What is fundraising through the sale of products?
Fundraising through product sales seems simple on the surface. Your organization sells a product such as candy, magazines, or Christmas gift wrap, and keeps a portion of the proceeds. However, this type of fundraising can be as successful as the Girl Scouts' annual cookie sale; or it can leave the organization and its volunteers weary and wondering if it was worth the effort.
What do you need to be successful at fundraising by selling products?
- enthusiastic volunteers to fundraise with your products
- outstanding products that will result in outstanding fundraising results, and
- superb fundraising coordination, from order taking to delivery.
What should I be wary of when choosing a fundraising company and fundraising product?
- Be sure that product fundraising is compatible with your organization's mission. Product fundraising seems to go well with youth organizations but not so well with social service or human rights nonprofits.
- If you have not done product fundraising before, ask your volunteers, board members and supporters if fundraising by selling a product would be acceptable to them. If you serve youth, ask the parents if they are willing for their children fundraise by selling a product. If your potential fundraising sales force is not enthusiastic, you will not be able to pull off fundraising through product sales.
- Look around your community. Is your area saturated with nonprofit fundraising through product sales?
- Choose your fundraising product well. Make sure that it is of highest quality, and is something that people really like and use. If the product is something your potential customer would buy anyway, he/she is more likely to buy it from you. On the other hand, if similar products are easily available at retail stores, that could negatively affect your sales.
- Is the fundraising product easy to deliver? Does it need refrigeration or other special handling?
- What is the commission on the fundraising product you are considering? Commissions vary from 25% to 75%. Commissions of 50% or more are preferable, especially if you use a lot of volunteers and expend a lot of energy on the sale.
How do I pick a fundraising company?
Consider these attributes of any fundraising company you might use:
- What is the quality of the fundraising products?
- How long has this fundraising company been in business? What is its reputation in the fundraising community?
- Does the fundraising company have good customer service?
- Does the fundraising company provide attractive and useful marketing materials? Are these materials free?
- Does the fundraising company have clear, written policies and procedures?
- What are the fundraising company's refund and return policies?
- How timely are the fundraising company's shipments of orders?
Do we have to collect sales taxes on our fundraising product sales or pay income tax on our profits?
Generally, if your organization is exempt from federal and state taxes, you will not have to collect sales tax on the sale of your fundraising products. But, to be on the safe side, check your state's fundraising regulations. The Multistate Tax Commission and AFRDS provides a website where you can check your state's fundraising regulations plus there is contact information for the relevant state offices.
If you are a 501(c)(3) organization and if your fundraising product sale is conducted primarily with volunteers, you will probably not have to pay taxes on your profit. If you are not an IRS registered, tax-exempt nonprofit, you may have to pay taxes on your profits from your fundraising product sales. Check with a tax specialist and with your state.
Where do I start looking for a fundraising company with a good product?
Start with these fundraising resources:
- Association of Fund-Raising Distributors and Suppliers (AFRDS)
AFRDS is the product fundraising industry's only trade association. It represents some 650 U.S. and Canadian supplier and distributor companies in the product fundraising industry. Its members generate an estimated 80 percent of the industry's gross annual sales of $3.9 billion.
The Association provides an email newsletter, an annual trade show that showcases the latest fundraising products in the field, and a number of useful online tools:
- The Fundraising Edge can be downloaded from the AFRDS site and you can subscribe to an electronic version. It has articles on all aspects of product fundraising, from volunteer management to fundraising tips.
- The Fundraising Handbook is a how-to guide on how to run a successful fundraising product sale. It covers setting fundraising goals, finding a professional fundraising company, and more.
- The Fundraising Report Card helps nonprofit managers make the right choice of fundraising product companies.
- FundraisingKnowHow.com provides reviews of fundraising programs. The articles are excellent, but the site does have a lot of advertising.
- eFundraising.com is a leading provider of products for fundraising. It is a subsidiary of the Reader's Digest Company. It is a solid, experienced company with quality products and fine marketing materials. Its website has considerable information and advice for product fundraising.
Who are the major companies in fundraising through product sales?
The top companies in product fundraising, as determined by PTO Magazine, include: