. It is always good to see a final budget that shows lower expenses than the preliminary budget (Levine, 2001).