Often times when you hear a company fundraising representative talk about sales profit they may or may not be telling you the entire story. Many companies have additional requirements that also must be met; otherwise there may be some extra fees.
Companies should disclose all information about any potential charges with the organization prior to them signing any agreement but unfortunately this doesn’t always happen. If the rep doesn’t bring it up, sponsors should be informed enough to ask the necessary questions.
For example, many companies charge shipping fees if certain order minimums aren’t met on a brochure sale. Fees are usually lower for nonperishable goods like gift wrap and jewelry that don’t require special packaging and shipping. Items like cookie dough and frozen food must be shipped frozen which is more expensive for the company. Either way, a fee may be passed down if a certain minimum order amount is not reached. Here are some other examples of fees that may also impact your fundraiser profit.
Most companies don’t charge for prizes but make sure you confirm this before moving forward. Sometimes companies will require a minimum order here as well and it may depend on the type of prize program. For example, with our big event fundraising prize programs, we charge a prorated fee only if the group retails under a certain amount.
Because of the cost of fundraising supplies, if participation falls below a certain level, groups may be charged. Most companies don’t employ this; however this can have a greater impact on larger groups than smaller ones. For instance, it can become an issue if a large middle school with an enrollment of 1,400 students only ends up having 50 participants. Imagine companies having to pay for so many student fundraising packets but with little in return to cover their expenses. This is how some companies protect themselves.
Prorated Fundraiser Profit
Some companies offer what’s called a prorated fundraising profit that is strictly performance based. As long as the group performs, they’ll receive a higher profit. However, if they don’t, the profit is reduced. On the other hand this can be provided to a group as an incentive. For example, if the group is motivated by the higher profit potential and they push their group to sell more, they’ll be rewarded accordingly.
The bottom line is to make sure that you understand what these fees are and what it’s going to take to meet and exceed any minimum requirements. The company representative should be able to go over the numbers with you based on your group size to help you determine if this will be a concern or not. Oftentimes groups can simply refer to previous sales results.