We are currently working with a great grassroots organization on a half-million dollar capital campaign for the renovation of a facility. The project is going great and the group is an absolute blast to work with. That said, one of our greatest challenges with this project has been keeping all eyes on the prize– raising a half-million dollars, as expediently as possible. “Expediently” is the key word here.
On a capital campaign of this size and scope, securing major gifts is the most direct route to success. While any number of fundraising activities can be employed to bring in dollars, from merchandise sales to events, these ancillary activities yield relatively low dollars for the investment of time and resources they require. It has proven to be a bit of a challenge to keep everyone focused on soliciting major donors instead of becoming distracted with fundraising activities that are better suited to the public phase of the campaign which is still months away.
That said, we would like to address a specific type of fundraising partnership that has come up with this project– working with retailers. It has become increasingly common to see these types of gimmicks whereby a retailer offers a percentage of sales for a finite period of time to an organization that promotes their brand. While these sorts of relationships can create an opportunity to increase exposure for nonprofits, in the end, it is the retailer who gains the greatest benefit.
"If you'll just give us free direct advertising to all of your constituents, we'll give you 10% of the proceeds from the ones who happen to show up with the coupon on a very specific day."
From a business standpoint, it is brilliant…for the retailer. These gimmicks have to be the best return-on-investment in advertising. Nonprofits, who typically maintain fairly large, passionate audiences, can often offer a tremendous amount of direct advertising for the retailer through their mailing lists and social networks. But, what is that advertising worth? And, how much revenue does the contribution from the retailer actually yield? Generally, we find that the audience reach of the nonprofit tends to be very large, while the compensation provided by the retailer tends to be well below the fair market rate for the advertising provided.
It is our position that nonprofits should think more like businesses. Doing so, they would determine the fair market value of the direct advertising being sought by the retailer and demand a reasonable guaranteed minimum contribution for that advertising. Too often, when it comes to revenue, nonprofits are willing to do whatever it takes to get whatever they can and are reluctant to negotiate with companies who appear to be doing them a favor. In this situation, keep in mind that the company is thinking like a business, and your nonprofit should, too.
Ginger Keller-Ferguson, MBA