The Backwards Approach to Planning a Successful Fundraising Event

Forget guessing and hoping 🤔 —learn how to plan your next event with a clear financial framework.

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Let’s dive into the world of smart fundraising strategies and set your event up for success! 💡

Understanding the concept of the Profit First Method

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Planning a fundraising event can be quite an adventure, can't it?

Between juggling ticket sales, sponsorships, and silent auctions, it often feels like you need a magic formula to ensure success. 

Well, guess what?

There's a method that might just be the secret sauce you're looking for:

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"The Profit First Method"

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Now, before we dive into the nitty-gritty steps on how to plan a fundraising event using this method, let's get a grip on the basic concept. The Profit First Method is a game-changer in the world of business finance and event planning. 

Instead of the traditional way of calculating profit —where it's merely the leftover crumbs after all expenses are paid— this method flips the script.

As we explore this method, keep in mind that this isn't just about numbers; it's about changing how you think and plan. 

And trust me, once you get the hang of it, you'll wonder how you ever managed without it.

What is the Profit First Method?

Let's start with a quick question: How do you usually calculate profit? If you're like most people, you probably use the classic formula:

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“Sales - Expenses = Profit”

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This is what they teach in Business 101, right? But here's the thing—this formula makes profit seem like an afterthought, just whatever's left over after all expenses are paid. No wonder so many businesses struggle to maximize their profits!

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This method flips the traditional formula on its head:

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“Sales - Profit = Expenses”

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See the difference? By reordering the equation, the Profit First Method makes profit a priority, not an afterthought. Instead of hoping there's money left over, you decide on your profit first, then figure out your expenses from there.

So how does this apply to planning a fundraising event? 

Step 1: Set the Amount You Are Going to Raise

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Alright, let's get into the nuts and bolts of how to plan a fundraising event using the Profit First Method.

You might be thinking, “Isn’t setting a fundraising goal the same as setting a target amount?”

Actually, there’s a bit of a twist here. Traditional fundraising goals often feel like a hopeful number =>>> something you’d like to achieve after figuring out your costs. 

But with the Profit First Method, we’re flipping the approach.

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Here’s the deal: decide on the exact amount you want to raise before you do anything else. This isn’t a flexible number; it’s the precise target that will guide your planning. By determining this amount upfront, you’re making it your primary focus.

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For instance, if your goal is to raise $10,000, write it down and commit to it. This isn’t just a wish; it’s your new standard. Everything else in your planning process will revolve around reaching this number.

Every decision you make from 

• ticket pricing, 
• venue choices 
• to marketing strategies

will be influenced by this set amount.

Step 2: Determine Your Event Revenue

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Great, you’ve set your fundraising target.

Here’s where things start to get interesting. With your fundraising target in place, the next step is to figure out how much money you’ll be bringing in from various sources.

What sources of revenue will your event have? Common ones include:

• Ticket Sales
• Sponsorship
• Silent Auctions => If you’re holding an auction, estimate how much you might raise from it.
• Bar Sales => For events with a bar, this can be another revenue stream.
• Merchandise Sales: Selling event-related merchandise can add a nice boost to your total revenue.

Let’s say you’re planning an event with the following revenue sources:

‍Ticket Sales: $12,500 (125 tickets at $100 each

Silent Auction: $1,250

Merchandise Sales: $1,250

Now, add these figures together to determine your total Event Revenue. In this example, you’d be looking at $15,000 in total revenue.

So how does this fit into your planning? By determining your event revenue, you’re setting a clear picture of how much money you’ll have to work with. This helps you understand how much you can spend on your event while still reaching your fundraising target.

For example:

Event Revenue: $15,000

Amount You Want to Raise: $10,000

Subtract your fundraising target from your event revenue to find out your maximum expense budget:

$15,000 (Event Revenue) - $10,000 (Amount Raised) = $5,000 (Maximum Expenses)

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Knowing your revenue helps you plan your expenses smartly. You’re not guessing or hoping; you have a clear financial framework to work within.

Looking for tools to aid in your fundraising efforts? Check out our list of Free Fundraising Tools to streamline your planning process.

Step 3: Calculate Your Maximum Expense Budget

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With your fundraising target set and your expected event revenue determined, it’s time for the step where everything comes together.

Now deduct the amount you want to raise from your total revenue. This amount is what you can spend on the event. Using our example:

Event Revenue: $15,000

Amount to Raise: $10,000

Maximum Expenses: $15,000 - $10,000 = $5,000

Plan Your Expenses: With your maximum expense budget set, you can now allocate funds to various aspects of your event. This might include:

• Venue Rental
• Catering
• Entertainment
• Decorations
• Marketing and Promotion

By knowing that you have a $5,000 budget for expenses, you can make informed decisions on where to allocate funds. This prevents you from overspending and helps ensure that your fundraising target is met.

Why does this approach work?

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Here’s why this approach is effective:

Focus on Goals, Not Leftovers: This shifts your mindset from “I hope we raise enough” to “This is the amount we’re going to achieve.” It keeps you focused and motivated.
Strategic Spending: Knowing your maximum expense budget from the start helps you allocate resources wisely. 

Clarity and Control: By planning backward, you gain a clear understanding of your financial boundaries. 

Watch the complete video of this content

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Conclusion

Here’s a concise summary of how to apply this approach:

1. Set Your Fundraising Target: Decide on the amount you want to raise. For example, if you aim to raise $10,000, this becomes your goal.
2. Determine Your Event Revenue: Estimate the total revenue from all sources. Suppose you project $15,000 from ticket sales, sponsorships, and other streams.
3. Calculate Maximum Expenses: Use the following formula to find out how much you can spend:

Event Revenue - Amount to Raise = Maximum Expenses

$15,000 (Event Revenue) - $10,000 (Amount to Raise) = $5,000 (Maximum Expenses)

By using this method, you start with your target, calculate your revenue, and then establish a clear budget for expenses. This ensures you stay focused on your goal and manage your resources effectively, leading to a more successful and financially sound event.

Note: The Profit First Method. => This approach, inspired by Mike Michalowicz's book Profit First, flips traditional financial planning on its head.

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