The current economic crisis and continual need for funding by nonprofits has created a new fervor among more and more companies and individuals pitching fundraising programs and multi-level marketing schemes. Maybe you have been exposed to this.
The offer or pitch acts as if the company is truly concerned about the nonprofits and how the company making the offer in their great compassion and wisdom want to share with you the lowly nonprofits a remarkable new concept. This next generation fundraising idea will create an “endless stream of income” for the nonprofit from their donors or others with little effort.
All this hype of course is pure baloney but many nonprofits fall for this approach out of desperation, and it makes me sick when I get these emails full of false promises and half truths.
What these companies fail to realize is that the vast majority of the time nonprofits don’t have the paid staff capacity they need to just carry out their current programs and maximize their current fundraising activities much less try to start new ones.
Likewise, having all volunteer board members normally does not lend itself to having an endless amount of time or energy to take on more programs that would require trying to “sell someone,” namely their donors or whoever else might lend an ear to this new fundraising idea.
One idea that seems to be touted frequently is the fundraising idea in which nonprofits are given the opportunity to create their own online shopping mall.
Originally many of these companies charged a set up fee or monthly fee or both to nonprofits to create a template web page or site for the nonprofit as their own online shopping mall that had hundreds of stores to choose from. The companies often acted as if by having this page on the internet it was somehow magical with the assumption that nonprofits would get traffic and people would buy items left and right and somehow through all this they would get a commission and be able to ride the gravy train to easy money! Well, as you might have guessed there are many fatal flaws in this concept.
Soon companies were finding it harder to sell these pages to the nonprofits so many started giving these pages away for free. All with hopes that the nonprofit would do all the sales pitches and work to bring people shopping to these pages.
Having a template web page with some obscure long domain name and your extension to identify the page as yours is about as useful as yesterday’s news.
Who cares! How are you going to get people to find this web page? Assuming they find you, what is their incentive to use your site to order anything?
Let’s be honest, in general people i.e. your donors are set in their ways to a certain pattern to their life like most people. Asking someone to change their habits is a big deal and without a benefit attached that is tangible. People are not going to automatically start ordering or buying items off one lame web page just because you ask them nicely.
Nonprofits need to really examine the motives behind any offer made by a company or individual to give them money or items! It is okay to be skeptical and further is even more prudent for you to ask up front, what is in this for them.
It is reasonable to think that if a company could sell whatever service or product on their own they would do so without soliciting nonprofits for help. If they are asking for nonprofits to be their sales force then I am afraid they are going to be sorely disappointed.
DISCLAIMER: This information is not intended to provide legal or accounting advice, or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here.