Tuesday, July 8, 2014

ROI - How much is the Chicken?

This morning, I had the pleasure to speak with Jeff Sellers.  Jeff recently joined our team and already
has already experienced the “Reality of Charity Fundraising.” 

When I first met Jeff, we spoke about the reality of fundraising in 2014.  Initially, I could tell he didn’t agree with what I was speaking to him about but if you ask him now what he thinks, he will just laugh while repeating what I told him on the very first day.

Recently Jeff was speaking with a Charity about their event last year.  The charity was very happy with their performance last year and sent over their event breakdown.  After analyzing it, he was surprised to see that the actual event was in the “Negative” – they actually lost money by holding it.  All of their profit came before the event and not during it.  This is referred to as “Net Net.” 

Jeff did his duty by showing the charity the error of their ways, but the charity surprised both of us by deciding to not host the event again instead of following our advice and assistance.  They decided the ROI (Return on Investment) was not high enough – it was ZERO.

Some time ago, I wrote a Blog called “How much is the Chicken.”  It was probably one of my most popular so I am going to write it again while adding just a few extra points:

When planning an event, charities begin to review and select everything for their event, here are some of the topics which they commonly analyze:

1.        The “Right” Venue – Their event has to be in a great place.  It has to look good, be   
         decorated beautifully with an excellent staff.  Their guests deserve it.
       2.       The “Menu” – Charities begin to plan what the dinner will 
                consist of based on the ticket price which they want to
                charge.  “How much is the Chicken Dinner?”…”How much
                is the Beef Dinner?”…”How much is the bar, the hore
                d’ouevres?”…”What desserts are we going to have?” –
                Obviously, the cost is essential but the guests deserve the
3.       The “Printed Program” – Charities must have a program that is beautifully designed.  This 
         means they must have a Graphic Designer lay it out.  It must be printed on great paper as
         well, showing color and the print quality must be fantastic.

4.       The Event “Decorations” – The room must be decorated beautifully.  They will need large
        screens to show video or what is going on, on the stage.  They will need a beautiful flower
        center piece for the tables, a wonderful table cloth, Signs around the room etc.

       5.       What they are going to wear – Everyone must be dressed beautifully, new dresses and suits
               are a must.  Everyone needs to look fantastic.
Now – everything above comes at a Cost.  “There is no such thing as a free lunch” someone said many years ago.  If you want great, you have to pay for it.  The “Right” Venue will cost, the “Food” will cost, a “Printed Program” will cost, a Graphic Designer will cost, Decorations will cost and most certainly…a beautiful dress or great suit will definitely cost.

So, with everything above coming at a cost…why then does the Charity forget everything and utilize items on their Live & Silent Auctions that are “Less than”?  Many charities today will only accept items that are 100% donated, despite the fact that the return or profit is low? 

Charities forget that they are paying for all of the above but then forget their strategy when it comes to the items they have available to raise the dollars they need.

I high “ROI” is vitally important – having items available on a Silent or Live Auction which do
not have a high return is not a successful strategy. 
We must understand the ROI on perhaps one of the most popular donated item that there is across North America – the Gift Basket:

This is based on fact – Gift Baskets do not bring high returns:

1.       The retail value of the Gift Basket is $60.00
       2.       The highest bid or what the Gift Basket is $40.00
       3.       In order to get the Gift Basket donated, it took the following time:
               a.       30 minutes to speak to the donor in order to get them to donate the item
               b.      2 hours to pick up the Gift Basket
               c.       $10.00 in Gas to drive to the Donor
This is called the “Cost of the Donation”

If you are going to utilize donated products at your Charity Fundraising Event, use them in a place and in a way for the highest “ROI.”  Commonly, the best place to utilize donated items is in a raffle or game setting.  The ROI will then be 10 times retail.

If you utilize No Risk Auction Items, understand that the return is much higher than if an item is donated. 

We suggest that our clients start the bidding at 20% above the Cost to Non Profit.  So with an item that has a Cost to Non Profit of $200.00, the starting bid or “Reserve” is $240.00.  That means, at the starting bid, the charity will profit $40.00 with the very first bid which matches the “TOP” or “Selling” bid of the donated item.  The reserve bid is just the starting line for much higher bidding.  With higher end or high profile items, your guests will compete to take that item home – which means your ROI will be very high. 

Plus – the investment is nothing if the item does not sell.

Again, if you want your event to be the best it can possibly be; don’t forget that fact when planning your Live & Silent Auction – the items available must match the event.  Higher profile or High End items always, 100% of the time, will always have a very high ROI.  Where are you going to invest your money...in a loser or winner?

If we can help you match your event with the right items for your guests, garnering you a high ROI “Return on Investment”, contact us today at www.BWUnlimited.com or email Jeff Sellers at Jeff@bwunlimited.com.  We will help guide you down a successful path.



No comments:

Post a Comment