Non-profits tread a line on costs of fundraising galas
Written by: Lisa Bertagnoli
To celebrate its 25th anniversary this year, Chicago Shakespeare Theater turned its old Corporate Night, a decade-old fundraiser that grossed about $800,000, into a real gala, complete with dinner, a live auction and $500-per-person tickets.
The results were “humbling,” says Brooke Walters, director of institutional advancement at the theater. The party brought substantial new donors to the theater—including one who bid five figures on a live-auction item—and grossed $1.25 million. With expenses at $194,000, the cost of the gala as a percent of gross proceeds rang in at 15.5%.
Fundraising experts say the cost of a gala shouldn't exceed 30% of gross proceeds. Much higher, and donors start to get the feeling they're underwriting a party, not a cause.
With that figure in mind (and cognizant that most non-profits release gross, not net, figures in press releases touting the success of their galas), Crain's requested and received net gala proceeds from 16 Chicago-area non-profits with annual benefit galas that gross around $1 million.
Three galas hovered above that 30% mark; the rest fell below, in some cases well below. Non-profits with their own venues (museums, theaters) seemed to fare well, as did those with robust fundraising activities at the event such as auctions and paddle raises.
Costs of Brookfield Zoo's spring 2011 Whirl ball, a major fundraiser held on zoo grounds, ran 36% of gross revenue, due to higher food costs. “When food costs go up, they're passed along to us,” says Sarah Breen-Bartecki, vice-president of the conservation funding initiative at the Chicago Zoological Society, which runs Brookfield Zoo. Party planners trimmed costs elsewhere—for example, reducing the number of trolleys running around the zoo during the event.
An entree of sustainably raised lobster helped raise costs to 34% of gross at the Shedd Aquarium's Sea Jelly Soiree last spring. The Chicago aquarium felt obliged to serve sustainable seafood; after all, it is concerned with ocean and waterway conservation, says Jennifer Baryl, senior vice-president and liaison to the board of trustees. Fifty extra guests who attended but were not budgeted for also increased costs, she says.
Even with a higher cost, Ms. Baryl says the annual gala is worth the expense: Shedd's largest individual donor—she would not disclose the name— was introduced to the aquarium at a gala 10 years ago. “If not for the event, we wouldn't have met those folks,” she says.
See the costs and net proceeds of the area's 16 largest fundraisers
Steppenwolf Theatre's spring party ran 32% of gross receipts. The dinner was held at Blackhawk on Halsted, an event space, rather than at a hotel. Hiring caterers and decorators to turn the space into a party room accounted for the higher cost. But it cost less than erecting a tent in Steppenwolf's parking lot, as the Chicago-based theater has done in the past, says Sandy Karuschak, director of development.
No matter how closely a non-profit watches its pennies, such events are hardly a budget-friendly way to raise money.
Galas are “the most expensive forms of fundraising,” says Edith Falk, chair of Campbell & Co., a fundraising consultancy in Chicago. She says even the net-proceeds figure doesn't reflect the full cost of staging one: “If you add up the cost of staff time, you probably haven't netted as much as you could.”
At the same time, such an event can lead to contributions far exceeding total ticket sales, if it attracts new donors.
“It's who's coming and what pipeline of new donors they're bringing,” says Jason Saul, CEO of Mission Measurement LLC, a fundraising consulting firm in Chicago. “But if you just are trying to rally your base, it might not be worthwhile.”
Different organizations use galas for different purposes. For some, it's a party first, fundraiser second. For others, it's a critical part of the fundraising plan.
Lyric Opera's annual Opening Night and Opera Ball “brings in new people, but it is far more a long-standing tradition,” says Mary Selander, director of development, adding that the opera's triennial wine auction is more lucrative. Net proceeds from this fall's ball represent less than 5% of total contributed income of $20.6 million for 2011.
By contrast, proceeds from Cures 2011, Gateway for Cancer Research's fall black-tie gala, accounts for 50% of contributed income. “The event is critical for us,” says Lynette Bisconti, president of the Schaumburg non-profit.
The gala this fall at the Fairmont Hotel Chicago was heavy on fundraising; a live and silent auction plus paddle raise brought in $707,000 this year. That raised the total proceeds of the event, including ticket sales and sponsorships, to more than $2 million and pushed the cost ratio down to 11%. The organization sticks to a no-frills budget: Chairs at the event were left uncovered, and staff volunteers took photos and shot video.
Indeed, party planning means walking a fine line between spending enough to justify the ticket price—high-grossing events cost between $500 and $1,500 for a single ticket—but not appearing extravagant.
Non-profits haggle with hotels, caterers and other vendors. Centerpieces are more likely to be asters, not orchids, and volunteers often do most of the planning and legwork.
“We're always trying to find a balance,” says Kim Duffy, senior project manager at the Chicago Symphony Orchestra. Its 2011 Symphony Ball had a 21% expense ratio.
This year, the orchestra's Women's Board cut costs by switching to a less-expensive florist. While Ms. Duffy calls the decision “savvy,” she says some donors told her the cost-saving efforts dimmed the event's luster.
“I heard, ‘I wish (the gala) had a little more buzz, a little more pop,' “ she recalls.
Ms. Duffy says that in healthier economic times, it was easier to plan events without worrying that the “wrong” centerpiece would vex donors. Now contributors want reassurance that their dollars are supporting the orchestra, not a florist.
“People don't look at attending galas in the same way,” she says, adding that they “don't attend galas as easily as they did in the past.”
Elizabeth Hurley, who joined the Art Institute of Chicago in February as vice-president for museum development, thinks costs shouldn't exceed 20% to 25% of gross. “It's just paying attention to every dime that was spent, and getting as many contributions as possible,” she says.
The Art Institute will divulge neither gross nor net proceeds for its April 15 party honoring former Chicago Mayor Richard M. Daley and Maggie Daley; Ms. Hurley says expenses ran about 20% of the gross. The Art Institute's 2010 spring gala, to herald the opening of its Henri Matisse exhibit, ended with costs at 36% of gross. Ms. Hurley was not at the museum at the time and would not comment on the cost; an Art Institute spokesman says the museum considers the event a success.
As expensive and time-consuming as parties are, big donors seem to like them, calling them a unique way for a non-profit to showcase its mission to a well-heeled crowd.
“The gala is an occasion for giving,” says philanthropist Maureen Dwyer Smith, a board member at the Field Museum, the Joffrey Ballet and After School Matters, among others. Donors can buy a table or underwrite a portion of the event, making such fetes multilayered giving occasions.
Chicagoan Eve Rogers has been surprised after attending galas that look fabulous but don't work as fundraisers. “That's kind of disappointing,” says Ms. Rogers, director at Graff jewelers in Chicago. “You're here to raise money, not to have the most expensive flowers possible.”
As one of the planners of the Dec. 1 opening of the Ann & Robert H. Lurie Children's Hospital of Chicago, Ms. Rogers is being careful: The party will be a cocktail affair, not a dinner, which allows more people to attend and keeps food costs down. As far as the décor and the invitations, “it will look nice, but we are trying to stay within reasonable means,” she says.
Other philanthropists think galas matter less than the fanfare surrounding them might suggest.
Galas “are not the be-all-and-end-all of fundraising,” says Carol Prins, a Chicago resident who serves on several non-profit boards, including the Goodman Theatre's.
“It raises the visibility of the organization,” she says. “But if it's not going to raise money and will take a ton of staff time, I say skip it.”
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