The wide use of smartphones has led to incredible advances in communication across all industries, and the nonprofit sector is no exception. Digital marketing channels such as text messaging have made it easier for nonprofit organizations and advocacy groups to promote their causes, raise donations, and reach potential supporters more effectively. For instance, online giving has increased 8% annually over the last few years.
In this article, learn how much your nonprofit should spend on raising donations and how you can use SMS marketing to increase fundraising while cutting costs.
Understanding Overhead and Fundraising Expenses for Nonprofit Organizations
Nonprofit organizations provide valuable support to communities, and carrying out their services costs money. Although nonprofits operate differently than for-profit organizations, they must be financially organized to be accountable.
Many nonprofit organizations and advocacy groups exist thanks to sponsorships, grants, donations, and fundraising. These funding sources allow organizations to execute projects and deliver their mission. Maintaining financial records and a good understanding of overhead can be challenging for nonprofits, but it's necessary.
As defined by the National Council of Nonprofits, nonprofit overhead refers to "a combination of 'management,' 'general,' and 'fundraising' expenses." Simply put, operation costs and the costs of soliciting and collecting charitable contributions make up overhead costs. In contrast, costs related to specific programs or activities are direct costs and aren't typically included in overhead expense calculations.
Overhead expenses for nonprofit organizations may include:
- Event-related costs
- Utility bills
- Software subscriptions
- Rent for office spaces
- Travel expenses
- Marketing and advertising costs
- Staff salaries
- Staff benefits
- Fundraising costs
Fundraising is essential for nonprofit organizations to have a meaningful impact on their causes. Without fundraising, many nonprofits would not exist. In many cases, the number of donations a nonprofit raises influences the work it accomplishes throughout the year.
Nonprofits struggle to accurately define their fundraising expenses, but in reality, there's no specific spending requirement for fundraising. Some organizations, such as the Better Business Bureau's Wise Giving Alliance, recommend not exceeding 35% of total expenses. Charity Navigator, one of the most widely used charity evaluation platforms, considers organizations spending less than 25% on fundraising and administrative costs combined to be performing well, while those exceeding 30% may receive lower ratings. However, these benchmarks should be viewed in context — a newer nonprofit that is investing in growth may justifiably have higher fundraising ratios than an established one.
Meanwhile, many organizations see an average of $5 in donations returned for every single dollar spent on text messaging, making text messaging a way to make money — not spend it.
To drive support from stakeholders and donors, it's more important to increase awareness of the organization's mission with engaging strategies and have financial transparency and a good grasp of the organization's overhead.
As Rolando Damian Rodriguez, an expert in developing fundraising campaigns for humanitarian causes, said:
"A nonprofit organization could be measured by the quality of its services, and the quantity of people served, not primarily by how low it keeps its operational expenses."
3 Ways to Cut Costs and Raise More Donations
Nonprofit organizations once commonly solicited donations by going door to door, approaching people in person, and hosting costly fundraising events. Soliciting donations in person can be quite challenging and exhausting, and many nonprofits with limited budgets can hold only one fundraising event annually.
Cost-effective and engaging strategies, such as text message marketing, make fundraising much more accessible and enable nonprofits to quadruple donations.
The following three strategies can help cut your fundraising costs and increase the amount of money you raise.
1. Use Text Message Marketing
We can't say this enough: text message marketing is one of the most effective and efficient ways to raise money. A significant advantage of text messaging is its open rate. About 99% of all text messages are opened, and 90% of those messages are opened within three minutes of being received. That's an open rate five times higher than email marketing, which sits at just 20%. Not only is text messaging highly effective, but it's also adjustable to fit tight budgets without sacrificing success.
The cost structure of SMS fundraising is inherently more efficient than many traditional methods. There is no printing, no postage, and no event venue to book. According to the Association of Fundraising Professionals' Fundraising Effectiveness Project, donor acquisition costs are one of the largest line items in any fundraising budget. SMS reduces that cost dramatically because the per-message cost is measured in cents, not dollars, and the speed of delivery means campaigns can be deployed, tested, and optimized in hours rather than weeks.
For a deeper look at how nonprofits use texting, see our nonprofit text messaging guide. If you're ready to get started, check out how to create your first SMS nonprofit campaign.
2. Integrate a Fundraising Platform with Your SMS Campaign
A great advantage of using an SMS platform like momoGood Messaging for your fundraising campaigns is how easily it integrates with fundraising tools. If you're already using a fundraising platform, you can keep using it. momoGood's integrations connect with Salesforce, Blackbaud, and other nonprofit fundraising platforms so data flows automatically between systems — no coding required.
Whenever your followers donate or fill out a form on your website, their phone number integrates with your text messaging platform to continue raising future donations. This connected approach ensures your fundraising campaigns are safe, secure, and efficient.
3. Use Clear and Strong Calls to Action
As SMS marketing experts, we recommend you always add a clear call to action (CTA) in your text messages, especially if your goal is to request donations and increase fundraising. CTAs help your supporters know exactly what you want them to do next. SMS messages with good CTAs generate action.
Generally, nonprofit fundraising campaigns are time-sensitive. The best CTAs are created around your campaign's essential functions and convey a sense of urgency. Some examples of great CTAs for fundraising campaigns include: "Donate now," "Text to give," "Sustain our mission," "Join the fight," "Take action," and "Give to our cause."
Use AI-powered message composition to test and refine your CTAs faster, and personalize your messages based on supporter history for stronger results.
See how nonprofits cut costs with momoGood
Text messaging, donor scoring, smart send times, and CRM integrations — one platform that replaces manual fundraising workflows.
Book a demo →Examples of Nonprofit Fundraising Through SMS Message Marketing
Now that you've learned the importance of fundraising and how to cut costs, let's look at how top nonprofits use text message marketing to raise donations.
The Humane Society of the United States is a nonprofit organization working to end suffering for all animals. The organization was founded in 1954 and cares for more than 100,000 animals each year through wildlife centers, rescue teams, and sanctuaries.
The organization uses text message marketing to send news, invitations to special events, fundraising messages, and information on how supporters can help protect animals. In one campaign, the Humane Society integrated its text messaging with a fundraising platform to make donations more accessible to its subscribers. Its marketing team also created a sense of urgency by using the phrases "is now live" and "make a last chance...before midnight tonight."
People for the Ethical Treatment of Animals (PETA) is an American animal rights organization with nearly 400 employees and 6.5 million supporters and members. The organization uses SMS message marketing to communicate with its advocacy program members and raise donations. With the phrase "Give before midnight," the PETA organization sent a clear, time-sensitive text message to generate action.
Both examples show the power of combining urgency with clear CTAs — a pattern any nonprofit can replicate with the right messaging platform.
Understanding the True Cost of Fundraising Channels
When evaluating fundraising costs, it is helpful to compare the true cost per dollar raised across channels. Here is how common nonprofit fundraising channels typically compare:
- Text messaging: With an average ROI of $4 to $5 for every dollar spent, SMS is one of the most cost-efficient channels available. Per-message costs are measured in cents, and there are no printing or mailing expenses.
- Email: Email has a low marginal cost per send but requires investment in list management, content creation, and deliverability. Response rates have declined as inboxes become more crowded.
- Direct mail: The cost per piece (printing, postage, list rental) makes direct mail one of the more expensive channels, but it can produce high-value donors, especially among older demographics.
- Events: Fundraising events can generate significant revenue, but they also carry significant upfront costs — venue, catering, staffing, and logistics. Net revenue after expenses varies widely.
- Phone (telemarketing): Phone-based fundraising is highly personal but labor-intensive, with high per-contact costs and declining answer rates as more people screen calls.
The key is not to eliminate expensive channels entirely but to allocate budget based on where each channel performs best. Use GuideStar (now Candid) to research how peer organizations in your sector allocate their fundraising budgets — this can provide useful context when setting your own targets.
Raise More While Spending Smarter
Ready to launch a successful and affordable fundraising campaign? momoGood Messaging helps nonprofits lower costs and raise more donations through SMS. With automation, AI-powered donor scoring, smart send-time optimization, and integrations that reduce manual work, your team can focus on strategy instead of logistics.
momoGood has helped organizations raise $2.4 billion and send over 25 billion messages. Our team will guide you every step of the way and support all the hard work your team is doing.
Talk to our team to learn how momoGood can help you reach supporters and increase donations effectively.
Raise more while spending smarter.
momoGood Messaging reduces manual work with automation, AI, and integrations — so your team can focus on strategy, not logistics.