Peer-to-Peer Event Financial Reporting 101
How do you do financial reporting for your peer-to-peer event?
Often when collaborating on strategy for events, we get into bookkeeping territory. A typical question sounds like this, “When determining costs of grassroots events, like a walk or a 5K, do you include staff, event costs, or both?” On the face of it, it’s a pretty straightforward question. But it’s not surprising that we hear this a lot, because there is no standard method of reporting across the nonprofit industry. This is true even for basics like direct and indirect costs.
When examining organizations’ financials, you will see that sometimes event t-shirts appear in the indirect category, though they are a direct expense. That the expense is variably categorized is interesting given it is often the largest direct expense. The following is what we know based on experience as articulated by Vickie LoBello, Turnkey’s lead strategist.
Typically, organizations start with direct and indirect costs, which is sometimes called the “double net.” Optimally, you want to look at “triple net,” which includes staffing. Putting staff costs into the equation gives you a much better picture of how much revenue is really reaching the organization, plus it helps to inform your decisions about what type of staffing model is required for the events. A staffing model can vary widely, from 1:1 (one staff person, one event) to 1:110, (for example, St. Baldrick’s) or even distance support, where volunteers only are ever on-site.
When the scope of our work is inclusive of recommendations on staffing considerations, we build out triple net and recommendations for changes to achieve greater ROI.
Take the American Cancer Society for example. Here’s how it looked for Relay For Life events during the time we worked with them, during the 1990s and 2000s:
- Direct 20 percent (higher for younger events)
- Indirect 3 percent
- Staff Costs – At the time of transformation (a massive organizational realignment effort) the minimum staff/event ratio was one manager for $250,000 in revenue. The chart below shows the $250,000 baseline. Most staff carried more than that amount of revenue in their portfolio. Note: Managers and upper-level staff are not included in triple net nor is benefits package.
Direct Costs are the costs of implementation at the event itself:
- Recognition Items
Indirect costs usually fall into the paper/promotion type of categories:
- Costs for meetings leading up to day of event
- Banking/processing fees
Direct and indirect expenses are really much more complicated than described here. Yes, there are financial requirements of nonprofits, however, to say there is “wiggle room” is an understatement; you can drive a truck through the wiggle room. The best thing to do is to establish rules for reporting and make them known to the staff. The results will be better decision-making and fewer surprises.
Katrina VanHuss is the CEO of Turnkey, a U.S.-based strategy and execution firm for nonprofit fundraising campaigns. Katrina has been instilling passion in volunteer fundraisers since 1989 when she founded the company. Turnkey’s clients include most of the top thirty U.S. peer-to-peer campaigns — Susan G. Komen, the Cystic Fibrosis Foundation, the ALS Association, the Leukemia & Lymphoma Society, as well as some international organizations, like UNICEF.
Otis Fulton is a psychologist who joined Turnkey in 2013 as its consumer behavior expert. He works with clients to apply psychological principles to fundraising. He is a much-sought-after copywriter for nonprofit messaging. He has written campaigns for St. Jude’s Children’s Research Hospital, The March of Dimes, the USO and dozens of other organizations.
Now as a married couple, Katrina and Otis almost never stop talking about fundraising, volunteerism, and human decision-making – much to the chagrin of most dinner companions.
Katrina and Otis present regularly at clients’ national conferences, as well as at BBCon, NonProfit Pro P2P, Peer to Peer Forum, and others. They write a weekly column for NonProfit PRO and are the co-authors of the 2017 book, "Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising." They live in Richmond, Virginia, USA.