Cost to Raise a Dollar by Channel: A Nonprofit Leader's Guide

Most nonprofit boards know exactly how much their organization raised last year. Far fewer know what it cost to raise it, and almost none know what it cost channel by channel. That gap matters, because a single blended efficiency number can disguise a development operation that is pouring its energy into the least productive activity it runs. The Association of Fundraising Professionals and the Fundraising Effectiveness Project have spent years documenting that mature programs spend roughly $0.20 to $0.35 to raise a dollar overall, but the word "overall" is doing heavy lifting. Underneath that blended figure sit channels ranging from genuinely cheap to genuinely ruinous, and a leader who manages to the average is managing to a number that does not exist on any actual line of the budget.

What the Metric Actually Measures

Cost to raise a dollar is deliberately simple: take everything you spent on fundraising in a period, including staff salaries allocated to development, and divide it by everything you raised. A result of $0.25 means a quarter spent to bring in each dollar. The simplicity is also the trap, because the inputs are easy to undercount. Most organizations capture the obvious direct costs, the mailing, the event venue, the platform fees, and quietly omit the largest line of all: staff time. A gala that looks like it cost $0.30 per dollar on direct expenses often costs double that once you honestly load in the months of development-director and event-coordinator hours it consumed. The discipline that makes this metric useful is counting time as money, because in fundraising it almost always is.

The Channel Spread Is Enormous

Break the blended figure apart and the channels separate into a clear hierarchy. At the cheap end sit retained individual donors and monthly sustainers, where the relationship is already built and the marginal cost of the next solicitation is an email. Online giving from existing supporters routinely runs under $0.10 per dollar in AFP-aligned benchmarking. Bequests and planned gifts are cheaper still on a pure ratio basis, though they arrive unpredictably. In the middle sit grants, where the cost is mostly the writer's time against a known award size, and lapsed-donor reactivation, which is cheaper than fresh acquisition because the relationship already existed.

At the expensive end sit the two channels that dominate most galas-and-mailings calendars: special events and first-year donor acquisition. Events frequently cost $0.50 or more per dollar raised once staff time is counted, and the Fundraising Effectiveness Project has shown for years that acquiring a brand-new donor often costs as much as or more than that donor's first gift returns. This is the central, counterintuitive fact of fundraising economics: the activities that feel most like fundraising, the big night and the acquisition push, are usually the least efficient on their own, while the quiet work of keeping and upgrading existing donors is where efficiency actually lives. The fuller treatment of why retention dominates the math is in our analysis of donor retention economics.

Why You Should Not Just Cut the Expensive Channel

The naive response to a $0.60-per-dollar gala is to kill it. Sometimes that is right; often it is a mistake, because cost to raise a dollar measured in isolation ignores what a channel feeds into the rest of the program. A gala that loses on its own ratio may be the organization's primary engine for recruiting new donors who then convert to cheap-to-retain monthly givers, or for cultivating the relationships that close as major gifts a year later. Acquisition is supposed to look expensive in the year it happens, because its entire return is deferred into the retention and upgrade years that follow. Judging it on year-one efficiency is like judging a customer-acquisition campaign on first-month revenue: the number is real but it answers the wrong question.

The right evaluation traces each channel through to the donors and pipeline it produces. An event that recruits 80 first-time donors should be credited not only with its gala-night net but with the lifetime value of the share of those donors who stay, a connection we develop in our piece on donor lifetime value. A channel that raises money but feeds nothing, recruits no new relationships, cultivates no upgrades, is the one whose standalone cost actually deserves scrutiny.

Retention Is the Master Lever

Because acquisition is recovered only across the donors who give again, retention quietly controls the blended cost to raise a dollar more than any other variable. Picture two organizations spending identically to acquire 1,000 new donors. The first retains 20% into year two; the second retains 40%. By year three the second organization has roughly twice the giving base from the same acquisition spend, which means its acquisition cost is spread across twice as many future gifts, which means its blended cost to raise a dollar is materially lower, with no change whatsoever to its marketing budget. This is why development veterans treat the second gift as the most valuable conversion in fundraising and why stewardship, not acquisition, is where the efficiency gains hide. An organization unsure where its own stewardship leaks can grade itself in minutes with the Donor Retention Grader and see which practice sits furthest below peer norms.

Measuring It Without a Finance Department

None of this requires cost-accounting software. A two-staff organization can build a usable channel analysis with a spreadsheet and an honest afternoon. For each channel, record two numbers: the direct expense and an estimate of staff hours multiplied by a loaded hourly cost. Divide the sum by the dollars that channel raised. The first time a small shop does this, the result is almost always the same revelation, the year-end email and the monthly program return several dollars per hour of effort while the signature event returns cents, and that comparison reshapes the calendar more effectively than any consultant's slide deck. The point is not precision to the penny; it is direction, and direction is visible even with rough inputs.

Where cost to raise a dollar by channel becomes genuinely strategic is in deciding the mix, not just auditing the past. Once you know your own per-channel economics, the question becomes how much of the program each channel should carry, which is the funding-mix problem we lay out in balancing grants, individual giving, and events. For fundraising consultants, CRM vendors, and capacity-building firms advising on exactly these tradeoffs, the diagnosis doubles as lead capture: an executive director who has just seen her channel costs laid out is a far warmer conversation than a cold proposal request, the pattern documented on the lead generation tools for nonprofits page. For the nonprofit itself, the conclusion is one sentence: you cannot manage the efficiency of a development operation you have only ever measured in gross dollars.

Flip the Ratio: Return on Fundraising Investment

Cost to raise a dollar has a mirror image that some boards find easier to act on: return on fundraising investment, which simply inverts the ratio to express how many dollars each dollar of fundraising spend brings back. A channel that costs $0.25 to raise a dollar is returning four dollars for every one invested; an event that costs $0.60 is returning less than $1.70 per dollar spent. The two metrics carry identical information, but the framing changes the conversation, because a board that hears a year-end appeal returns four-to-one and a gala returns under two-to-one immediately grasps the relative productivity in a way that two overhead-flavored cents-per-dollar figures sometimes obscure. The inversion is also the language major-gift work speaks most naturally, since a cultivated relationship that yields a six-figure gift for the cost of a development officer's time can return ten or twenty dollars for every dollar invested, an efficiency we trace in major-gift economics. Whichever direction a leader prefers to read it, the discipline is the same: compute it by channel, include staff time, and let the comparison rather than a single sector average drive where the next hour of development capacity goes.

The Time-Horizon Fix for the Acquisition Distortion

The single largest measurement error in cost to raise a dollar is the one nobody intends: judging acquisition on a single year. Because a brand-new donor frequently costs as much to recruit as their first gift returns, any one-year snapshot makes acquisition look like a money-loser and makes an organization tempted to gut the very channel that feeds its future base. The fix is to measure acquisition on a multi-year horizon that matches when its return actually arrives. Spread the first-year acquisition cost across the full stream of gifts the recruited donors give over their retained lifespan, and a channel that looked ruinous in year one often reveals a perfectly healthy blended cost once the second, third, and fourth-year gifts are counted, the lifetime-value logic we develop in donor lifetime value. The practical method is to keep two distinct figures rather than one: a near-term cost to raise a dollar for the channels whose return is immediate, such as renewing existing donors, and a lifetime-adjusted cost for acquisition channels whose return is deferred. Collapsing both into a single annual number is what produces the recurring strategic mistake of starving acquisition to flatter this year's ratio, and separating the time horizons is what keeps the metric honest.