The C.A.T.E Formula

How to Figure Out What Kind of Fundraising to Do, Based on the Resources You Have

by Katherine Wertheim, CFRE

Organizations have four basic resources: people, time, money and the story they have to tell. Every organization has elements of these four resources: perhaps you do not have a lot of money to invest in fundraising, but you have a lot of people involved. Or it’s just you and one other person who want to do fundraising, but you have time before you need to meet payroll. Or perhaps you don’t have any of these resources: there are still ways you can fundraise, but it will be more difficult.

Let’s go through each of these resources:

People
People are your #1 resource. The more people you have involved in your cause, the easier fundraising will be. There are types of fundraising you can do with fewer people, such as grantwriting and perhaps direct mail, but generally speaking, the more people you have involved, the better. And some kinds of fundraising are vastly more difficult without people involved, such as special events.

Time
Time is a terrific resource as well. You will do very different kinds of fundraising, based on the amount of time you have before you need the money. If you have to meet payroll this week, you’ll be on the phone raising money. If you have three to six months, you can write grants or create larger special events.

Money
Some organizations do have money to invest in fundraising. You should have a budget set aside, if you don’t now. Consider a formula like this: Fundraising should be about one-third of your non-program budget. If your budget is $200,000, and you are spending 75% on programs, or $150,000, your management expenses would run about $33,000, and your fundraising would be about $17,000. Now, there are games you can play with these figures, of course, which is why no one should rely on percentages to decide whether to support a program. (Games include putting your fundraising costs under education for example. Your fundraising might indeed be educational, but it’s the kind of thing that a larger organization can do because they have the fancier accountants.) But if you don’t have a fundraising budget, there are still plenty of ways you can fundraise.

Story to tell
The story you have to tell is an integral part of fundraising. If you have a good story to tell, things you’ve accomplished, it makes fundraising much easier. It’s hard to disguise your failures: somehow the donors know if you’re not accomplishing what you set out to do.

Now, how here’s how to use a formula to decide what kind of fundraising to do, based on what resources you have.

The C.A.T.E. Formula
The C.A.T.E. Formula stands for COST, AMOUNT, TIME and EFFORT. Cost is the total cost: you should include staff time, although many people don’t. Amount is the gross amount raised: subtract costs and you have your net revenue. Time is the number of days between deciding to do the fundraising and having the money come in. Effort is the number of people involved.

So, let’s consider a couple of types of fundraising: special events and grant writing. A special event will have costs that run about one-third of the gross raised. It might take six months or more to arrange. A lot of people have to be involved in ticket sales. However, you can raise a large amount of money this way.

Grant writing, conversely, takes the effort of one or two people. The cost is very low, and the amounts can range from $1,000 to $50,000 or more.
So, is the answer to do grantwriting and not special events? Not necessarily. In this case, grant writing would be good if you have few people involved and not much money. However, there are things that the formula doesn’t consider. For example, more people understand how to throw a party than understand how to write grants. The special event gets your volunteers involved in fundraising. It makes it easier to get corporate contributions.

Also, grant writing has some problems. Foundations tend to like you for about three years, and then they want to see a new program or project. Some organizations may not have a lot of foundations that will support them, based on your issue or where you’re located. And, there are only limited numbers of foundations, while there are many more individuals from whom you can raise money. Then, people have emotional feelings about fundraising, and may have an easier time asking for money for an event than other kinds of fundraising. Still, if you have few people to do fundraising, but some time before the money is needed, you definitely want to include grant writing in your fundraising mix.

Obviously, there are more factors to consider than just the resources you have. A mix of fundraising will help you reach the most people who can support your cause.

One final piece of advice: spend as much time as you can drafting people to help you with your cause. Of the resources listed, the greatest of these is people. If you have enough people involved, it’s like having a lever long enough to move the world!