What About Fundraiser Profit Guarantees?

Why profit guarantees are too good to be true.

Many fundraiser companies make enticing offers to get elementary schools to sign up. They throw out additional prizes, invoice reductions, higher percent profits, and even cash.

Signing bonuses are offered to schools to get them to sign up early. The idea is to lock them up before they've had a chance to consider other options.

Another way companies attempt to lure sponsors is to offer fundraiser profit guarantees. If the school falls short of its sales goal, the company will make the difference.

For example, if a company guarantees that a school will profit $10,000 and they only end up making $9,500, the company is supposed to cover the difference.

Companies attempt to remove any financial risk of working with them and instill confidence. Does this sound too good to be true? Here are some reasons you should avoid profit guarantees.

Profit Guarantees can Backfire

Hypothetically, if schools know they'll receive their money regardless, why should they put any effort into their sale? They're covered by the company, right? Many schools work hard on their sale despite the guarantee. But what if their sale doesn't do well for whatever reason? Can the company make up the difference if a school falls well short? Ethical companies will do what was initially agreed to, no matter what. However, this doesn't always happen. Some schools regret signing up for fundraiser profit guarantees because companies failed to make good on their promise. Unfortunately, this makes everyone look bad, not just the company.

Guaranteed Profits are Conditional

The adage, "everything has a price", is always true. Companies need to protect themselves financially, so who will assume the risk? You may be asked to do things like:

• Lock into additional programs
• Pay undisclosed fees

Don't Yield to Rep Pressure

Some companies only offer their guarantee if you sign up with them on the spot or by a specific date. Don't act impulsively. Instead, you should be allowed plenty of time to decide on the right program for your school.

Guarantees Don't Solve Problems

Don't choose a company because of the guarantee. If you prefer another company that doesn't offer it, you're better off picking the better program, not the guarantee. Many groups signed on with a company mainly because of the guarantee, only to regret receiving an inferior program and subpar service.

Companies have conditioned many schools to expect signup bonuses, like fundraiser profit guarantees. Although signup bonuses may capture business for companies, schools will be better off with more vital programs and reliable customer service. Unfortunately, companies offer them because they can't differentiate themselves from their competition any other way.

See our brochure fundraisers.

Author Bio

Clay Boggess has been designing fundraising programs for schools and various nonprofit organizations throughout the US since 1999. He’s helped administrators, teachers, and outside support entities such as PTAs and PTOs raise millions of dollars. Clay is an owner and partner at Big Fundraising Ideas.