The True Cost of Fundraising— and Why It’s Climbing

June 16, 2025

The generosity treadmill isn’t fueled just by donor emotion—it’s built into the very mechanics of the fundraising system.

Charities are spending more to raise less. And as costs rise, expectations around overhead ratios haven’t adjusted. Instead of reducing friction, the system adds layers: forms, PDFs, bespoke grant proposals, and redundant due diligence.

Let’s break down where the real costs come from—and why donor-advised funds (DAFs), despite their intent to streamline giving, often end up making fundraising more expensive.

What It Takes to Raise a Dollar

You may have seen stats floating around about the cost to raise a dollar:

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 just the tip of the iceberg. What’s often left out?

Staff time for cultivation and stewardship
Rejected applications (which still take time to prepare)
Custom reporting and compliance
Donor database systems and CRM tools
Opportunity cost of donor churn

The Grant Application Maze

Every grantor wants something slightly different:

One wants a 5-year budget
One wants an impact report with photos
One wants a logic model in PDF format
One wants a Common Grant Application (but with edits)

Multiply that by 50+ applications a year, and you get the modern nonprofit treadmill.

Charities spend hours per week repackaging the same story into slightly different formats. No wonder small teams struggle to scale.

Enter the DAF… and Its Irony

Donor-advised funds (DAFs) were designed to make giving easier. But in practice, they’ve added a layer of opacity and friction:

DAF-holders are harder to reach directly, forcing charities to spend time and resources just getting visibility
Each DAF sponsor has its own granting system, forms, and workflows
Donors sometimes create custom grant requirements, increasing workload

The result? More forms. More PDFs. More staff time. More cost.

A 2022 study from the Council on Foundations estimates that charities spend an average of $7,000 annually managing DAF-related grants—mostly due to lack of standardized data and communication. $7000 x 1.4 million charities in North America (yes, I realize not all do it) and it is a number so large, my calculator can’t compute.

Fundraising Is a System—Not a Line Item

When we isolate fundraising as a single percentage in a pie chart, we miss the real picture. Fundraising is interconnected with everything else:

Impact storytelling
Trust-building with donors
Governance and compliance
Measurement and reporting

It’s not an accessory. It’s a backbone. And the backbone is getting weak.

The Bigger Picture: Where the Money Goes

In 2023, over $557 billion was donated in North America. Between fundraising costs and donor-side admin, an estimated $115–$144 billion was spent just moving money around.

Zoom in to major philanthropy, and it’s worse:

Gala dinners, donor trips, major gift cultivation events
Back-channel networking, funder briefings, advisory boards
Lunches, Zoom calls, texts, intros all of the games.

All that to unlock funding that resets each year.

It’s not that donors or funders are the enemy. The system is simply too fragmented.

The Hedonic Treadmill Speeds Up

Charities are being asked to:

Raise more money
With lower overhead
While increasing transparency
Across dozens of disconnected platforms

Every donor meeting. Every PDF. Every portal login. Every custom reporting system. It’s motion, not progress. We would never invest $100,000 in Apple like this.

And with the rise of AI-powered tools that auto-generate grant proposals or donor insights, the noise is only going to grow. Thousands of cold, unreviewed applications are sent every day. That’s not generosity. That’s exhaustion.