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.
Otis spent most of his career in the education industry, working at the psychometric research and development firm MetaMetrics Inc., Pearson Education and others. Since 2013, he has focused on the nonprofit sector, applying psychology to fundraising and donor behavior at Turnkey. He is the co-author of the 2017 book, ”Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising” and is a frequent speaker at national nonprofit conferences. With Katrina VanHuss, he co-authors a blog at NonProfit PRO, “Peeling the Onion,” on the intersection of psychology and philanthropy.
Otis is a much-sought-after copywriter for nonprofit fundraising messages. He has written campaigns for UNICEF, St. Jude’s Children’s Research Hospital, March of Dimes, Susan G. Komen, the USO and dozens of other organizations. He has a Ph.D. in social psychology from Virginia Commonwealth University and a Bachelor of Arts from the University of Virginia, where he also played on UVA’s first ACC champion basketball team.
Katrina VanHuss has helped national nonprofits raise funds and friends since 1989 when she founded Turnkey. Her client’s successes and her dedication to research have made her a sought-after speaker, presenting at national conferences for Blackbaud, Peer to Peer Professional Forum, Nonprofit PRO, The Need Help Foundation and her clients’ national meetings. The firm’s work is underpinned by the study and application of behavioral economics and social psychology. Turnkey provides project engagements, coaching, counsel and staffing to nonprofits seeking to improve revenue or create new revenue. Her work extends into organizational alignment efforts and executive coaching.
Katrina also regularly shares her wit and business experiences on her and Otis Fulton's NonProfit PRO blog “Peeling the Onion.” When not writing or researching, Katrina likes to make things — furniture from reclaimed wood, new gardens, food with no recipe. Katrina’s favorite Saturday is spent cleaning out the garage, mowing the grass, making something new, all while listening to loud music by now-deceased black women, throwing in a few sets on the weight bench off and on, then collapsing on the couch with her husband Otis to gang-watch new Netflix series whilst drinking sauvignon blanc.
Katrina grew up on a Virginia beef cattle and tobacco farm with her three brothers. She is accordingly skilled in hand to hand combat and witty repartee — skills gained at the expense of her brothers. Katrina’s claim to fame is having made it to the “American Gladiator” Richmond competition as a finalist in her late 20s, progressing in the competition until a strangely large blonde woman knocked her off a pedestal with an oversized pain-inducing Q-tip. Katrina’s mantra for life is “Be nice. Do good. Embrace embarrassment.” Clearly she’s got No. 3 down.