We’ve recently revamped Firstgiving’s home page.  If you are an NPO, you might notice we have a special box for you with the following checklist: “Make your life easier.  Reach more people.  Raise more money.”  

Bold claims, we know.  And how can this be so, you ask?

Consider the following: 

Imagine you are a coffee connossieur with a very busy schedule (indulge us for just a moment).

Suppose a pound of fresh gourmet coffee from the coffee shop around the corner costs $12.  A cup of freshly brewed coffee at the same coffee shop costs $2.  A pound of coffee beans will brew approximately 32 8 oz. cups of coffee, which means that coffee brewed at your house costs about $0.38 cup, a difference of $1.62.  So brewing coffee at home is cheaper, right?

Maybe, but maybe not.

For the true connossieur, a vacuum brewer. Perks: the coffee never touches anything but the glass.

Let’s factor in the cost of your time.  (If you’re particularly interested in terminology/jargon, this example will illustrate the economic concept of opportunity cost, ).

Suppose it takes about 2 minutes to open the coffee bag, grind the beans (remember, you’re a connoisseur; only freshly ground beans for you), load the coffee pot, and press the button.  

After the coffee is brewed, it takes another 4 minutes to pour the coffee into your to-go mug, wash the pot and filter basket and wipe the grounds from the counter.  Suppose the brew time is approximately the same as the time you would spend walking to and ordering at the coffee shop, so we’ll call that a wash.  Result: you’ve got yourself a 6 minute home coffee brewing regimen.

Now, suppose your time is worth an average of $10 per hour, or about $0.17 per minute.  6 minutes of coffee-making costs about $1, making the total cost $1.38, so it’s probably worth it to brew your own.  

But suppose your time is worth an average of $60 per hour, or $1 per minute, and in the time you’ve spent brewing your coffee, you could have attended to some very important emails or done one last run-through of your presentation slides.  That cup of home-brewed coffee actually costs about $6.38. Yikes!  (In case you’re wondering, the point of indifference occurs when your time is worth approximately $16 per hour, or $0.27 per minute, and the java costs you $2 whether you brew or buy).

Are you with us so far?  Let’s let this settle in and we’ll post the rest of the story this afternoon.  Questions?  Want to argue about the calculations?  Post comments below.

This entry was posted on Wednesday, August 6th, 2008 at 9:38 am and is filed under Fundraising Ideas, Fundraising News, Social Media Fundraising, Tips & Tricks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.