How Much Should Nonprofits Spend on Fundraising? Plus 3 Ways To Cut Costs and Raise More Donations


The wide use of smartphones has led to incredible advances in communication across all industries, and the nonprofit sector is no exception. Digital marketing channels such as text messaging have made it easier for nonprofit organizations and advocacy groups to promote their causes, raise donations, and reach potential supporters more effectively. For instance, online giving has increased 8% annually over the last few years. 

In this blog post, learn how much your nonprofit should spend on raising donations and how you can use SMS marketing to increase fundraising while cutting costs. 

 

Understanding Overhead and Fundraising Expenses for Nonprofit Organizations 

Nonprofit organizations provide valuable support to communities, and carrying out their services costs money. Although nonprofits operate differently than for-profit organizations, they must be financially organized to be accountable. 

Many nonprofit organizations and advocacy groups exist thanks to sponsorships, grants, donations, and fundraising. These funding sources allow organizations to execute projects and deliver their mission. Maintaining financial records and a good understanding of overhead can be challenging for nonprofits, but it’s necessary. 

As defined by the National Council of Nonprofits, nonprofit overhead refers to “a combination of ‘management,’ ‘general,’ and ‘fundraising” expenses.” Simply put, operation costs and the costs of soliciting and collecting charitable contributions make up overhead costs. In contrast, costs related to specific programs or activities are direct costs and aren’t typically included in overhead expense calculations. 

Overhead expenses for nonprofit organizations may include:

  • Event-related costs
  • Utility bills 
  • Software subscriptions 
  • Rent for office spaces
  • Travel expenses
  • Marketing and advertising costs
  • Staff salaries
  • Staff benefits
  • Fundraising costs 

Fundraising is essential for nonprofit organizations to have a meaningful impact on their causes. Without fundraising, many nonprofits would not exist. In many cases, the number of donations a nonprofit raises influences the work it accomplishes throughout the year.

Nonprofits struggle to accurately define their fundraising expenses, but in reality, there’s no specific spending requirement for fundraising. Some organizations, such as the Better Business Bureau, recommend not exceeding 35% of total expenses. However, many Tatango clients see an average of $5 in donations returned for every single dollar spent on text messaging, making text messaging a way to make money—not spend it.

To drive support from stakeholders and donors, it’s more important to increase awareness of the organization’s mission with engaging strategies and have financial transparency and a good grasp of the organization’s overhead. As Rolando Damian Rodriguez, an expert in developing fundraising campaigns for humanitarian causes, said, “A nonprofit organization could be measured by the quality of its services, and the quantity of people served, not primarily by how low it keeps its operational expenses.” 

 

3 Ways To Cut Costs and Raise More Donations

Nonprofit organizations once commonly solicited donations by going door to door, approaching people in person, and hosting costly fundraising events. Soliciting donations in person can be quite challenging and exhausting, and many nonprofits with limited budgets can hold only one fundraising event annually. 

Cost-effective and engaging strategies, such as text message marketing, make fundraising much more accessible and enable nonprofits to quadruple donations. 

The following three strategies can help cut your fundraising costs and increase the amount of money you raise.

 

1. Use Text Message Marketing

We can say this enough: text message marketing is one of the most effective and efficient ways to raise money. A significant advantage of text messaging is its open rate. About 99% of all text messages are opened, and 90% of those messages are opened within three minutes of being received. That’s an open rate five times higher than email marketing, which sits at just 20%. Not only is text messaging highly effective, but it’s also adjustable to fit tight budgets without sacrificing success. 

 

2. Integrate a Fundraising Platform with Your SMS Campaign

A great advantage of using an SMS software provider like Tatango for your fundraising campaigns is how easily it integrates with fundraising tools such as NGPVan and other nonprofit fundraising platforms. If you’re already using a fundraising platform, you can keep using it. Integrating it into your SMS campaign will double your results. Additionally, Tatango’s technology integration requires no coding and ensures your fundraising campaigns are safe and secure. Whenever your followers donate or fill out a form on your website, their phone number integrates with Tatango’s text messaging platform to continue to raise future donations.

 

3. Use Clear and Strong Calls to Action

As SMS marketing experts, we recommend you always add a clear call to action (CTA) in your text messages, especially if your goal is to request donations and increase fundraising. CTAs help your supporters know exactly what you want them to do next. SMS messages with good CTAs generate action. 

Generally, nonprofit fundraising campaigns are time-sensitive. The best CTAs are created around your campaign’s essential functions and convey a sense of urgency. Some examples of great CTAs for fundraising campaigns include: “Donate now,” “Text to give,” “Sustain our mission,” “Join the fight,” “Take action,” and “Give to our cause.”

 

Examples of Nonprofit Fundraising Through SMS Message Marketing

Now that you’ve learned the importance of fundraising and how to cut costs, let’s look at how top nonprofits use text message marketing to raise donations. 

How Much Should Nonprofits Spend on Fundraising 2

The Humane Society of the United States is a nonprofit organization working to end suffering for all animals. The organization was founded in 1954 and cares for more than 100,000 animals each year through wildlife centers, rescue teams, and sanctuaries. 

The organization uses text message marketing to send news, invitations to special events, fundraising messages, and information on how supporters can help protect animals. In this text message campaign, the Humane Society organization integrated its campaign to a fundraising platform to make donations more accessible to its subscribers. Its marketing team also created a sense of urgency by using the phrases “is now live” and “make a last chance…before midnight tonight.” 

How Much Should Nonprofits Spend on Fundraising

People for the Ethical Treatment of Animals (PETA) is an American animal rights organization with nearly 400 employees and 6.5 million supporters and members. The organization uses SMS message marketing to communicate with its advocacy program members and raise donations. In the example above, with the phrase “Give before midnight,” the PETA organization sent a clear, time-sensitive text message to generate action.

 

Let’s Raise Donations Together 

Are you ready to launch a successful and affordable fundraising campaign? Partner with Tatango to lower your costs and raise more donations. For over 14 years, Tatango has been the industry leader in helping nonprofit organizations reach new supporters and raise more donations through SMS messaging. In this time, we’ve learned a what truly works for successful fundraising campaigns.

The Tatango team will guide you every step of the way and support all the hard work your team is doing. Chat with one of our SMS marketing experts to learn how the Tatango SMS platform can help you reach supporters and increase donations effectively.





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