Hello All,
I've been a reader of this forum for some time now, but this is my first post. I work for a fundraising company (I will withhold the name) and have been working in the fundraising industry for over 20 years. I am interested in your feedback on the following topic.

More and more, we are getting calls from PTO / PTA groups that say they don't even want to talk to us unless we can offer them a profit of 50% or higher. And it's not just our company; this is now common throughout the entire fundraising industry. However, the problem is that by demanding 50%, many cases that will result in more problems such as poorer product quality, longer shipping times and a reduction in the level of customer service.

You see, the margins in the fundraising industry are very thin. Usually 4 parties need their cut:
1. School Goups
2. Distributor
3. Manufacturer
4. Sales rep.

For years, the norm in the industry was 30% - 40% profit. That structure worked and there were enough margins for everyone involved. But in the 90's and 2000's the demand for a 50% profit became more prevalent.

When the school gets 50% that leaves the 3 remaining entities to split the remainder 50%. Since it's such a competitive industry, companies will go out of the way to give the customer what they want, and if that’s a 50% plus profit, then that's what they're going to give them. But, something has to give because the numbers just don't add up.

But what the school doesn't realize is that these companies will make up this margins elsewhere. Especially in PRODUCT QUALITY. Smaller sizes, cheaper materials and less quality ingredients (if it's a food product) are the end result in the fundraising products. It has gotten to the point that the quality is so poor, that I am questioning the entire direction of the fundraising industry. Your customers buying the products (which in many cases they can get a better quality product for a 1/3 of the price at the local Wal-Mart) are the ones who may feel they've been taken for a ride.

But this comes down to the demands of the PTA / PTO groups organizing the fundraisers. Many schools will not consider higher quality products and programs just because they're offered at 45% or lower. Yet, in most cases the sales will be higher with these programs (because of the quality and selection) and schools will make more money than the cheaper programs that offer 50% profit.

Are PTO / PTA wrong by blindly demanding a 50% profit?

Are fundraising companies wrong to lower the standards of the products and service to appease these demands?


Maybe fundraising companies should just deal with the fact that school groups need their 50% profit and PTO / PTA should just deal with that fact that their product quality will suffer as a result.