Wait a minute...math? What happened to the other $3500? Oh, that's to pay the hotel for the fancy dinner that they serve to the supporters during the fundraising gala.
So why don't I just go online and donate the $5000 directly to the organization?
That's a concern I have about galas. In the US (at least from what I've seen) tickets to such charity events cost a set fee, let's say $100, of which attendees are allowed to claim a tax deduction of a portion of it, let's say $20. So what that's saying is that of the $100, $80 of which went towards paying for the fundraiser and only $20 is actually going towards the cause.
I've read a few articles that talk about how throwing a good fundraising actually costs more but sometimes there are title sponsors that pitch in for the event so that more of the individual attendees' money can go towards their cause.
I'm personally not a fan of going to a lavish event in which only a portion of my money goes towards helping people. I feel like it is a way to dress up and feel like you're accomplishing something without actually doing anything. So kinda like watching a TED Talk. But I've spoken to a few people that work at non-profits and such events do help draw attention and get commitments from people.
This sort of this is to get people who wouldn't ordinarily donate. For example, I volunteered with an animal shelter in college and during finals week we would have a "puppy cuddle" event to bring in a bunch of dogs and the students get to hang out with them for $5+ donation. It cost money for the permits and safety and everything, but it was worth the expense because lots of people came and donated who would never have done it on their own. What college kid randomly donates to an animal shelter?
Galas are the same thing - just for people that like fancy living instead of puppies.
You mean like the CharityWorks decadence? They came to a pretty sticky end:
https://www.washingtonpost.com/lifestyle/style/the-fabulous-charityworks-galas-raised-millions-for-good-causes-over-the-years-then-something-changed/2016/09/06/9133091c-5420-11e6-bbf5-957ad17b4385_story.html?utm_term=.da2d7a4f3235The non-tax-deductible portion of a gala ticket has nothing to do with the cost of putting a gala on. It has to do with the market value of the food, travel, or meal received.
The margin on gala events can be well worth the time. But you have to pick a kind of event that actually appeals to the attendees, and you have to be intelligent about the costs as a small percentage of the estimated revenue. The image people have of fancy galas, with CharityWorks as an extreme example, are only cost effective if they're run in a sustainable way.
Not one human being has ever attended a charity gala with the intention of getting their money's worth in entertainment. Dollar for dollar, if you add up the cost of a CharityWorks bash and divide it by the number of attendees, you can throw a better dinner party with your friends at home and hire people to cater your event and serenade you with live music and fire dancing. People come to charity balls to be seen as power brokers within their domains by people whose opinion they think matters (i.e. to get their butts kissed while staying ahead of their rivals), and to have access to power brokers relevant to their domain (i.e. the strivers). There is no other purpose. Selling access to power works in places like Washington, D.C. where people get off on it, or you can also sell access to social prestige but that's very difficult to do unless someone with credibility is hosting it.
A model like that works in places where people get off on power and image and where such things can be monetized... nowhere else. It's a way to monetize social capital that isn't your own. Most charities and organizations never get that big or high-profile to advertise enough to become household names. Things like the viral ALS Ice Bucket Challenge or the We Are The World initiative (for the pre-Millenials among us) come along perhaps once a decade. They're almost impossible to replicate although Malcolm Gladwell and Nassim Nicholas Taleb made a bunch of money off of our collective desire to believe we could.
Now, back on Planet Earth, there are two ways to do fund raisers: you can monetize the labor of the Board, the volunteer pool, and other people connected to the charity (case in point: an animal sanctuary fundraiser described a few posts up). Or, you can monetize your social capital. The tipping point (to rip off Gladwell a bit) comes when you can monetize not just the social capital of the individuals directly involved with the charity but the reputation of the charity itself. Then you can have a situation where the returns exceed the expenses substantially even if you pay retail price for everything. That kind of situation is seldom sustainable. It will be a flash in the pan. Continued giving at that level exhausts the donor pool.
If I want to run an effective fund-raiser of the "gala" variety, I first consider whether I've got an organization with institutional social capital. If so, I look at the community *with whom* the social capital exists, and think about what people in that community believe constitutes "fun" and who the target community thinks is "important". If I can't line these things up on a shoestring budget, or at least on a fraction of the plausibly estimated revenue, I don't do a gala and focus instead on different kinds of fund raising. There are reliable ways to calculate how much money can be sustainably extracted from a group of people before it loses the desire to support the charity-- or indeed any charity at all.
Fund raisers work if and only if the person making the donation receives value proportionate to their donation. Puppy snuggles happen during exam season for a reason: a good pup-snuggle reduces stress.