Stephan, these are just my personal views, FWIW.
1. $700 after booth expenses is nothing to sneeze at IMO. Sure, it's less than the $500/day that you like to see, but it's $700 more than you started the weekend with. Think of all the vendors that might not have made their booth fee & are in the negative. Those are the types of shows I wouldn't go back to, but if I make decent $ & have fun, I'll go back. BTW, $350/day comes to $122,500 if done everyday, so it's a lot more than the majority of people in the U.S. make every day.
2. Marketing/Exposure, since you've done the show for the last 2 years, there's probably a good chance that you might have some returning customers that will be looking for you. If you're not there, your competition will be - "outta sight, outta mind".
3. Space - if you don't do the show, then you'll lose your space & might not be able to get it back. Any chance of getting a different space away from the non-profit? If you're a returning vendor, you might have a little "pull" with the promoter & might be able to ask for a better spot. A better spot can make all the difference between an OK show & a record setting show, as we learned first hand last year.
4. Insurance - When we first started out, we saw one show that we wanted to do that required insurance but we didn't have it at the time. By the time we got it, it was too late to apply. Being soapers, we gotta have insurance so now we have an annual policy & can go online to print out our insurance certificates to give to the promoter. There are some other insurance companies that offer insurance just for specific events, around $30-$40 or so, so you can probably get insurance to cover you for that show if you need it.
But, ask the promoter, sometimes they'll say "don't worry about it". They put that requirement in the show details to cover themselves but check with the promoter just in case, they might give you a pass.