Revenue Efficiency Report

Multiple revenue streams reduce risk.  How dependent are you on any one source?

This report shows the profitability of each revenue stream by comparing the costs and the revenues.  This report helps Boards make proactive decisions on which audiences to target… instead of doing the same thing, year after year.  Inspired as the marketing equivalent to a Balance Sheet, it takes about 1 hour to prepare, at year end.

Questions from your Board of Directors:

  • How diversified are our revenue streams?
  • What is our CRA Fundraising ratio?  How can we improve our CRA ratio?  How do we select which marketing activities to cut?  In the US, the Fundraising Efficiency formula is expressed as a cost per dollar (e.g. $.21 for each $1 raised).
      CRA fundraising ratio      Action
      <35%                       no concern
      35%+                       evaluate
      70%+                       concern
  • Which is the most cost effective revenue stream?  Is there a correlation between revenue and staff time?
  • Which revenue steam has the most “room to grow”? Which revenue stream has the most competition?  What is the optimal point within each revenue stream, beyond which we will experience “decreasing marginal returns” from our marketing efforts?
  • If a new revenue stream is proposed, how will it compare with existing revenue streams?
  • Is the allocation of staff time appropriate?  Is it possible to reduce marketing staff costs by diverting work to volunteers?  Do we have enough measures in place to track our marketing staff time effectively?

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Reassure your:

  • accounting staff that these are internal reports for making management decisions, so they don’t need to change your existing accounting system. In most non profits, the only relevant variable costs tied to each stream are marketing budget and marketing staff time.  If your non profit has other true variable costs, then add them in too.
  • marketing staff that you do not expect them to log their effort on time sheets.  Rather ask them to pause for 10 minutes at year end and make an estimate.
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