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Scrip Fundraising: Proceed With Caution

It has a funny name and a checkered history, but scrip fundraising can be a powerful tool.

by Alicia Miller and Tim Sullivan

[published March 2001; updated October 2006]

Picture this: You make your usual yearly sojourn for new school clothes. You fill the dressing room bench as usual—with polo shirts and cargo pants, belts and sweaters—and head to the register with whatever fits (and, of course, is also cool). Your selections are rung up and folded, and you pay a grand total of $400. Guess what? You just earned $28 for your kids' school. On the way home, you pick up a video and a pizza. That's another $1 for good old Anyschool Elementary.

How is this possible? Welcome to scrip.

The concept is simple: Schools purchase gift certificates, or scrip, from popular retailers at a discount, which the retailers are happy to give because they're guaranteeing themselves customers and some goodwill advertising. Parents then buy the gift certificates from the school at face value. The difference in price is kept by the school. Parents spend the scrip at the retailer, where it's worth the full face value; they haven't spent an extra dime to help the school, nor have they had to change stores.

And school earnings can really add up. The most successful scrip schools get hundreds of thousands of dollars per year from scrip. Typical schools with modest programs can earn $3,000 to $10,000 without an undue amount of effort.

Some quick math is the best way to demonstrate the earning potential of scrip. Say a family with one child in elementary school and one in middle school spends $1,200 on school clothes every year. The school gets a 7 percent discount on certain retailers' scrip. During that year, the school would make $84 (7 percent of $1,200) from one family's clothing bill. Now consider what that same family might spend on pizza and gas and toys, items with typically higher discount percentages. And don't forget holiday shopping. Multiply that family's earnings by, say, 20 families, and you have $5,000 or more for your school.

A word of caution about scrip, however: Although it's been around since 1988 and many schools have run successful scrip programs, several major scrip brokers have gone out of business in the past few years—often leaving schools in the lurch for thousands of dollars in unfilled orders.

It's important to use a few precautions when you invest in scrip, recommends Dave Burgess, vice president at Great Lakes Scrip. "Don't be afraid to ask financial questions about the business," he says. "An open line of credit, the fact that a bank is willing to loan them money, is usually a sign that it is a healthy outfit."

Some signs that a scrip vendor might be in trouble include missed delivery dates, long holds for customer service, and increasingly frequent reports that the company is "reviewing its orders with merchants." But groups can reduce the likelihood of falling victim to a failing company by being cautious, staying on top of orders, and even splitting orders among several brokers.

"You have to run your scrip program like a business," Burgess says. "With a healthy dose of skepticism."

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Scrip Tips

While the impressive returns from scrip are very real, there's still no such thing as completely pain-free fundraising. Where scrip gets high grades for its earning potential and for the fact that parents don't have to spend an extra penny to help your school (they don't have to buy or pay more, they just have to buy differently), successful scrip volunteers do spend a lot of time on their programs.

But though the prospect of starting a huge new fundraising effort may be daunting, a scrip program can be run more simply. Follow these pointers and you'll be on your way:

  • Choose your scrip broker carefully. Scrip from national retailers can be purchased at very similar discount percentages from all the scrip centers, but the real differences crop up on the list of second-tier or regional retailers. Be sure a scrip center's retailer list is a good fit for the shopping habits of your supporters before deciding on a scrip vendor.

  • Start small. The beauty of scrip is that it doesn't take hundreds of supporters to see solid rewards. Nearly every school has 10 to 15 folks who take on the bulk of the volunteer duties. If you can get this core group to purchase, you can earn thousands. And from that success you can slowly add more people and more retailers to your mix.

  • Grow slowly. Add to your core group one friendly face at a time. It makes managing your program easier, and it's realistic. You may be a regular Shakespeare when it comes to writing fundraising letters, but folks don't readily send in weekly checks in exchange for gift certificates. There's a show-and-tell element and some hand-holding required for each new regular. Remember: You're asking supporters to change a long-held pattern. It's not nearly as simple or as widely recognized as a candle sale.

  • Consider profit-sharing. Almost all of the big scrip schools—those making $50,000-plus per year in scrip earnings—use some element of profit-sharing to encourage/require participation. A typical scenario allows a family to apply 10 percent or 20 percent of the dollars it raises toward school tuition or an activity fund. This option is obviously more common in parochial and private schools, but it has been attempted in public schools where the "share" percentage can be credited toward a particular homeroom or activity. Some schools even require that families purchase a certain amount of scrip or face an additional activity fee. Such programs certainly increase participation and earnings.

Despite the initial difficulty of getting people to change their shopping routine, in the end scrip works for two reasons: The participating retailers are stores where your supporters already shop all the time, and your supporters can help your school without spending an extra dime. It's a nice combination. If you can find a group of supporters (even just a small core group, at first) willing to change their shopping habits, you could be on your way to a successful scrip fundraiser. And your shopping trips may never be the same.

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Comments

  1. Posted by - raw on Nov. 25, 2013

    is it possible to buy the top retail stores giftcards for my fundraiser at a wholesale or discounted pricing?
  2. Posted by - Ray Richards on Apr. 27, 2010

    Definitely be careful when choosing a scrip fundraising company. Many of our best customers are those who have been disappointed with our competitors in terms of order fulfillment. As Canada's largest gift card fundraising company, FundScrip has built its reputation by maintaining customer service and rapid order fulfillment as the primary focus.
  3. avatar

    Posted by Craig on Nov. 18, 2009

    Fred -- Scrip is not a copyrighted concept. Many retail companies issue scrip (the coupons) and there are several broker companies that work with retailers to offer them to parent groups.

    John -- You can offer a higher percentage to parents, but of course that means your group/school raises less for itself.
  4. Posted by - Fred Uttech on Nov. 18, 2009

    Is scrip a copyrighted concept. If so, does a certain profit go to the copyright owner? Is scrip only for schools? Can you use scrip for other organizations?
  5. Posted by - jOHN on Nov. 17, 2009

    I see where some schools split the profits 50/50 giving 50% as a credit against tuition. This talks about only 10 to 20%. Will 50% get the school in trouble?
  6. avatar

    Posted by gjcoram on Nov. 16, 2009

    Do most schools allow the scrip vendor to automatically make withdrawals from the PTO bank account? I'm very hesitant to do so, but at another school in our district, the scrip coordinator thinks it's critical to have the 1-week turn-around that automatic withdrawals enable (takes an extra week if you have to mail a check in).
  7. Posted by - Tim Sullivan _ PTO Today on Jul. 23, 2009

    Thanks Dan -

    (Note: I had asked Dan to comment, as I know he works very closely on scrip in general and this issue in particular. We will try to keep all updated should there be any more clarification on this issue.)

    Perhaps biggest point, in 15 years of following scrip, I've never heard of a case of a parent getting in hot water over scrip tuition reduction plans.

    Tim
  8. Posted by - Dan Springer from Great Lakes Scrip Center on Jul. 22, 2009

    Hi Isabel - With conventional kinds of fundraising that involve selling a product; the IRS considers benefits to individual families based on sales to be a form of commission, and therefore a taxable activity. Unlike other forms of fundraising, Scrip fundraising does not involve any selling. Families purchase gift cards to use in place of cash, checks and credit cards for everyday household spending, and therefore are used for personal consumption. The money that is raised is considered a rebate to the family, who can choose to use that rebate to support their school, or perhaps use a portion to pay their tuition or other school fees. The IRS has been very clear about rebates being non taxable events.
  9. Posted by - Isabel Vigil on Jul. 21, 2009

    How do schools get around the IRS implications of profit sharining to individual families based on their fund raising efforts?
  10. Posted by - Isabel Vigil on Jul. 21, 2009

    How do schools get around the IRS implications of profit sharining to individual families based on their fund raising efforts?
  11. Posted by - Tracey on Sep. 04, 2008

    Good article for a newbie.
    I would have loved it if you had done some of the research for me (us) and advised top three companies in US and Canada as a jumping-off point for my (our) research.
  12. Posted by - Kathryn Lagden from PTO Today on May. 22, 2008

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  14. Posted by - Nick on May. 19, 2008

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