Introduction
Have you asked yourself ‘should my nonprofit have a gala?’ If you are wondering the answer to this question, it is important to consider the positives and negatives. Planning a nonprofit gala and executing it successfully are very difficult tasks. Having been through this process, we will try to assist you in considering the good, the bad, and the ugly. At the end of the day, nonprofit galas come down to two things: a large investment of time and money.
Investment – you have to spend money to make money
Will it be profitable? This is probably the scariest part of hosting a gala for a nonprofit organization. No one wants to invest money into an event, then not be able to sell tickets, draw a crowd, and end up in the black. Here’s a few considerations and tips to help you maximize your gala profit:
In-Kind Donations – before you go out and start writing checks for food, lighting, sound, space, flowers, and printing services for invites, ask all vendors if they would be willing to provide services for free. Often, even if you do not get the services for free, you can get them at a significant discount. The service provider can claim an in-kind donation for whatever discount they provide you under the fair market value.
Table Sales – individual ticket sales can be difficult. Organizations are often in a better position to purchase tickets in bulk than individuals are. Set a slightly discounted price to sell an entire table at your event to an organization.
Sponsors – consider asking community partners if they may be interested in sponsoring your event. You can offer to put their logo on your invitation, or a link to their website on your event page. You can also offer various levels of sponsorship if you have interested organizations with a wide array of funding ability.
Should I have an auction? There are many things to consider here. Can you get enough worthy items for an auction? Do you have time to gather the items? Even if you get items, will the bids be high enough (and profitable enough) to justify the work? Here’s a few additional questions to ask as you decide
- Fair Market Value Considerations – when a person bids on an item and wins it at a charity auction, they may be able to claim a tax deductible donation for any amount over the fair market value of the good. Some items are fairly simple to assess fair market value (concert tickets, museum entry, goods regularly sold online, etc.). Many donated items will be unique and difficult to assess fair market value (paintings, autographed items, dinner with a famous person, etc.). We have had to assess the fair market value of the following items: a board member’s house to be used as a wedding venue; a day on a board member’s boat; and an appearance in a major motion picture. The more items you have and the more unique they are, the more difficult this task becomes. Keep this in mind when deciding whether to have an auction.
- Live vs. Silent – do you have a compelling, interesting, well-spoken volunteer or board member to host a live auction? Can they rally the troops to increase bids? If you aren’t 100% sure, you may want to start with silent auction in year one. A terrible live auction host will not only reduce the bids on your items, it will suck the life right out of your event. You may also want to consider whether your guests would be the type to participate in a public showing of their net worth. Silent auctions tend to be much easier, with a simple sign-up sheet next to an item where people write in their bids throughout the night. This will not intrude on your program and will allow guests to fully evaluate each of the auction items. Of course, you could always do both. Start your event with a silent auction and bring the goods to the stage and use the highest silent auction bid as a starting point.
- Auction bidding software – recently, we have considered purchasing software to help organize and execute auctions at the galas we help put together. One Cause (formerly Bid Pal) has an impressive sounding product though we have no experience with it. The software allows your bidders to enter credit card info, get notifications when their bid falls, and place bids from anywhere they have internet.
Investment – you have to invest a ton of time
Who is going to organize and plan the gala? If you have ever planned a wedding, you know planning large events can be very time consuming. A gala is, in many ways, very similar to planning a wedding. Someone will need to: view and book a venue, test and try food options, select an audio visual company, collect auction items and calculate the fair market value (see above), develop a save-the-date and invitation, sell tickets, come up with a program for the night, recruit people to participate in your program, and successfully execute the entire thing.
Who is going to come? This may not be a situation where “if you build it they will come.” If you are unsure whether people will attend your event, you probably want to start small and grow year-over-year. One great place to start is to ask your board to sell a certain number of tickets. Whatever they don’t sell they are responsible for purchasing. This will encourage them to invite their friends, and, if they are not able to sell the tickets, they will likely give the tickets to their friends anyway. Also, as you go around collecting auction items, invite community partners and friends to send a representative. Invite civic leaders and influential community members.
Lastly, you need to think about whether planning and executing a gala takes away from your mission. Are you accomplishing less because you are spending more time fundraising? Schedule G of your nonprofit’s tax return tells the world how much you spend to fundraise. Here’s a breakdown of various events in the Cincinnati area, including gross revenue and expenses. We have to wonder – is there really a point to hosting an event if you are only taking home 6 cents of every dollar?
If you are thinking about starting a gala, hopefully you will take into account all these considerations. At the end of the day, events can be fun, successful, fundraising ventures. But, they can also leave your organization tired, broke, and winding down.
