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Online Fund-Raising Malls: Fund Raising Goes High Tech
The Internet fund-raising revolution brings greater opportunity but also some new challenges in the areas of seller/buyer motivation and customer service. How can you make this new technology work for your group to improve its fund-raising profitability?
Until recently, the way that groups have raised money to meet their needs has undergone little appreciable change in at least 25 years. Operating costs have soared, school budgets have been slashed, and charities have been asked to take on ever-expanding duties. This has resulted in an immensely increased need for outside funds. Yet, children continue to raise funds with high-effort techniques such as selling to neighbors and family members, holding bake sales and raffles, and washing cars.
Now, dot-coms have entered the fund-raising industry and, with the click of a mouse, the world of schools, churches and charitable groups is forever changed. The Internet fund-raising revolution brings greater opportunity but also some new challenges in the areas of seller/buyer motivation and customer service. How can you make this new technology work for your group to improve its fund-raising profitability?
The answer is simple: Be an educated user. There are many options out there, and more are sure to come. The following information should assist you in making a more informed decision on whether to use online fund raising and which fund-raising company to choose as your partner.
The Birth of the Online Fund-Raising Mall
By far, the hottest new trend in fund raising is the online fund-raising mall. The concept is simple and rapidly growing in popularity. Those who wish to earn money for their group can log on to an online fund-raising mall site, select their group, and then link to different e-commerce sites to make purchases. The e-commerce sites pay affiliate fees—a sales commission on the total purchase for each user—to the site through which their site was accessed. These sales commissions can be as much as 30 percent of the total sale. Online fund-raising malls then funnel a portion of this commission to schools and charitable organizations.
The key to successfully using such fund-raising sites is choosing the one that will give one’s group the highest percentage return. Most of theses sites give the group or charity 50 percent to 75 percent of the sales commission. Other sites rely on other revenue streams and actually give more. At FundRaising.Com, for example, we do not rely on our fund-raising mall as a revenue stream. So we donate 100 percent of all sales commissions to the group that earned them.
Another thing to consider is the ability for the shopper to choose which sub-group within a school or other organization should get the money, since not all fundraising mall sites offer the technology to do this. If buyers can designate not only a school or church, but also earmark a sub-group, such as the school swim team or the church youth group, shoppers will be more motivated.
A final practical consideration that seems intuitive but bears stating is that a group should look at their online fund-raising mall as a long-term partnership. While a group can select a different product supplier every year and still have a great sale, profits from online fund-raising malls take years to build. It takes so long for the simple reason that you have to change peoples’ buying habits in order for your fund-raising mall to take off. You don’t want to change fund-raising malls every year. With the profits so small in year one, most fund-raising managers don’t realize that selecting their fund-raising mall is a legacy-making (or breaking) decision. If you think you may have selected the wrong fund-raising mall partner, it’s not too late to switch---once. Although some may want to "hedge their bets" by using several different sites, a group can raise much more money by consistently recommending a single site to their supporters.
Long-Term vs. Short-Term Fund Raising
Online fund raising is clearly the future of fund raising. But to raise a large amount of money in a short period of time, product fund raising remains the best option for the foreseeable future.
Of course, the Internet has changed that, too. The days of a sales rep with a territory are nearly at an end, and what is saved by not having to pay the salesperson 10 to 15 percent of every sale can be passed on in the form of higher returns to groups. In addition to cost savings, the Internet has changed product fund raising by offering greater access to smaller groups, which no salesman would ever have called upon, and by adding a degree of flexibility for busy people. Companies such as my own, FundRaising.Com, are using the Net to make their product lines, samples and even expert advice available 24 hours a day, seven days a week to accommodate groups of all sizes and fund-raising needs.
Ignoring online fund raising is shortsighted when one considers the potential of the Internet. But depending on online fund-raising malls alone is also ill advised because of the ramp-up time, peaks in the fund-raising cycle, and the often unexpected needs of individual groups. By far, the best option for a school or charitable organization is to partner with a fund-raising company that has the expertise and breath to handle both its long-term and short-term needs.
Challenges
The true challenge of the fund-raising industry as we enter the 21st century lies in managing its rapid growth and potential without sacrificing a high degree of customer service or leaving anyone behind.
For this reason, forward-thinking companies offer customers the choice of calling an 800 number, for those who do not have access to a computer at home or are not as comfortable using technology. This is particularly important in lower income or more rural communities, where the need for fund raising is the most dire and traditional fund-raising sales representatives are scarce. The 800 number is also important for people to feel "connected" to us. Whenever a question arises, or a customer, whether it be an online fund-raising partner or a product fund-raising partner, needs advice, a trained fund-raising consultant is there to help. No matter how a customer chooses to access FundRaising.Com, help from a live human being is not more than a click or a call away.
With the turmoil we’ve seen on the stock market this year, the primary challenge for those looking to raise funds is recognizing the differences between the various Internet fund-raising companies. Anyone can make a good looking website these days, so it’s hard to tell which companies will be around in five years when your fund-raising mall profits take off. Unfortunately there’s no easy answer. Look for companies with both online and traditional fund-raising products, low prices, a long operating history, and a great customer service. If any company has all those qualities then it will be able to thrive no matter what happens in these turbulent times.
The Future of Fund Raising
We have just scratched the surface of the many ways that the fund-raising industry will grow and change in the near future. Since the industry is now operating to a large extent on the Internet time, improvements will come quickly, with companies promising to "build a better mousetrap." The future is extremely bright and promises great rewards for those who are looking for easier, more effective ways to raise funds. However, as in any time of great progress, the more time someone takes to familiarize himself with all the options, the better his position in the long run.
For more information on using the power of the Internet to your group’s advantage or for general product fund-raising assistance, visit www.FundRaising.com or call (800) 443-5353.
FUND RAISING MANAGEMENT , Cedarburg, WI - June, 2000.
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