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Good Fundraising Is More Than Just Profit

Don't choose a fundraiser for your group based on profit percentage alone.
by Tim Sullivan

When it comes to analyzing your fundraising success, you have a lot more to consider than just dollars and cents. In fact, I’d argue that a relentless focus only on fundraising profit is one of the biggest mistakes many parent groups make.

Instead, look at your fundraising as part of an overall plan for your PTO, and make sure your overall goals come first even when analyzing your fundraising. That approach is a key to growing your group’s effectiveness year after year.

Typical discussions of fundraising are usually short and sweet, highlighted by two simple questions: How much did you make, and what was your profit percentage? High profit presumably equates to a great fundraiser, and high profit with a high profit percentage is often considered the ultimate fundraising achievement.

That would clearly be true if our only goal were to raise as many dollars as possible in a single year. In that case, a laser focus on profit at the expense of relationships and volunteers and reputation would make sense.

But the PTOs and PTAs I know are hoping to be “in business” for many years, and their goals aren’t just fundraising goals. The best PTOs and PTAs aim to create a great community at their school, to grow parent involvement, to serve parents, and to help provide valuable resources for the school and the students. Only the last one of those four goals is related to fundraising.

The danger in focusing just on fundraising profit in the short term is that you can make it more difficult for your group to reach its other, often more important, goals. Total profit is absolutely a relevant data point, but by no means is it the only one.

Whenever you fundraise, you’re not only taking in dollars; you’re also spending some percentage of your group’s non-cash assets. You only have so many volunteers, and you can only tax their energy so much. You have the ear of parents only so often before they stop listening. Your group’s reputation is essential for your success, yet it tends to improve or get worse based only on your most recent efforts. It takes a long time to recover from missteps. Your fundraising choices affect all of these things.

Think about two groups that each got together last spring to choose a fall fundraiser, and imagine that all else (their demographics, organization, etc.) is equal. One group chose a new company that offered a 60 percent profit margin on a product that parents often grumble about but do buy. It’s a pretty expensive product. It takes quite a bit of volunteer effort to execute this fundraiser from beginning to end. The group wasn’t sure whether the sales representative would be awesome or just OK. Would she be available on order and delivery days? How would she deal with the inevitable hiccups? Is she trustworthy?

The second group chose a more popular product at a lower price point and stuck with a fundraising rep who has treated the group really well for five years running. This rep does a ton of the busywork that can make fundraising programs a chore. The profit margin was 45 percent.

At the end of the process, group 1 made $13,000 in profit and group 2 made $11,000. Which one did better?

Group 1 clearly made more money, but are they closer to or further from their key goals? Have they served parents by going with a higher-priced item during a recession? Are they likely to recruit more volunteers if the job was a tremendous chore this past fall? How is the group’s reputation (i.e., are parents likely to get more involved with the school) after running a fundraiser where clearly profit alone was the driving force? I think those questions are just as relevant as the profit number.

Furthermore (and ironically), I’ve seen many times that a focus on fundraising profit above all else actually led to lower profits in future years as the parent group lost support and connection and involvement.

There’s an old PTO adage that goes, “We fundraise to exist; we don’t exist to fundraise.” As we head into fundraiser decisionmaking season, I hope that you’ll make tons of money so you can do all your important work and more. But I hope that you’ll do so with an eye toward balance and with the knowledge that a successful fundraiser is measured by a lot more than just net profit.

 

Comments   

#3 YG COMMEMORATIVE 2010-05-22 17:39
We definitely agree with this article; especially the PTO adage, "We fundraise to exist; we don't exist to fundraise." Why try to force products parents don't want down their throats? This will ultimately leave next year's school organization/sc hool organization board/fundraisi ng team with a bitter taste and less parents willing to help out.

With the school organizations we've worked with, we simply return a percentage of sales for our custom items, not overpriced general items, with no minimums or other catches. For those that truly want our products, great! We welcome and thank you for their business.

Too bad other companies don't make it their business to truly help school organizations vs. making it their only business to get students & parents to fundraise, fundraise, fundraise for them.
#2 School Fundraisers 2010-05-10 02:06
Great article Tim. Choosing a fundraiser is always a hard decision. We are finding that groups are tending to go with fundraisers that are tried and true like cookie dough or discount cards. In this economy it seems like the safer fundraisers are winning out over the newer riskier ones.
#1 Estacie Aurelio-Perata 2009-03-04 05:04
Since I became president pf our unit PTA, I have discouraged the selling of anything, esp. cookies. I think it's hypocritical to tell our kids to eat healthy foods, then turn around and have them sell cookies! I also do not like the idea of children knocking on the doors of strangers. My other objection lies with the part where we ask them to sell/purchase a certain number of items and reward them with stuff that just ends up in the junk pile! This is my 2nd year as President, and I have not encountered any complaint. The fundraisers that I have done are the following; ArtStamps where we asked the children to draw and their artwork were turned into stamps, notes, cards,etc. I also asked one of the local community theatres to donate 15% of their proceeds when they perform a play.
We also did a bike-a thon which netted approx. $2,000.00, half of which we donated to the local Children's Hospital. In my opinion, selling merchandise as a method of fundraising should be banned from the PTA. Thank you.

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