Product fundraising is big business; some estimates suggest that over a billion dollars a year is raised through this type of fundraising activity. Given the recessionary climate it can also make a lot of sense to use this model of fundraising. Rather than donating (and getting nothing more than a warm glow in return) ‘customers’ receive products that they need or want. In many ways it’s a win-win situation for both fundraising bodies and their supporters.
Traditional product fundraising includes well known items such as cookies or candy, but in more recent times they have been joined by catalogue sales and sales of bespoke products with charity logos printed on them (such as vehicle logo magnets, sweatshirts and mugs). Although it can be hugely successful, there are a number of tips which will help to ensure that product fundraising is a real success and that the process doesn’t leave your group wondering if it was worth the effort.
Who is it Suitable For?
Product based fundraising has been around for a long time and most charitable organisations, schools and church groups can benefit from it. From food sales at fairs and fetes to door-to-door sales of candy and cookies, it’s a well-loved, tried and tested model. With the move towards newer products and more diverse ranges of products, the method now offers more opportunities than before. There is probably no organisation that can’t benefit from this type of fundraising but when deciding how to use product fundraising there are a number of factors to consider.
Fur Coats and Animal Sanctuaries?
The type of product or products that you sell should be appropriate for your organisation. Luxury fur coats and accessories may not suit animal rescue organisations, for example! Some church groups may also feel that products should reflect their own values and schools may need to consider carefully how appropriate their offerings are. There is a huge range of products out there, thankfully, which means that most organisations can make a choice that fits with their needs and principles. Single products like car magnets work especially well for schools, sports groups and churches. Items like this are useful at placing advertising for your group around town in the future and by doing so help to increase awareness of your organisation.
Quality Products Equal Successful Sales
Quality counts, whatever product you choose. Selling poor quality items will not endear you to the public, nor will it generate repeat sales. This is important in any product sales fundraising plan but especially so if you choose catalogue selling as your main fundraising activity. When choosing a company to work with you should check a number of factors before making your decision. These include how long the firm has been established, do they provide good quality promotional material to help you market your products and do they deliver promptly?
Commission structures are important as well and understanding how these work (and how they can affect your profits) is crucial. In the case of logo magnets, sweatshirts, mugs etc. you’ll normally pay a flat fee per item (see LogoMagnet custom car magnets as a good example) and then you can set the price of the product sold to the customer. With this type of product bear in mind that a minimum order will normally apply.
This way of pricing can allow you to be flexible in the way in which you manage your product sales fundraising, giving you freedom to determine your profit and how much you can raise in funds. Firms that provide catalogue sales services usually offer percentage shares of the profit for your group. Don’t assume the highest percentage is the best; pick the best quality, broadest range of products and especially focus on businesses that can offer a range of price brackets. Even if you earn lower percentage commissions on this type of catalogue the chances are that this will be balanced out by higher sales.
Should I Pay Tax on Product Sales Fundraising Income?
In general you should not need to pay tax arising from sales in the case of product fundraising. If your organization is exempt from taxes (federal or state) this should be straightforward. If not, then check with Multistate Tax Commission and AFRDS (Association of Fund Raising Distributors and Suppliers) website for local regulations. If you are not sure of the status of your organisation and the relevant state laws it’s worth checking with a local tax advisor as to whether you should or shouldn’t be paying tax on sales and (if necessary) registering with the IRS to ensure that you do not need to make tax payments.
Writer Alan Rosinski works for a number of marketing firms and in his spare time helps out with a range of community projects. Here he looks at the benefits and pitfalls of product sales fundraising.