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Are Fundraising Companies Really a Necessary Evil?

By Clay Boggess on Aug 14, 2015
Are Fundraising Companies Really a Necessary Evil?

Why school fundraisers benefit by using companies

It depends on who you talk to. Many sponsors feel that fundraising companies add value to what they’re trying to accomplish. A study of the National Association of Elementary School Principals indicated that 94% of schools relied on fundraisers to supplement depleting financial support from district, state and federal sources.

Robert Channick with the Chicago Tribune states that the fundraising industry generates $3.3 billion in annual sales, of which $1.4 billion goes to schools and other various nonprofit organizations. And therein lies the rub. Some who are opposed to fundraising companies getting involved feel that schools are simply raising money for the companies as opposed to the schools themselves.

Furthermore, many feel that schools shouldn’t be sending their students and parents out into the community to make sales. A few are even asking why schools should even have to fundraise at all. Some groups have attempted to raise money in other ways, like getting parents to write a donation check. But in spite of the opposition, why are fundraiser companies still so popular?

Fundraising Companies Offer a Proven Business Model

Just ask any volunteer group who has taken the time to set up a school carnival or silent auction. It’s hard work. Sure, if items are donated groups can make 100% profit; however, think about the people who invested their own time to get the businesses to donate in the first place.

On the other hand, companies help make the process of raising money easier by allowing schools to plug into a built in system. Step by step instructions are provided by the company that allow the school to easily navigate the fundraising procedure.

Schools receive student packets that provide information about how to proceed. Parents merely follow the steps and take the orders. Merchandise is then prepacked by seller so the school doesn’t have to sort it. This makes it easier for the school to ultimately distribute the products to the end customer.

A Misconception on Fundraiser Company Profit

Who profits more from the sales, fundraiser companies or the schools? Actually it’s the schools that keep the majority of profit, not the companies. How can this be? Let’s look at an example. If a school gets to keep 40% of their gross sales many feel that the company simply pockets the 60%.

Out of that 60%, companies have to then pay their own expenses. For example, companies have to purchase and stock the items that are sold in the brochures from various suppliers and manufacturers. The brochures also have to be designed and printed. Personnel who provide customer support to the schools have to get paid. So one can see that the 60% is only the gross profit.

It used to be that fundraiser companies only helped schools raised money for non-essentials, like field trips and end of the year parties. This is no longer the case as much of the money that is raised is now helping to fund everyday necessities that the school districts can no longer cover. Does this make companies evil or should the blame fall on the rest of us for not making the funding of our children’s education a higher priority? You be the judge.

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