When Does a 40% Profit School Fundraiser Beat 50%?

You may have heard it said before. You don’t take ‘profit’ to the bank you take ‘money’. Fundraising coordinators often make the mistake by focusing too much on obtaining the highest profit percent possible for their school fundraiser when negotiating with a fundraising company. Some people won’t even consider working with a company that offers less than 50% profit. In some cases competing fundraising companies have had to go even higher in order to get the business. Is the school sacrificing in order to get a higher profit? The short answer is definitely. If the first question out of your mouth when interviewing a fundraising company is, “What is the percent profit I am getting?” then you are definitely missing out on some other important aspects that could end up making you more money than if someone offered you a higher percent profit. Is it really possible to take more money to the bank when all is said and done even though you are making less profit?

What follows are three different scenarios that you need to also consider when choosing a fundraiser for your school. It’s not as straight-forward as you might think.

1. More Appropriate Brochure
Consider the following scenario:

A fundraising company offers you a gift item brochure at 50% profit or a frozen food brochure at 40%. Which one will net you more money?

Gift item brochure at 50%:

• People have expressed to you that they are tired of the same old gift item brochure year after year
• You already know that lots of nearby schools are selling them
• The pricing in your gift item brochure seems a little high and you have received complaints about value

Compared to a frozen food brochure at 40%:

• You have heard people actually suggest frozen food
• People would find consumable products useful 
• Thus, frozen food may have a higher perceived value

The take home message is if your product lines up better with the needs of your customers then it might end up raising you more money because people will buy more

2. Better Prize Program
A school fundraising company offers you a choice between a standard prize program at 50% profit and a more exciting prize program at 40%. Which one will net you more money?

Standard prize program at 50%:

• Your older students have seen this type of prize program for years and are thus not that excited about it
• All of your students figure out that they will need to sell a lot of items to win the bigger and more worthwhile prizes which may become discouraging
• Your parents have also seen this type of prize program and aren’t that excited about it either. They can go to the store and simply buy it for next to nothing

More exciting prize program at 40%:

• Most of your students are excited about the chance to participate in something new and different that they haven’t seen before
• They are offered better prizes for selling less items which encourages them to sell more
• More students are excited to sell so participation goes up
• Your parents have haven’t seen this type of prize program before and seem more interested in it as well

It has been proven that by offering a better prize program, more of your students will sell additional items and thus your gross sales will usually be higher. Your net sales are often higher as well and the important thing to keep in mind is that people are more satisfied. As a result your participation may increase even more next year because the word will spread.

One question might be why can’t we have the higher percent profit and the better prize program? The fact is that all fundraising companies have to work within a certain budget. The better prize programs cost more so you have to give something up in order to get it. A lot of schools that have been used to getting 50% profit with a standard brochure aren’t even aware that there are other more exciting prize programs out there that will do a better job of motivating their students to sell.

3. Stronger Fundraising Coordinator
Weaker fundraising coordinator is doing a fundraiser at 50% profit:

• Doesn’t promote their sale that much
• Doesn’t believe that additional incentives will make that much of a difference
• Is focused more on what the administrators won’t let them do than trying to work together to achieve fundraising objectives
• Lets negativity and barriers affect them
• Doesn't delegate responsibilities effectively to others

Stronger Fundraising coordinator is doing a fundraiser at 40% profit:

• Reminds students to sell every day
• Sees the value in incorporates additional incentives
• Has established a fundraising goal for each seller
• Realizes the importance of getting parents, teachers and staff to buy into the fundraiser
• Realizes that they can't do it all so is able to effectively delegate responsibilities to others
• They are problem solvers who don’t become discouraged with potential roadblocks or hurdles
• Has established and promoted a good fundraising purpose

The most important aspect to experiencing a successful school fundraising sale is good leadership at the top. If everyone knows that you have bought into the program and are giving it your all, they will more than likely follow your lead.

So there is a lot more involved than just looking at percent profit. Asking for the highest percentage possible without considering other important factors is like asking for the cheapest car with no upgrades. A friend of mine once said that a ‘fast nickel beats a slow dime – every time!’