I'm a veteran of nonprofit work--20+ years as communications director and/or manager for various nonprofit associations in the D.C. area. At one organization I worked for, the annual dinner cost loads of money (including expensive flowers), but actually paid for itself. People (supporters, board members, donors, and vendors with whom the association did business) bought individual tickets or whole tables. A board member with connections to the liquor industry donated the wine. A vendor we used to print our association magazine printed the program gratis. We used the occasion to highlight the accomplishments of environmental activists, generating both publicity and goodwill. Staff members strategically placed at tables with donors/potential donors were able to use the occasion to connect with these people, who later gave additional money. So I agree that the "bottom line" of these events is not just the actual cost of the fundraiser. These events can be significant "friend-raisers" too.

That said, the same organization spent an extraordinary amount on direct-mail to recruit and retain members. We had to kill zillions of trees and spend millions of dollars just to keep our membership at a steady rate. Some of the costs of those mailings were allocated as "education" expenses, which seemed pretty disingenuous to me. Yes, they talked about issues, but in a "the sky is falling" kind of way that was designed to scare people into sending money--which in turn was used for the next big direct mail push.The IRS has gotten much tougher since then on what associations can allocate to "education" expenses, and I think that's a good thing.

I think many nonprofit associations, particularly the very large ones, forget that their members expect that the money they send will be used for the purpose of ending hunger, or promoting peace, or saving wildlife, or whatever. The larger the association, the harder it seems to be for management to make the connection to the fact that all its dollars (in the case of my former organization, $19 million of them a year)come from people who are counting on the organization to spend it wisely and well and for the purpose it was given. The support staff in associations tend to see this connection much more clearly, because it is they who process the individual $25 contributions from people who say things like: "I wish I could give more, but I've been out of work for six months and this is all I can send...." I wish the president of every nonprofit were required to read these often-handwritten notes on a regular basis to be reminded of their constituency and their mission. And in the case of my former organization, they should probably be reminded of the irony of an environmental nonprofit spending a significant portion of every dollar on direct mail that killed countless trees for the benefit of a one-half-percent rate of return in memberships.