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Why School Fundraising Profit Percent is Overrated

By Clay Boggess on Nov 14, 2020
Why School Fundraising Profit Percent is Overrated

A guide to raising more money for your school

On the surface it makes perfect sense. The higher your brochure fundraiser profit margin, the more money you’ll make. It seems like an easy win for those schools that are able to negotiate a higher profit up front. Some companies require schools to sell a certain amount first. This creates a buffer for the company and an incentive for the group. Others offer more profit as a sales hook to win the account.

But at the end of the day no one’s going to remember what their profit percent was. The only thing school fundraising groups care about is did they reach their goal. It’s all about the money. Higher profit percentages can work. Yet this is assuming the group sells at least the same number of items. Many times they don’t.

One of the first things inquiring groups want to know about is the profit. Many sponsors choose a company based on how much profit percent they get. They may consider several other factors. But in the end it often comes down to who offers a higher percentage of the sales.

Unfortunately, they’re asking the wrong question. Focusing on profit percent is a short-sighted approach for many reasons. In fact, the entire mindset is flawed. What schools should be asking instead is, “What do we need to do to reach our financial goal?”

The focus should be on how to make more money. This should be at the top of the priority list. Emphasis should be given to companies that offer better ideas and sales tools. Someone once said that you don’t take profit percent to the bank, you take money. So how do you shift your mindset?

If you had to choose only one of the following, what would it be?

  1. Negotiate a higher fundraiser profit percent.
  2. Discover ways to improve sales.

This isn’t a trick question. The results may surprise you. It turns out that there are other variables that groups need to consider. Here are 3.

1. Quality Usually Trumps Quantity

Even if you make 100% profit, does this guarantee profitability? If people don’t want what you’re selling, nothing else matters. If your group doesn't get behind your cause it's all for not.
In exchange for a higher profit, many companies offer cheaper merchandise. You may get lucky the first time but will people buy from you again? Higher profit percentages at the expense of disgruntled buyers jeopardizes future sales.

As an example, one of our brochures offers a variety of customizable designer bags. These bags are more expensive, but they're strong sellers year after year. Buyers want them because they know they’re getting good quality.

Even with less profit percentage, they make more money because of the higher price. And to top it off, you have a satisfied customer who'll be more likely to buy next time.

Learn 3 ways school fundraisers make more with fewer sales

2. Offer Stronger Prize Programs

Your greatest fundraising asset is your students. If you can motivate them, they'll drive sales more than anything else you can do. Prize programs should be able to do 2 things:

  1. Include incentives at the lower levels that generate interest.
  2. Offer exciting rewards at the higher levels to encourage students to keep selling.

For instance, our magic show requires students to sell 5 items to gain admission. This has proven to improve participation. But you also need to maintain sales momentum throughout the sale. Higher sales level incentives include:

  • Getting to be an assistant magician up on stage.
  • Learning and performing a magic trick in front of their peers.
  • Being the top seller and earning the privilege of being in the show’s grand finale.

When these 2 ways to motivate work in synergy, sales improve. The following schools had been using basic prize programs for years. When we suggested they offer better incentives, the following year their sales improved.

School Basic Prizes Improved Prizes $ Increase % Increase
Webb Elementary $20,000 $43,000 $23,000 115%
Noonan Elementary $8,000 $27,000 $19,000 238%
Kostoryz Elementary $12,000 $31,000 $19,000 158%
Milton Elementary $24,000 $42,000 $18,000 75%
Meadowbrook Elementary $12,000 $27,000 $15,000 125%

Even with a lower percent profit these schools brought in more money. The reason was their students were more excited and they made more sales.

Steps to improve school fundraising participation

3. How to Really Maximize School Fundraising Sales

So instead of worrying about raising your percent profit, focus on ways to bring in more sales. Here are some questions to consider:

  • What product will people want to buy?
  • How do you plan to promote your sale?
  • What strategies can you incorporate to motivate your group to sell?

Higher profit percentages can also lead to complacency. Making more money off the products you sell doesn't guarantee that you'll reach your goal. We've seen this assumption backfire many times.

Sadly, it's the students who end up paying the price for lower than expected sales. A fast nickel beats a slow dime every time. Or said another way, the turtle always wins in the end.

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