What Fundraising Expenses Should Be Included in ROI? (2026 Guide)

Calculating return on investment is one of the most important things your nonprofit can do to understand whether your fundraising efforts are actually working. But here is the catch: your ROI number is only as accurate as the expenses you include in the calculation. Leave out hidden costs like staff time or software subscriptions, and you may believe a campaign is profitable when it is actually losing money.

In this guide, I will walk you through exactly what fundraising expenses should be included in ROI so you get a true picture of what every dollar raised actually costs your organization. We will cover the ROI formula, every category of direct and indirect costs, how to value staff and volunteer hours, a step-by-step worked example, and the benchmark numbers that separate healthy campaigns from money pits.

Whether you are a development director, a nonprofit CFO, or a board member trying to make sense of the numbers, this breakdown will give you a framework you can apply to every campaign you run.

What Is Fundraising ROI?

Fundraising ROI measures the financial return your organization gets from its fundraising efforts by comparing the revenue generated against the total costs incurred. It tells you, in plain numbers, whether a campaign was worth the resources you poured into it.

The standard fundraising ROI formula is straightforward:

ROI = (Revenue − Total Costs) ÷ Total Costs × 100

For example, if your gala raised $50,000 and cost $20,000 to produce, your ROI would be: ($50,000 − $20,000) ÷ $20,000 × 100 = 150%. That means you generated $1.50 in net revenue for every $1 spent.

A closely related metric is Cost Per Dollar Raised (CPDR), which flips the calculation: Total Costs ÷ Revenue. A CPDR of $0.20 means it costs you 20 cents to raise each dollar. Many nonprofit finance professionals track CPDR alongside ROI because it is easier to communicate to board members and donors.

The key distinction to understand before we go further is gross revenue versus net revenue. Gross revenue is the total amount donated. Net revenue is what remains after you subtract all fundraising costs. ROI should always be calculated using accurate cost data, not just the obvious out-of-pocket expenses.

Fundraising Expenses to Include in ROI

This is where most nonprofits get tripped up. The question of what fundraising expenses should be included in ROI has a simple answer: include everything that would not have been spent if the campaign did not happen. That means direct costs, indirect costs, and the value of human time.

Here is a comprehensive breakdown of the expense categories you should be tracking:

Direct Campaign Costs

Direct costs are expenses tied specifically to a single campaign or fundraising activity. These are usually the easiest to identify because they show up as line items in your accounting software.

Marketing and communications: printing and design for direct mail pieces, postage, creative agency fees, copywriting services, and promotional video production.

Digital and online: online advertising spend (Google Ads, social media ads), email marketing platform fees tied to the campaign, landing page hosting, and payment processing fees from your donation platform.

Event-specific costs: venue rental, catering, audio-visual equipment, entertainment, decorations, printed programs, name badges, and event staffing (registrations, security, cleanup).

Phone and peer-to-peer: phone-a-thon costs including call center services, dialer software, and script development, plus peer-to-peer platform fees and participant incentive items.

Indirect and Overhead Costs

Indirect costs are shared expenses that support fundraising but are not tied to one specific campaign. Many organizations skip these, which inflates their ROI numbers and hides the true cost of fundraising.

Software and technology: your CRM or donor database subscription, email marketing platform base fees, fundraising event software, and analytics tools. Allocate a portion of these costs to each campaign based on usage.

Office and facilities: a percentage of rent, utilities, and office supplies that corresponds to the time staff spend on fundraising activities.

Professional services: legal fees for reviewing sponsorship contracts, accounting costs for processing donations, and audit costs attributable to fundraising revenue.

Training and development: fundraising certifications, conference attendance, and professional development for development staff.

Staff Time and Labor

This is the single most undercounted expense in nonprofit ROI calculations. Every hour a staff member spends planning, executing, or following up on a campaign is a real cost, even if it does not generate a separate invoice. I cover the valuation methodology in detail in the next section.

In-Kind Donations and Materials

If a local business donates catering for your gala, that food still has real value. If a volunteer designer creates your campaign brochure pro bono, that design work has a market rate. Including the fair market value of in-kind donations in your ROI calculation gives you a more accurate picture, even though no cash changed hands.

Forum discussions from the nonprofit community confirm this is a persistent pain point. Many small organizations report that they list administrative and fundraising costs as zero on financial statements because they have no system for tracking these shared expenses, which makes their ROI numbers meaningless.

Direct vs Indirect Fundraising Costs

The distinction between direct and indirect costs matters because it affects how you allocate expenses across campaigns and how watchdogs like Charity Navigator evaluate your efficiency.

Direct costs are traceable to a specific fundraising activity. If you run a direct mail campaign, the design fees, printing costs, and postage are all direct costs. If you host a golf tournament, the green fees, catering, and prizes are direct costs.

Indirect costs are shared across multiple activities. Your development director’s salary supports every campaign they touch. Your donor database subscription powers every fundraising channel. Your office rent houses every function of the organization.

The standard approach to handling indirect costs is allocation. Here are three common methods:

1. Percentage of time: If your development director spends 40% of their time on a specific campaign, allocate 40% of their salary to that campaign’s costs.

2. Percentage of revenue: If a campaign generates 25% of total fundraising revenue, assign 25% of shared overhead costs to that campaign.

3. Activity-based costing: Track specific activities (meetings, calls, emails) and assign costs based on actual usage. This is the most accurate but also the most labor-intensive.

Pick one method and apply it consistently across all campaigns. Switching methods from year to year makes trend analysis impossible and undermines board confidence in your numbers.

How to Value Staff and Volunteer Time

Staff time is often the largest fundraising expense that goes uncounted. If your executive director spends 20 hours organizing a gala and you do not include that time in your costs, your ROI calculation is fiction.

For paid staff, the calculation is straightforward. Take the person’s fully loaded hourly rate, which includes salary plus benefits and payroll taxes, and multiply it by the hours spent on the campaign. A development manager earning $60,000 per year with 25% in benefits has a loaded rate of roughly $37.50 per hour. Twenty hours of gala planning adds $750 to your costs.

For volunteer time, use the Independent Sector’s estimated value of volunteer time, which is updated annually. For 2026, the estimated national value is approximately $33 per hour. If 10 volunteers each contribute 15 hours to your fun run, that is roughly $4,950 in donated labor that should be reflected in your calculation.

If a volunteer provides specialized professional services, such as legal work, graphic design, or accounting, value their time at the market rate for that profession in your area. A pro bono attorney who would normally charge $250 per hour should be counted at that rate, not at the general volunteer rate.

Some nonprofits choose to report two ROI figures: one that includes the value of donated labor and one that excludes it. This gives leadership both the cash-only picture and the full-cost picture, which is the most honest approach.

Step-by-Step ROI Calculation Example

Let me walk you through a real-world calculation using a mid-sized nonprofit’s annual fundraising gala. This example uses round numbers so you can follow the logic easily.

Step 1: Gather your gross revenue. The gala raised $80,000 through ticket sales, sponsorships, and a live auction.

Step 2: List all direct costs. Venue rental: $8,000. Catering: $15,000. Audio-visual: $3,500. Printing and invitations: $2,000. Auction items not donated: $1,500. Entertainment: $2,000. Total direct costs: $32,000.

Step 3: Add indirect costs. CRM allocation: $500. Portion of development director salary (40 hours at $45/hour): $1,800. Executive director time (15 hours at $60/hour): $900. Office overhead allocation: $300. Total indirect costs: $3,500.

Step 4: Add in-kind donations value. Donated catering (partial): $4,000. Volunteer decorator time (20 hours at $30/hour): $600. Total in-kind value: $4,600.

Step 5: Calculate total costs. $32,000 + $3,500 + $4,600 = $40,100.

Step 6: Apply the formula. ($80,000 − $40,100) ÷ $40,100 × 100 = 99.5% ROI. Your CPDR is $40,100 ÷ $80,000 = $0.50, meaning it costs 50 cents to raise each dollar.

Without including indirect costs and in-kind value, your ROI would have looked like 150% and your CPDR would have appeared to be $0.40. The full-cost picture reveals that this gala is borderline and may need restructuring.

What Is a Good Fundraising ROI?

Benchmark numbers help you contextualize your results, but they vary significantly by fundraising method. A ROI that looks weak for a major gifts program might be perfectly acceptable for a special event.

Here are general benchmark ranges based on industry data:

Major gifts: ROI of 300% to 900% (CPDR of $0.10 to $0.25). These campaigns have high upfront relationship investment but very low marginal costs per gift.

Direct mail (acquisition): ROI of 0% to 50% (CPDR of $0.67 to $1.00). Acquisition mailings often lose money or break even in year one, with returns coming through donor retention over time.

Direct mail (renewal): ROI of 150% to 400% (CPDR of $0.20 to $0.40). Renewing existing donors is far more cost-effective than acquiring new ones.

Email and digital campaigns: ROI of 300% to 700% (CPDR of $0.12 to $0.25). Low marginal costs make digital strong, though acquisition costs can be higher.

Special events: ROI of 50% to 200% (CPDR of $0.33 to $0.67). Events are expensive to produce and typically have the lowest ROI, though they provide community engagement and brand visibility that pure fundraising metrics do not capture.

Grant writing: ROI of 400% to 1000%+ (CPDR of $0.05 to $0.20). High ROI but long timelines and significant uncertainty.

Two common rules of thumb appear throughout the nonprofit sector. The 3-to-1 rule suggests you should raise at least $3 for every $1 spent, which equals a 200% ROI. The 80/20 rule in fundraising refers to the tendency of 80% of donations to come from 20% of donors, which is a segmentation insight rather than an efficiency benchmark, though both concepts help you focus resources where they generate the best return.

The 33% rule relates to charity watchdog standards. Organizations like Charity Navigator and the Better Business Bureau’s Wise Giving Alliance typically recommend that fundraising expenses not exceed 35% of total contributions. If your CPDR is above $0.35 across all campaigns combined, watchdog ratings may suffer and donors may question your efficiency.

Common Mistakes in Fundraising ROI Calculation

Even experienced finance teams make errors that distort ROI. Here are the most common ones I see and how to avoid them.

Excluding staff time. This is the number one mistake. If you only count invoices and credit card charges, your ROI looks great but your actual costs are invisible. Always include labor.

Using gross revenue instead of accounting for refunds and unfulfilled pledges. If $10,000 in pledges never materialize, that revenue should not be in your calculation. Use actual realized revenue.

Ignoring multi-year value. A direct mail acquisition campaign that loses money in year one might produce a donor who gives $5,000 over five years. Track first-year ROI and lifetime ROI separately so you do not kill campaigns that are building long-term value.

Counting only one side of events. Galas and auctions often have sponsorships and ticket revenue that blur the line between fundraising and friendraising. Be consistent about what you count as revenue and what you count as cost.

Inconsistent allocation methods. If you allocate overhead one way for the spring appeal and another way for the fall gala, you cannot compare the two. Standardize your methodology and document it.

Forgetting payment processing fees. That 2.9% plus 30 cents per online donation adds up fast on a large campaign. Build it into your cost model.

Reddit’s nonprofit community regularly flags these issues. One small organization reported spending 50 to 60 cents to raise every dollar at events, which is consistent with the benchmark ranges above. Another noted that their ROI calculations were department-level rather than campaign-specific, making it impossible to identify which efforts were dragging down overall performance.

FAQs

Conclusion

Getting fundraising ROI right comes down to one principle: include every cost that would not exist if the campaign did not happen. That means direct expenses like printing and venue rental, indirect costs like software and overhead allocation, staff time at fully loaded rates, volunteer hours at fair market value, and the value of in-kind donations. When you consistently capture all of these, you get ROI numbers you can trust, compare across campaigns, and defend to your board.

Start by auditing your current calculation against the expense categories in this guide. If you have been leaving out staff time or shared overhead, your real ROI is lower than you think, and that knowledge is the first step toward improving it. Track first-year and multi-year ROI separately so you do not abandon campaigns that are building donor lifetime value. Use the benchmark ranges to set realistic targets by fundraising method, and revisit your allocation methodology annually to keep it consistent and defensible.