Like Water or Chocolate: A Smorgasbord of Fund Raising

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Business Page Dick Raddatz is convinced that after shelling out for candy bars, homemade pizza, cookie dough, and other fund-raising items, parents and other school boosters are ready for a nice drink of water.

Bottled water will be the Next Big Thing in school fund raising, he believes.

"People are buying more and more of it," said Mr. Raddatz, who runs a Web site called www.Fundraising.com that suggests schools sell the $1 bottles by the 24-bottle caseload. "We can custom-print a picture of a group or school logo right on the bottle. It's really been working out."

If bottled water isn't the school band's ticket to that trip to Disney World, maybe beef jerky is. Or fruit snacks. Fundraising.com offers those products, too.

And if traditional fund-raising items such as candy, magazine subscriptions, and gift wrap are generating yawns, perhaps parents will get excited about a commemorative brick with their child's name permanently adorning a school sidewalk or wall.

The nearly $2 billion-a-year school fund-raising industry is cruising along with a lot of long-held relationships between educators and business people, and many proven products. But that doesn't keep new ideas from entering the marketplace, where they can get at least a one-season tryout.

And the ailing economy doesn't seem to be hurting the suppliers and distributors of fund-raising products, whose clientele includes church groups and other nonprofits but is dominated by school-related customers. In fact, the industry appears to be doing better than ever as schools face tighter budgets, the costs of activities go up, and parents raise more money for core classroom purposes. ("Parents Buy Into Paying for the Basics," this issue.)

"There does not appear to be any serious repercussions to this industry relating to the economy," said Vickie Mabry, the associate director of the Association of Fund-Raising Distributors & Suppliers. The Atlanta-based trade group has some 650 member companies and in January had a turnout of 1,500 people at its annual convention in Las Vegas, a slight increase over last year.

The association won't divulge many figures, but it says that candy leads all fund-raising product categories, followed by magazine subscriptions, frozen entrees, cheese and meat products, decorative novelties, and gift wrap.

"In the 1970s, when school fund raising really took off with band and music groups, household cleaners were the big thing," Ms. Mabry said. "Today, almost any consumer good can be found in the fund-raising market."

Frozen cookie dough is the latest item to successfully bite off a chunk of the market, she said.

'Boatload of Magazines'

The industry has scores of small, mom-and-pop companies that distribute products such as brand-name candy tailored for the fund-raising market by manufacturers such as Hershey Foods Corp. and Mars Inc., maker of M&M's.

But some players are relatively big. One is Entertainment Publications Inc., based in Troy, Mich., which sells two-for-one coupon books as fund-raising items and owns the Sally Foster line of gift wrap. In 2002, schools and other nonprofits earned more than $100 million selling the company's products, said Jennifer Foss, a spokeswoman.

"Often with a fund-raiser, you are buying something from a loved one that you don't really need," she said. "But with the entertainment book, you're getting thousands of dollars worth of savings."

Entertainment Publications was founded in 1962; it acquired Sally Foster in 1993. Ms. Foster herself remains a consultant to the division that bears her name, which is known for coming out with distinctive new designs each fall.

In November, USA Interactive Inc., an Internet-content company led by the Hollywood mogul Barry Diller, announced that it was acquiring Entertainment Publications from the Carlyle Group private-equity firm for $370 million in cash and stock. The acquisition, which will put Entertainment Publications in USA Interactive's stable along with Ticketmaster and Expedia, is expected to become final early this year.

Although Entertainment Publications and Sally Foster have already gotten into Internet sales, Ms. Foss said USA Interactive's muscle in that arena was sure to help spur growth in the fund-raising to business.

Another big player is QSP Inc., a division of the Pleasantville, N.Y.-based Reader's Digest Association Inc. QSP primarily offers magazine subscriptions, but it also has a close partnership with World's Finest Chocolate Inc., a Chicago- based confectioner that sells primarily in the fund-raising market.

William C. Burton, the high school principal and overall fund-raising coordinator at Greater Atlanta Christian School, said QSP's magazine sales have been a productive fund-raiser for the 1,700-student institution for 30 years.

"Last year, we grossed $583,000," he said. "That's a boatload of magazines."

The school got to keep 40 percent of the take, or about $233,000. According to Mr. Burton, the magazines are easier to handle than some other money-making options: No frozen turkeys or cookie dough need to be stored for distribution, for instance. And the school continues to make money from subscription renewals.

Some products might not seem like natural candidates for school fund raising, but are nonetheless carving a niche. Commemorative bricks do nothing to satisfy a donor's sweet tooth, but they do offer potentially higher "profit" margins than most products, which typically allow schools to keep 40 percent to 50 percent of sales.

Missy Woodard's family operated a masonry-supply company in Dallas when, 10 years ago, someone got the idea of offering commemorative bricks.

"People have spent so much on candy and gift wrap, but this provides a longer-term impact," Ms. Woodard said.

The company, Brick & Stone Graphics, offers standard-size bricks at $20 apiece, with larger-volume discounts available. It adds names or symbols with "hand sandblasting," Ms. Woodard said. Schools then offer the bricks starting at $40, but sometimes for as much as $200. The company offers larger stones that schools can sell to businesses that may want their sponsorships to stand out from the crowd.

The Dallas company has provided bricks to 5,000 schools across the country and in Canada. Ms. Woodard was quick to discount the notion that bricks are a one-time-only fund-raising opportunity for a school that happens to be installing a sidewalk or a new wall. Special thin bricks can go over existing surfaces on, say, a school wall, she said.

"There is no limitation," Ms. Woodward declared.

Direct Marketing

Mr. Raddatz of Fundraising.com, based in Cedarburg, Wis., said he is a veteran of various school money-raising projects. In the mid-1990s, he had a son who worked for Microsoft Corp., and Mr. Raddatz began reading about the potential value of Internet domain names.

He registered the name Fundraising.com in 1995, but didn't begin using the site until 1999.

"I was more lucky than smart," he said.

The site offers products from many outside suppliers, but Mr. Raddatz produces his own line of handmade chocolates, such as Springtime Bunnies and Chocolate Smoothies.

"Fund-raising chocolate is not always top-quality," he said. "We decided to get involved in manufacturing our own."

Besides touting the strength of bottled water, Mr. Raddatz said cookie dough and scented candles are selling well. One idea that didn't pan out: Internet sales in which schools could earn a small commission when parents made purchases from affiliated online retailers. Several Web sites were based on the same idea. ("Schools Hope to Cash In on Online Sales," Dec. 15, 1999.)

Mr. Raddatz said the idea lacked the direct contact that is essential to successful fund raising.

"The chairperson of the fund-raising committee was enthusiastic about it, but the word didn't get out to the community," he said. "Most fund-raising products are sold at work now, and it's pretty direct. If you try to get someone to go online and buy something, you've lost that direct contact."

And many people, he added, are easy targets for that $1 bar of chocolate.

Vol. 22, Issue 22, Page 8

Published in Print: February 12, 2003, as Like Water or Chocolate: A Smorgasbord of Fund Raising
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