Setting a proper budget is the best way to measure success for your fundraising event. This will allow you to better control costs and determine your overall event profit from donations and event proceeds (tickets, auction, raffles, etc.). In this article, we 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.
How to budget for your fundraising event
Event Profit and Loss
Ok so 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. Don't worry about it, we will keep it simple; and, you won't be asked to publish your P&L on Yahoo Finance anytime soon.
The P&L will simply be 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, that could be a tough task. Instead, we are going to take this approach: build a budget and then set a revenue plan to make the event profitable. So let's dig in.
We are going to present this in a 2 part series. In this article, we will focus on determining event costs. We will then follow that up with an article on how to forecast your event revenues. Combined, that will give you a good picture of your event's overall profitability.
Set an Event Budget - Determining Expenses
You can either read this first or download our Event Budget spreadsheet template and complete that as you go. To download the Event Budget template, please click the link below:
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 complete the following 2 steps:
Step 1 - Size 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.
Step 2 - Establish the date for your event?
Establishing the date for your event is important because it may constrain the venues that are available. If your event is based on a real event (e.g. Kentucky Derby, Valentines) or a holiday, then you will be forced to find a venue that can accommodate your date and your crowd. Otherwise, you may have some flexibility here.
Either way, the outcome of Steps 1 and 2 should be a venue.
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 first section on Venue costs.
This in turn will likely influence the next most influential cost: food and drink. Let's cover those next. Food and Drink can either be a combination of venue costs (if the venue controls the sale of alcohol) and catering costs. It won't matter how you track the costs, the key factor will be to determine what these costs will be.
Moreover, your venue may control which caterers you can use (or even be the only catering option (e.g. a hotel)).
Step 3 - Estimate your Food Cost
Food costs are often based on the menu (what you pick out) and an estimated number of guests. Don't worry if you are not quite sure how many people, your caterer should be good at helping you estimate based on your ticket sales. Besides, 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 the actual number of people and the cost per person that the caterer will charge.
You will also need to determine whether this cost includes rental of any tables, linens and place settings. In most cases, your venue will supply those or the caterer will. In either case, you are likely to have to pay for them.
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 top portion of the second section on Food and Drink costs.
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, then you need to figure out the following when building your budget:
- Do you plan to have any alcohol donated? If the venue will let you and you can secure the donors and any permits, this is a great option. In many cases, venues charge ridiculous sums of money for alcohol and any option to get it donated is a good one to pursue (with vigor).
- Who will serve the alcohol? Either the venue's staff or the catering staff will have to. It's likely you won't be allowed to. So plan on factoring in staff costs for bartending and gratuities.
- What do you plan to serve? Beer and Wine are easy as no additional mixers are needed. If you are planning to serve mixed drinks, decide if its a full open bar or if you only plan to have 1-2 options for 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 want. Even if a vendor requires you 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 if you can.
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 rest of the second section on ‚Food and Drink costs.
We now have what is often the two biggest costs of an event factored in: venue and catering. Next, we will estimate some other ancillary costs associated with your event: licenses, permits, and decorations.
Step 5 - Estimate your Decorations
Some people factor these into the venue costs, but in many cases, the venue has little to do with your decorations. Decorations would include any table centerpieces, event signage, balloons, streamers, etc. Include anything you plan to buy and/or the cost of supplies for anything you plan to make.
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
Other sounds a bit boring, but 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 include that.
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 Permits / Consultants / Misc costs.
Ok, only 3 buckets of cost to budget for Auction / Fundraising, Promotions, and A/V. 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? How about a live band or DJ? You need to budget for all of those things. In some cases, the venue may supply all of that for you. Regardless, it is best to track it as a separate line item in your budget.
Please note that sometimes the venue (in many cases hotels) charge absurd rates for A/V equipment. If you can rent or borrow it somewhere else and bring it in, we strongly recommend you consider it.
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 Audio / Visual / Entertainment costs.
Step 7 - Estimate your Media and Promotion Costs
Invites, postage, graphics design, advertising. All of these are what we call media and promotion costs. Are you sending out a save the date card? How about paper invites? Are you printing a program or other graphics for the event?
More importantly, are you a stickler for design and thus plan to hire a graphics designer to make it all look polished?
Also, do you plan to promote your event through any paid-ad channels (either on Facebook or on TV/Radio/Newspaper?)
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.
Ok, we are on to our final cost and we saved the best for last! Fundraising costs.
Step 8 - Estimate your Auction, Ticketing and Event Fundraising Costs
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 an 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 or hire onSite staff to create a great guest experience.
Don't get caught up in that belief. Investing in great event software (ticketing, mobile bidding, and automated payment software) will make it easier for your guests to purchase tickets, bid on items and donate. All of those help revenue. Ok, so off our soapbox and on to how we budget for these.
To build this budget, please ask yourself the following:
- Are you selling tickets to the event? If so, would you prefer that guests who purchase tickets be 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, do you plan to hire a trained and accredited benefit auctioneer? We recommend you consider hiring a benefit auctioneer and let that board member have a seat and enjoy the night. Sure, they cost money but it is often made up in higher auction revenues. After all, that is what they are trained to do: extract maximum dollars out of the room.
- Are you planning on having a silent auction? If so, we strongly recommend use use mobile bidding software. Moreover, use good software (ahem‚Ä¶ like Handbid). Sure, you aren't surprised to hear that from us, but hey we know it works. Trust us. To budget for your software costs, you need to determine how many items you intend to have and select a software package that best suits your needs.
- Are you selling anything at your event? Raffle tickets (don't forget that permit), a wine pull? If so, 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.
- Do you intend to have a donation/ask (aka Paddle Raise?). If you do plan to do one in the room and you have hired a benefit auctioneer to do it, be sure to factor in any additional costs the benefit auctioneer will charge you.
- Finally, do you intend to hire any paid staff to work the event? If you purchase great software (ahem Handbid), then we think this is one area of your budget you can really cut. If you feel you need some help at the event, lean on your event planner (if you have one). If you don't have one, consider just bringing in one experienced person from the mobile bidding company to help your team.
One thing to watch out for are those mobile bidding companies who want to bring a small army of staff. Sure the price looks amazing, but these staffs are often just temp hires from an agency with little experience running their software (let alone fundraising events). Save the aggravation and hire those people yourself. We will let you in on a little secret (ssshhhh‚Ä¶) Here is a company most of our competitors use. Just connect with them yourself if you want to go that route and save yourself some money.
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.
Ok well, that was a lot, but once you get through the budget template, you will be well on your way to building an event budget 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!
In our next article, we will cover how to forecast your event revenue, so look forward to that soon! If you are interested in seeing firsthand how an investment in mobile bidding software can increase revenues for your event, schedule a demo below.