DEFINITION of 'Fund-Drainer'

Fund-drainer is an unsuccessful fundraising event that causes a net loss of money for the sponsoring organization. A nonprofit organization cannot survive without donations. Fundraising events are important to its "business model" of simply collecting more money for its mission than it spends to carry out the mission. Since fundraising events often entail considerable work, a fund-drainer can be extremely demoralizing for the organizers. Fundraising events should be carefully planned and managed to ensure they are worthwhile endeavors.

BREAKING DOWN 'Fund-Drainer'

A fundraiser should be treated with the same seriousness as any business venture. Often, not all of the assets required for larger fundraising events can be acquired for free. For example, securing the venue and equipment, and providing catering may all be substantial expenses paid by the fundraising organization. Other significant expenses may involve paying a guest speaker who can draw a crowd, security, insurance, marketing and additional overhead, and swag for the attendees.

Aside from the cost factors, a fund-drainer may result from the lack of attendance or enthusiasm. Some events charge per head or per table, and if the organization does not fill the room, it could come up short on the "revenue" side. Alternatively, if attendance to an event is free and the organization is counting on raising money through auctions or raffle drawings of donated items, there must be buzz and excitement for the attendees so that they are more willing to open their purses and wallets.

A nonprofit organization that fails to generate sincere interest in its cause at an expensive fundraising event is at risk of draining funds. A fund-drainer will teach the organizers some lessons to do better next time.

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