What a board should ask before it approves the marketing budget
A marketing budget usually reaches the board as a list of things to buy. The right review asks what the money is supposed to move, and how anyone will know.
A marketing budget usually reaches the board as a list of things to buy: a campaign, a rebrand, a media plan, a new website. The board checks whether it fits the total and votes.
That's the wrong review. The right one asks what the money is supposed to move, and how anyone will know.
Last week I wrote about auditing the path from attention to a gift, a membership, or a ticket. This is the same idea from the board's seat. Before the vote, ask five questions. Under each one is the kind of answer you want to hear from staff.
1. What number is this budget supposed to move?
Not reach, impressions, or followers. Gifts, members, renewals, ticket revenue, attendance. One number for each major line, with today's baseline next to it.
A good answer: “This line is for new members. Here's where we are today, here's the target for June, and we'll report against both.”
2. What happens to someone after they see the ad?
Ask staff to walk you through it: the ad, the page it lands on, the button, the follow-up. If that takes more than a minute to explain, the money will leak.
A good answer: “They land on a page with one button, they can join in a couple of minutes, and they get a welcome email the next day. Here's who sends it.”
3. Are we paying to reach people we could reach for free?
Members, past donors, lapsed ticket buyers, and the email list cost little to reach. Paid spend should find people the organization can't reach on its own.
A good answer: “Members and past donors hear from us by email and in the lobby. The paid money only goes to people who aren't on any of our lists yet.”
4. When will we know if it's working, and what will we do if it isn't?
Name a checkpoint at 30, 60, or 90 days. Name the decision in advance: keep going, change course, or stop.
A good answer: “We'll check at 60 days. If joins haven't moved, we cut the paid line and put that money into renewals.”
5. What will the report show?
If the quarterly packet will count posts, opens, and events, ask for the numbers from question one instead. Activity is not a result.
Here's what a one-page fundraising report should show.
A good answer: “The report will show new members against the target and what each one cost. Posts and opens go in the back, if they go in at all.”
Why I ask these
I've worked the staff side of this. As VP of External Affairs at the Bowers, daily attendance rose 40% in 90 days, private funding grew 50%, and marketing returned 250% on what we spent. At Texas Ballet Theater, revenue grew more than 20% a year. Those were numbers a board could check. That's the point: the budget conversation should start with them, not end with them.
A board doesn't need to write the marketing plan. It needs to ask what the plan is for.
If you sit on a board, which of these questions does yours already ask?
Questions boards ask
What should a board ask before approving a nonprofit marketing budget?
Before the vote, a board should ask five questions. What number is this budget supposed to move? What happens to someone after they see the ad? Are we paying to reach people we could reach for free? When will we know if it's working? And what will the report show?
How much should a nonprofit spend on marketing?
My working range for hard media costs is 15 to 20% of projected earned revenue, meaning tickets, subscriptions and memberships. The percentage matters less than what the money is supposed to move. Tie each major line to one number, such as gifts, members, renewals, ticket revenue or attendance, and to today's baseline. A budget with a target and a checkpoint is easier for a board to judge than a list of purchases. As Michael Kaiser (opens in a new window), who led the Kennedy Center and turned around the Royal Opera House, put it: "Most people would cut back on the art or on marketing and those are the two things that produce revenue."
What metrics should a nonprofit board see in a marketing report?
A board should see the result the budget was meant to move, such as new members, gifts, renewals, ticket revenue, or attendance, measured against the target and the cost of each one. Counts of posts, opens and events are activity, not results. Put them in the back of the packet, if anywhere.
Reach, impressions, and followers are not the target. If the quarterly packet counts posts and opens, ask for the numbers the budget was approved to move instead.
When should a board check whether marketing spending is working?
Set a checkpoint before the money is spent, at 30, 60, or 90 days, and name the decision in advance: keep going, change course, or stop. For example, staff might check at 60 days and, if new memberships haven't moved, cut the paid line and move that money into renewals.
Should a nonprofit pay for ads to reach its own members and donors?
Usually not. You can reach members, past donors, lapsed ticket buyers and your email list for almost nothing. Paid spend should find people the organization can't reach on its own, so a board should ask whether any paid line is buying attention the organization already has for free.