Fundraising Gala Economics

Written by Seth Godin on October 15th, 2011

The email feels like a welcome one. “I’d like to invite you to…”

And then you find out it’s a charity gala. 500 people at an expensive hotel, eating a not very good meal and paying a great deal for the privilege. Sure, some of the money goes to charity (but too much goes for the chicken in white sauce). Sure, it’s entirely possible you will have ten interesting minutes of conversation, and yes, it may be that you’ll hear a speech that will move you.

But I think we can agree that this is a ridiculous way to efficiently raise money for a good cause.

Galas and charity auctions and other events designed to raise money from the inner circle of a community suffer because they’re conflating several benefits at once.

First, being invited to a gala feels like a gift. It’s nice to be asked, to be noticed, to be included. The socially appropriate response is to accept the gift and say yes.

Notice that the invitation isn’t being accepted because it’s a good cause, it’s being accepted because it’s a social obligation.

Second, there’s a set of benefits to both the invited and the inviter. The gala is held in a reasonably enjoyable venue, with lots of money spent on wine and food and such, all to benefit the attendees, not the charity. The inviter gets the social gratification of hosting, plus the added benefit of feeling charitable. The guest gets the social benefit of being included in this stratum of society, of having an excuse for a night out, and possibly the commercial benefit (lawyers, brokers, etc.) of being part of a trusted circle.

Again, none of this benefits the charity. [And having a big donor pay for the whole thing changes nothing.]

For this reason, the gala is actually corrupting. Attendees are usually driven by social and selfish motivations to attend, and thus the philanthropic element of giving–just to give–is removed.

Attending an event that’s dramatically overpriced for what’s delivered to the recipient is a signaling mechanism as well. It says to the other attendees, “I can afford to overpay and so can you, we must be similar, and our hearts are in the right place as well.”

Do elements of our community need gala-like events to lubricate their social interactions? Quite probably. It’s a tradition, particularly in certain cities and tribes. But is it a scalable alternative to selling generosity for its own sake?


About Seth Godin

SETH GODIN has written thirteen books that have been translated into more than thirty languages. Every one has been a bestseller. He writes about the post-industrial revolution, the way ideas spread, marketing, quitting, leadership and most of all, changing everything.

American Way Magazine calls him, “America’s Greatest Marketer,” and his blog is perhaps the most popular in the world written by a single individual. His latest book, Poke The Box is a call to action about the initiative you’re taking – in your job or in your life, and Seth once again breaks the traditional publishing model by releasing it through The Domino Project.

As an entrepreneur, he has founded dozens of companies, most of which failed. Yoyodyne, his first internet company, was funded by Flatiron and Softbank and acquired by Yahoo! in 1998. It pioneered the use of ethical direct mail online, something Seth calls Permission Marketing. He was VP of Direct Marketing at Yahoo! for a year.

His latest company, Squidoo.com, is ranked among the top 125 sites in the US (by traffic) by Quantcast. It allows anyone (even you) to build a page about any topic you’re passionate about. The site raises money for charity and pays royalties to its million plus members.

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