When lavish parties really pay off
Is it okay for a charity event to cost a mint? Sure, goodwill hunters say, because it's a wise investment.
By AMY SCHERZER Times Staff Writer
Published September 7, 2007
Charity organizers say: Show me the money, and I'll show you a good time. While I'm at it, I'll teach you about our cause and funnel your dollars to where they are needed.
But what's the cost of black-tie galas that entertain and coax philanthropists to give to good causes - and is it worth it?
While those on the outskirts of high society may question the amount of money spent to raise money, event organizers see results in the millions. They say socializing for a cause motivates people to give more than they would through the mail.
By far the most successful fundraiser this year was the Magnolia Ball, a lavish gala that netted more than $2-million for cancer research.
"A signature event like the Magnolia Ball is as much a marketing tool as moneymaker," said Larry Feder, vice president of the H. Lee Moffitt Cancer Center and Research Institute Foundation. "People hear a testimonial, see a video and they get engaged with the organization and want to learn more."
The Moffitt Foundation spent nearly $600,000 to entertain 830 guests at the 14th annual Magnolia Ball on May 5. Expenses included grilled filet of beef and seared lobster, the music of Huey Lewis & the News and the FedExing of the auction booklet to patrons to preview.
Was it worth it?
"We took in $3.2-million on that investment," Feder said, a net return of $2.6-million, a Tampa Bay gala record that surprised the veteran fundraiser.
Feder had primed several benefactors beforehand, asking them to respond to a matching challenge. "Catalysts," he calls them.
It turned out the catalysts weren't needed at this year's ball. Others stood up to make the first pledges, inspiring an electric round of giving.
In minutes, $1.7-million was promised, which came to $2.1-million with matching funds.
"Seeing people give money captured their imagination," Feder said.
On top of that, $1.1-million came through guests' $1,000 tickets, auction buys and sponsors.
"That's a 20 percent gross-to-net ratio," Feder said, well within the industry's standard, which calls for limiting event expenses to less than 30 percent per dollar raised. Known as an efficiency ratio, the number is determined by dividing the amount spent by the amount the charity actually receives.
Still, a $600,000 outlay?
"Tampa loves a good party," said Janet Hooper, vice president of development for the Boys & Girls Club of Tampa Bay. "They may not even know the organization, but if they have a chance to rub elbows with other leaders in the community, they'll go."
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To play up the see-and-be-seen aspect, organizers offer access to celebrity emcees or influential sponsors.
"It's a social connection that writing a check doesn't give them," Hooper said.
Professionals and politicians elevate their community standing by attending charitable events. Others use them as their social network, sometimes popping into more than one party a night.
In short, giving is good PR.
Seeing your picture in local society pages? Icing on the cake.
"There's no doubt, people feel they're getting something for helping the organization and getting the opportunity to mingle with people of like interests," said donor Suzette Berkman, who is also the chairwoman of many charity events.
Berkman prefers large events at reasonable prices to small turnouts at a higher ticket.
"It exposes twice the number of people to the charity," she said.
Well-established and well-heeled chairmen are in demand for the biggest job: leaning on business and social contacts to recruit corporate sponsorships and sell corporate tables.
The American Heart Association struck gold when philanthropists John and Susan Sykes agreed to co-chair the 2006 Tampa Bay Heart Ball. Tapping Sykes Enterprises and Sykes Foundation as major sponsors, the couple nearly tripled the gala's previous proceeds with a net of $870,000.
Luring Busch Gardens to sponsor the entertainment at the 2006 Lion King Storybook Ball was worth thousands of dollars to Ronald McDonald House Charities. Patrons enjoyed the cast of Katonga, African drummers and assorted jungle animals, said Janice Davis, executive director.
Also donated: top-shelf liqueur and wine, flowers and decorations, and program printing, which helped keep expenses to 26 percent of the gross.
"In-kind donations and auctions are critical to the bottom line," Davis said.
A local doctor purchased and donated two tickets on the luxurious Orient Express and first-class airfare to get there, which was auctioned for $25,000 - pure profit.
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Putting on an event like the Cattle Barons' Ball "multiplies money from people who might otherwise not donate at all," said Gloria Giunta, chairwoman and originator of Tampa's annual blue jeans affair sponsored by the American Cancer Society.
"I can turn a $1,000 check into $10,000," she said, through auctions, games, special appeals and raffles. "If they have a good time, they'll come back and maybe their donation will grow."
Expenses were kept to 14.5 cents per dollar, she said, for a net of $846 per guest, well below the agency's cap of 20 cents per dollar.
"That's unheard of, but I'd be hogtied if I went over," she said.
But successful fundraisers don't always start out that way.
Figure on three years before you gauge the effort vs. the return of a fancy fundraiser, Davis said. After that, start asking questions.
"If you're missing benchmarks and coming up short after the third annual event, you're just throwing a party," Davis said.
Amy Scherzer can be reached at firstname.lastname@example.org or 813 226-3332.
[Last modified September 7, 2007, 07:57:30]
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