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Fundraising costs in the United States
In the United States, nonprofits above a certain size must file a Form 990 return with the IRS. This simple form contains only modest amounts of information and a high proportion of nonprofits show no fundraising cost at all, even where they show high levels of income from donors.
Research by Cordes and Wilson (2000) identified that 59% of nonprofits receiving direct public contributions did not report any fundraising expenses at all, including nearly a quarter of those receiving more than $5m in contributions!
A cynic might wonder how such sums of money were raised in the absence of individuals being asked.
It seems remarkable that such sums of money were raised at no cost - no costs involved in asking individuals to give and no costs for collecting the gifts, paying them in and acknowledging them! Form 990 and hence studies based on its data are therefore of severely limited use and should be interpreted with caution.
In a further recent study, the Council for Advancement and Support and Education Study concluded from a study of 51 Colleges and Universities that the mean cost of fundraising was 16 cents on the dollar, the median 11 cents.
Against this backdrop a variety of bodies now stipulate ‘acceptable’ benchmarks of performance with the Council of Better Business Bureaus and the Philanthropic Advisory Service currently specifying a 35% limit on FR costs.
In a further recent study, the Council for Advancement and Support and Education Study concluded from a study of 51 Colleges and Universities that the mean cost of fundraising was 16 cents on the dollar, the median 11 cents.
Against this backdrop a variety of bodies now stipulate ‘acceptable’ benchmarks of performance with the Council of Better Business Bureaus and the Philanthropic Advisory Service currently specifying a 35% limit on FR costs.
