Setting a proper budget is the best way to measure the success of your fundraising event. Your budget will allow you to monitor and control costs, and determine your net revenue. This article will walk you through the basics of an event profit and loss statement, and help you craft a budget that will better predict your event profitability.
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Use this tool to follow along as we take you through the basic elements of creating a budget for your fundraising event.
How to budget for your fundraising event
Event Profit and Loss
Maybe you didn't pay attention in that finance class in school, and the thought of building a profit and loss (P&L) statement intimidates you. We promise to keep this simple: The P&L is simply a statement of event revenues (donations, ticket sales, sponsorships, auction revenue, raffles, etc.), minus any event costs (venue, catering, bar fees, consultants, auctioneers, entertainment, technology, etc.) If your revenues exceed your costs, then you have a profit. Otherwise, it is considered a loss (our goal is to avoid that from happening).
Most would ask you to start by forecasting your revenues first. If you have run this event for several years, you may feel comfortable doing that. However, if this is a new event, it could be difficult to predict how much money your event will raise. In this exercise, we are going to build a budget and then set a revenue plan to make the event profitable.
Set an Event Budget - Determining Expenses
First, we need to establish what is likely to be the item that will most influence the cost: the venue. To determine the venue, we need to calculate the following:
Step 1 - Estimate the Size of Your Event
The first place to start is to determine how many people you expect to attend your event. This will help you determine the required venue size. Don't overthink this part. This is simply an estimate so that you can choose the right venue. The size of your venue will likely differ if you're holding a silent auction to benefit your small private school versus a concert event that is open to the public.
Step 2 - Establish the Date of Your Event
Choosing a date for your fundraising event before selecting a venue is important for several reasons. First and foremost, you want to ensure that the date you choose does not conflict with other major events or holidays in your community that could potentially draw away attendees or make it difficult to secure vendors, volunteers, or the venue itself. Additionally, selecting a date before a venue allows you to have more flexibility and options when it comes to finding a location that can accommodate your needs. If you choose a venue first and then realize that the date you need is not available, you may find yourself scrambling to find a new location or having to compromise on your preferred date. By choosing a date first, you can plan ahead and have a better chance of securing the venue you want. Taking the time to carefully consider your event date before choosing a venue can save you time, money, and stress in the long run.
The outcome of steps 1 and 2 should help you narrow down your preferred venue.
If you are building your budget in the template, now is a good time to head to the expenses tab and fill in the first section on venue costs.
Another significant cost of your event will be food and drink. Food and drink may tie into your venue costs, depending on the venue. For example, most hotels require you to use their food and beverage service. Other venues have a list of approved caterers to choose from, and you're not permitted to use vendors outside of the list. You'll want to work closely with your venue to determine how you will provide food and drink for your guests.
Step 3 - Estimate your Food Cost
Food costs are often based on the menu you've chosen, and an estimated number of guests. Your caterer should be good at helping you estimate these numbers along the way. You likely won't have to give them a final number of guests until a week out from your event date. For this budget, you want to estimate how many people will attend your event and the catering cost per person.
It's important to consider whether the cost of your event venue includes the rental of tables, linens, and place settings. While some venues or caterers may provide these items, you'll need to confirm whether they are included in the cost or if there will be additional fees.
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Step 4 - Estimate your Drink Cost
If you don't plan to serve alcohol at your event, this portion gets considerably easier. If you are planning to serve alcohol, however, you need to figure out the following when building your budget:
- Can you get alcohol donated? When it comes to serving alcohol at your fundraising event, it's important to consider all of your options. One possibility to explore is securing donated alcohol, which can help you save on costs. However, it's important to note that this option requires careful planning and coordination, including securing the necessary permits and donors. Additionally, some venues may charge exorbitant fees for alcohol, making it even more important to explore alternative options.
- Who will serve the alcohol? Alcohol service will be handled either by the venue's staff or the catering staff, as you may not legally be allowed to do so because of permits and certifications according to your local jurisdiction. Consequently, it is crucial to anticipate and include staff costs for bartending services and gratuities in your budget planning.
- What do you plan to serve? Beer and wine are easy to serve, as they don't require additional mixers. If you are planning to serve mixed drinks, you'll need to decide whether you will have a full bar, or if you plan to have a choice of one or two predetermined cocktail options for your guests. We recommend you keep it simple. A full bar can be quite expensive to stock.
For non-alcoholic (NA) beverages, estimate what you plan to serve (e.g. sodas, water) and the number of each that you think you will need. Even if a vendor requires you to purchase alcohol from them, they may be more lenient on what NA beverages you bring in (and hopefully get donated). We encourage you to try and bring in your own waters and sodas if you can.
We have successfully incorporated two of the most significant expenses of any event into our planning: the venue and catering services. Next, we will estimate some other ancillary costs, like licenses, permits, and decorations.
Step 5 - Estimate your Decorations
Some people factor decorations into the venue costs, but in many cases, the venue has little to do with your decorations. Decorations include table centerpieces, event signage, balloons, streamers, etc. You'll also want to include the cost of the supplies required for any decorations you plan to make yourself.
If you are building your budget in our Event Budget Template, now is a good time to head to the expenses tab and fill in the section on Decorations costs.
Step 6 - Estimate your Other Event Costs
In many cases, you have event-related costs associated with consulting, licenses, insurance, and permits. To determine these costs, please consider the following:
- Are you hiring an event consultant? You need to factor that cost in somewhere. If it is a fixed cost, this is easy. If it is a per-hour cost, then you will want to estimate the number of hours needed and budget for it.
- Do you need any licenses or permits? If you are holding a raffle and need a raffle license, include that cost. If you need a permit to serve alcohol, add that in. If you need event insurance (we recommend you get it if you need it), then calculate that.
If you're following along in the template, now is a good time to head to the expenses tab and fill in the section on Permits / Consultants / Misc costs.
Let's dive into the promotions and A/V next.
Step 6 - Estimate your A/V and Entertainment Needs
Do you plan on giving a presentation? Do you plan to show any video during the event? Do you want a live band or DJ? You need to budget for all of those things. In some cases, the venue may supply all of the required audio-visual (A/V) equipment for you. Regardless, it is best to track it as a separate line item in your budget.
Please note that your venue may charge exorbitant rates for A/V equipment, especially if it's in a hotel. If you can rent or borrow it somewhere else and bring it in, we strongly recommend you consider that as an option.
If you are building your budget in our template, now is a good time to head to the expenses tab and fill in the section on Audio / Visual / Entertainment costs.
Step 7 - Estimate your Media and Promotion Costs
Media and promotion costs encompass various elements like paid advertising through social media or television ads, invitations, postage, graphic design, and advertising, all of which play a vital role in promoting your event. Have you considered sending out a save-the-date card to inform attendees in advance? Additionally, paper invitations and printed programs or graphics for the event should also be factored into the overall budget. All of these costs need to be put into your budget under Media and Promotions.
If you are building your budget in our Event Budget Template, now is a good time to head to the expenses tab and fill in the section on Media and Promotion costs.
Step 8 - Estimate your Auction, Ticketing and Event Fundraising Costs
We've saved the best for last! The unique thing about fundraising costs is that these are often the only costs that have a direct impact on your event revenue. If you cut here, expect a negative impact on your revenue. That point is often lost on many event planners who get caught up in what it costs to purchase ticketing and mobile bidding software. Don't get caught up in that belief. Investing in great event software will make it easier for your guests to purchase tickets, bid on items and make donations. All of those line items boost revenue.
To build this budget, ask yourself the following:
- Are you selling tickets to the event? If so, would you prefer that guests who purchase tickets are automatically pre-registered in the auction software with a credit card already on file? If you answered yes, then you will likely want to use a mobile bidding and event fundraising solution that includes integrated ticketing.
- Are you planning on having a live auction? If so, we recommend that you consider hiring a benefit auctioneer. Sure, they cost money, but that expense is often made up in higher auction revenues. Benefit auctioneers are highly trained to extract maximum dollars out of the room.
- Are you planning on having a silent auction? If so, we strongly recommend that you use quality mobile bidding software, like Handbid. To budget for your software costs, you need to do some research and find the software that best fits your needs.
- Are you selling anything at your event? There are many unique revenue generators you can employ at your event to raise more money. If you want to do things like a wine pull, a prize drawing, or other interactive game, you will want to determine if that results in a higher software cost from your mobile bidding vendor. You will also want to budget for any costs to acquire the items you intend to sell or give away.
- Do you intend to have a donation/ask (aka Paddle Raise?) If you plan on doing a donation appeal during your event and you have hired a benefit auctioneer to do it, be sure to factor in any additional costs the benefit auctioneer will charge you.
- Do you intend to hire any paid staff to work the event? If you feel you need some extra help at the event and you don't have enough volunteers, lean on your event planner (if you have one). If you don't have one, consider any additional paid staff, such as servers or software support staff that you'll need to bring in. Beware of mobile bidding companies who give you a great price and then supply subpar staff that does not know the software or how to run a fundraising event.
If you are building your budget in our Event Budget Template, now is a good time to head to the expenses tab and fill in the section on Auction/Fundraising costs.
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Once you get through the template, you will be well on your way to building an efficient event budget that you will be proud to show your Board. If you have any questions, feel free to leave a comment on this blog and we will try to answer it as best we can!
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