The Myth of Free Government Money
January 14th, 2012
For nonprofits, government money is appealing, but might not help the bottom line: Turns out that taking government money is inefficient for a non-profit.
For every $1,000 given through a government grant, nonprofits reduced their investment in other forms of fundraising by an average of $137. That, in turn, meant an average drop of $772 in gifts from private donors. In other words, that $1,000 check from the government netted only $410, on average, because grant recipients reduced how much they tried to raise money through other means.
What’s interesting is how efficient their fundraising is normally. Look at those numbers again – a $137 investment in fundraising was responsible for $772 in donated dollars. That’s an ROI of 463%. Wow.