How To Calculate Net Gain

With in-person events as a cornerstone fundraiser for many nonprofits, nonprofits are always looking for ways to raise more all while spending less. With two out of three nonprofits feeling pressured to increase revenue streams, it is increasingly important to ensure your fundraising events are driving revenue for your mission.Â

What is Net Gain for Nonprofit Events?Â

Usually, nonprofit organizations need to spend money when they host events. Typical costs for in-person events include venue rental, catering, marketing, and staffing. Along with expenses connected directly to the event, there are also indirect costs to account for, such as staff salaries. If employees spend 300 hours planning the event, that’s time they must direct away from other activities.Â

Ideally, the event ROI for nonprofits will equal more than 70% of the cost of hosting and organizing. To figure out the event’s net gain, or how much the programming brought, nonprofit staff must subtract its direct and indirect expenses from the total proceeds.Â

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How to Calculate Net Gain for Nonprofit EventsÂ

Calculating net gain for nonprofits involves crunching a few numbers. You’ll need three figures to determine how much an event brought in for your organization:Â

• Gross revenueÂ
• Direct expensesÂ
• Indirect expensesÂ

Gross revenue is all the money raised during an event. If you add up every monetary and in-kind donation, you’ll get this figure. Gross revenue is helpful, but you only gain limited insights from it. To calculate how much your event raised for your organization, you’ll need to subtract direct and indirect expenses from gross revenue. To do that, you’ll first need to tally up how much those expenses were.Â

Direct expensesÂ

Direct expenses are the more straightforward costs associated with throwing an event. They can be relatively simple to calculate, as all you need to do is look at how much your organization paid for specific program features. For instance, if you hired a band to play during a gala, that fee is one direct expense. The amount you paid for the catering service is another. Other common examples of these include:Â

• Venue rentalÂ
• Car rentalÂ
• DecorationsÂ
• FlowersÂ
• Entertainment — emcee, band, DJ, other performersÂ
• Food and drinkÂ
• Invitations and postageÂ
• Event fundraising softwareÂ
• Security at the eventÂ

Indirect expensesÂ

Indirect expenses are event-related costs your organization doesn’t pay out of pocket. They include the cost of time spent putting together the program by paid staff members and volunteers such as board members.Â

To calculate the indirect cost of your staff working on the event, keep track of how many hours they spent planning, preparing, and attending the program. Then, multiply that number by their total hourly earnings, including benefits. So, if your organization’s associate director spent 80 hours on the event and their salary works out to $50 per hour, the total indirect expense of this time is $4,000.Â

To calculate the indirect cost of volunteer hours spent planning the event, use the national average value of volunteer time, $31.80 per hour. If your volunteer team spent a collective 100 hours on the event, their contributions’ indirect cost is $3,180.Â

Net gain = gross revenue – expensesÂ

Once you have calculated the total cost of the event’s expenses, you can subtract that amount from the total revenue to find the net gain. If you ended up raising $150,000 during the event but spent $50,000 on direct expenses and $10,000 on indirect expenses, the program’s net gain was $90,000.Â

Cost to raise $1Â

Along with calculating the net gain from a nonprofit event, it can be useful to assess how much you had to spend to raise $1. Calculating the cost to raise a dollar gives you an idea of whether you are overspending on your galas and other events. To see how much you spend to raise $1, divide the total expenses by the net gain. If your net gain was $90,000 and you spent $50,000 on the event, your cost to raise $1 is $0.55. If you spent $100,000 and raised $90,000, your cost to raise a dollar would be $1.11, meaning you spent more than you brought in. The lower your cost to raise a dollar, the better.Â

Fundraising Event Costs: Things to ConsiderÂ

As with any program, there are some areas where it’s better to spend than save. Here are some expenses not to skimp on.Â

Find Fundraising Event Success with GiveSmartÂ

As event season ramps up, our team of experts has curated the top blogs, checklists, on-demand sessions, and more to power your nonprofit organization’s fundraising event, auction, and golf outing goals. Â

Visit our Fundraising Event Success Hub today. Â