Being a not-for-profit group does not mean you can’t make a profit, it simply means you can’t…
Product fundraising – buying bars of chocolate, mugs, lamingtons, tea-towels, socks etc. from a wholesaler and selling them on to your supporters – is a fundraising staple. But there are a few traps for beginners that you need to be aware of.
As long as you have a willing group of sellers and a product that people want to buy, product fundraising can be a seriously good money spinner.
But before you get started remember these two very important points:
Gross profits are not the same thing as net profits
When estimating your profits you’ll need to factor in the money you’ll have to spend to get there.
You will have to pay the company for the product, and cover the costs of promotion and distribution. (Thankfully, most not-for-profits don’t have to pay their volunteer sales force.)
You have to sell what people want to buy
Type 'fundraising' into Google and you'll find hundreds of firms that will be very happy indeed for your organisation to sell their wares on commission.
Not all of them will be relevant, acceptable or desirable to your target audience – they’re things you have to consider even before you think about the levels of commission or profit.
OUR TIP: It is very important to remember that the companies providing you with stock are not doing you a favour. You're doing them a favour. You're an independent contractor with a sales workforce you're offering to them for a fee. Whatever money you do raise for your school, pre-school or group, you're making more for the product manufacturer.
Pick the right product
When preparing to launch a product-based fundraising campaign it’s important to remember that there are many more options than the handful of groups who specifically package and sell goods for not-for-profit groups to re-sell.
Almost any business will be happy to have your people sell its goods for a commission, particularly when you tell them it’s for a good cause.
Round up a few members and have a focus group and see what's going to sell best. Do this before you start thinking of what you can get cheap.
Pick the exact product you need, and give the sales manager a ring.
Ask what the wholesale price is and how many items you need to buy to
get it. Ask if they'll lower that number for a good cause. If they
won't, make a few more calls.
Get it as cheap as possible
Once you've settled on a product, try to maximise the take:
- Can you get it given to you for free? That's best.
- Can you make it yourself? That's next best.
- Can you get it under wholesale?
Get it in big lumps
Your profit margin is not as important as the profit per item. It's easier to sell one $5 item than it is to sell five $1 items.
You can get more if you're selling a popular item, or if there's a
strong commitment to your organisation, or if your sales force is above
average. Try for all three.
If you can put the purchaser's name on an object, that will lift the profit margin substantially.
If you can put your organisation's name on an item, that makes it slightly more valuable and it also reminds customers that the real point is the giving, not the consuming.
At the very least, sell your items in a paper bag with your logo.
When your salespeople are going on their rounds, have them take a collection tin so they can practice the line, "And would you like to kick in a bit extra for a good cause?"
This is especially useful for people who don’t buy your products but would still like to contribute. Every little bit helps.
If you’re not keen on asking people to put in a bit extra verbally, add a box on the order form to encourage extra donations.
Buyer overload can be a problem, so coordinate your efforts with other organisations in the neighbourhood.
Seller overload is just as important to watch out for – don’t hit up kindergarten parents to sign on for a lamington drive when they’ve just completed the school’s sock drive; don’t ask them to do it all again a few months later.
OUR TIP: If you find out that another school, club or group is holding a sock drive in April, choose another type of fundraiser or another month.
While profit is a key factor, there are other issues that organisations should consider in choosing products to sell.
Just because a product is a good seller doesn’t mean it’s something your organisation should sell. Certain products might be incompatible with the organisation’s values – for example, junk food appears to be moving into that band for many groups, particularly schools.
You need to be sure the product vendor you choose is one you can trust. Ask for references from similar organisations that have used the vendor and/or the product you’re looking to sell.
Avoid up-front payments
Be extra careful of fundraising programs that require large upfront cash deposits if you aren't sure of the outcome of the fundraiser. The last thing you want is to be lumbered with piles of unsold stock or – worse – to make a loss.