The True Cost of Fundraising and Why It’s Climbing

The Real Cost of Fundraising—and Why the System Isn’t Working

The generosity treadmill isn’t just emotional—it’s structural. Built into the very mechanics of fundraising are expectations that don’t match reality. Charities are spending more to raise less, while donors and funders still expect ever-lower overhead.

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Instead of streamlining giving, the system has added complexity: more forms, more PDFs, more bespoke proposals. Even donor-advised funds (DAFs)—designed to simplify generosity—often end up adding to the workload. Not by intent, but by infrastructure.

What It Really Takes to Raise a Dollar

You’ve probably seen stats:

• Direct mail: $0.20–$0.30
• Events: $0.50–$1.00+
• Grants: $0.15–$0.25
• Major gifts: $0.10–$0.20
  

But those are surface-level. What’s usually missing?

• Time spent building relationships
• Applications that don’t get funded
• Custom reports for different funders
• CRM and donor database costs
• The churn when a donor disengages

The Grant Application Gauntlet

Most grantors ask for something slightly different:

• A 5-year budget
• A logic model (PDF, please)
• A report with photos
• Twenty ways to ask the same thing
  

Multiply that by 50+ proposals per year. Now you’ve got the modern charity treadmill—churning out custom documents just to stay visible.

The DAF Dilemma—And Its Opportunity

DAFs were built to make giving easier. And in many ways, they do. But the lack of standardization creates real friction for charities:

• DAF-holders are often out of reach
• Grant systems vary by sponsor
• Some donors create additional reporting requirements
  

None of this is malicious. But the result is the same: more admin, more cost.

A 2022 Council on Foundations study estimated that charities spend an average of $7,000 annually managing DAF-related grants. That’s mostly due to fragmented systems and unclear workflows. And that’s just one piece of the puzzle.

Fundraising Is Not Overhead—It’s Infrastructure

We hurt charities when we treat fundraising like a line item to minimize. It’s not a cost center—it’s a core function. Fundraising connects directly to:

• Impact storytelling
• Donor trust
• Compliance and governance
• Long-term sustainability

We don’t question Apple for investing in investor relations. Why do we penalize nonprofits for doing the same?

Where the Money Goes

In 2023, North America saw over $557 billion in charitable giving. Of that, $115–$144 billion was spent just moving the money—on admin, events, reports, and more.

Zoom in on major gifts, and the inefficiency grows:

• Gala dinners
• Donor trips
• Endless Zoom calls, briefings, and updates

All to unlock funds that often reset year to year.

The problem isn’t bad actors. It’s a broken system.

The Treadmill Is Speeding Up

Charities are now expected to:

• Raise more
• Spend less
• Show more data
• Submit more reports
• Across more disconnected platforms

And AI is about to flood the system with auto-generated applications. That’s not smarter giving. That’s signal overload.

Can We Build a Better System?

Yes. But it requires a mindset shift:

• Shared, standardized charity profiles
• Searchable, filterable project data
• Cross-platform due diligence tools
• Less friction. More function.

DAFs, foundations, and donors all want to give well. Charities want to serve well. We just need systems that let both sides do their best work.

That’s what we’re building. Because charities and donors didn’t sign up to become grant machines. You both exist to create impact. And we owe you the tools that match that purpose.

– Jeff

Co-Founder, WellFunded

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