|School fundraising companies provide real benefits.|
A very common belief found on messageboards and blogs in the Fall is that most of the proceeds from the sale of fundraising items goes to the fundraising companies and not the schools.
While it seems to be common understanding that companies get 40% - 50% of the profit from a fundraiser, what seems to be lost in translation is that schools get 40% - 50% of the gross sale - not profit.
Schools do not purchase wholesale products in a conventional sense. They want to be able to offer hundreds of items at will and not be overstocked. They want a way to sell products through catalogs and online without providing customer service. They want to reward students as well and they want to do this all without paying money upfront.
This means that they do not simply buy a wholesale item then get a split of the profit if that makes sense. Just to clarify, schools are keeping a percentage of the total collected. Out of the split that the fundraising company gets, the product needs to be paid for.
Doing the math.
So, excluding some of the fundraisers out there where a company gets 10% - 20% profits, an average profit margin is somewhere between 40% - 50% of the money collected. So, the fundraising company gets 50% - 60% back. At this point, the fundraising company is making more than the school but when the product price is taken out, it's no longer the case. Not by a long shot.
Schools that rely on fundraising catalogs for their fundraising efforts know why they do. It's because they get a true comprehensive service. They get to offer a large number of products that appeal to a wide audience without dealing with inventory. They get to run the fundraiser free of expenses, free of product ordering and warehousing and free of customer service.
In just a few weeks, schools earn tens of thousands of dollars without risk or the need for lots of planning or volunteer hours.
Think about all the services provided: custom parent letters, catalogs, order forms, student prize programs, catalog shipping, online shopping, teacher incentives, student participation programs, top-seller prizes and other drawing prizes, packing orders by student, product shipping and many times, special challenges like fundraising limo rides or special lunches are paid for.
There's expert advice, inspiration and marketing materials thrown in there as well!
When you take into consideration that 50% of the sale of each item supplies all these benefits listed above and also pays for the product, things begin to look differently.
Instead of fundraising companies riding high while kids do all the work, it seems more like schools teaming up so they can avoid the work involved in trying to replicate the long list of benefits a good fundraising company brings to the table.
Ok, until next time!