Situation in the Fundraising Industry

Most readers already know that in the past five years about 60% of fundraising companies across the United States have gone out of business. Some went bankrupt, and others simply closed down. The reasons were many, and included changes in the availability of financing, balance of trade with China, increasing cost of transportation, offering profit levels and services that were financial losses, and unwillingness of the client base to accept lower profit margins and increased costs.

The scientific theory that "nature abhors a vacuum" seems also to be work in the realm of economics these days. As soon as one company goes bankrupt, someone else pops up to give it a try. We have had such an occurrence in the supply chain this year, and it is a major disruption. Late in 2009 an individual who has worked in the industry for a number of years stepped up and started a new import company to capture some of the business left "on the table" by the closing of Giftco and the departure of Scott's from the import market. Since there was not a major import items supplier to the fundraising trade, this individual saw an opportunity.

The problem occurred when products did not arrive as promised. This has affected most if not all companies who supply nonfood items such as kitchen gadgets, ornaments, decor items and the like. Products are starting to arrive now, but this has created multiple backorders for just about every school and league in the country that is using a standard "catalog shopper" program, regardless of what company they contracted with for their fundraiser.

Fundraising product sales are highly concentrated into a two month period, with local sales starting in late July for leagues and in August for schools, with most local sales ending in mid-September, with just a few extending later into the fall. Packing operations start in early September for league sales and extend into November for school sales. Since we are at the middle of October when this is being written and are just seeing some of those imported items arriving at pack operations across the country, the backorder of items is occurring for every company nationwide, and is affecting thousands of schools and leagues.

For those fundraising companies that are in sound financial condition, products will continue to flow and backorders will be filled quickly. For those on shaky financial ground, who are over-leveraged and owe more than their receivables can support this may be the final straw, and some may not be able to afford the additional delivery costs of the backorders. Not only is there a delay in cash inflows, but the cash outflows go longer because temporary workers have to be kept on the payroll longer, until product comes in and is shipped out. So expect even more fundraising companies to go out of business before the fall of 2011.

Please understand that the pack and ship operations around the country that support the local independent fundraising companies have to make their purchases for the fall of 2011 in Feburary of 2011. This is a giant piece of guesswork and a giant gamble for the pack and ship operations. To protect themselves from financial ruin the "smart" companies are only printing a finite number of brochures to support the sale of products they order. Local fundraising companies are also taking protective measures by requiring higher participation levels for services and profit bonuses. When you compare companies, consider whether a company that "offers the moon and the stars" will actually be around to deliver.

Product fundraising remains the best and most efficient way for schools and leagues to raise large sums. In the future, however, it will be necessary to book your program earlier in the year and plan carefully to maximize your success. You may need to accept a lower profit percentage with products can be offered at lower prices, so people will actually buy them. With so many organizations raising funds it is essential for schools and leagues to do everything possible to maximize the number of students or players who actually sell and turn in orders.

There is truly a paradigm shift going on and those who stay in front of it will be rewarded. Those who fail to plan will surely fail.

Chocolate Sales

FREQUENTLY ASKED QUESTIONS ABOUT SELLING CHOCOLATE.

Will chocolate fundraising add to the problem of childhood obesity?

It's important to note that Wolfgang fundraising chocolate is primarily sold to adults. While it's possible the chocolate that is sold may be consumed by some children, if eaten in moderation, chocolate can be included in most diets. The current USDA food pyramid even includes sweets as part of a balanced diet. Sweets, such as chocolate, are considered "discretionary" calories and can be included in a well- rounded diet as long as they are eaten in moderation.¹

Our school has strict health policies. Can we sell chocolate?

The U.S. state and local health and wellness policies only restrict the sale of foods sold on school premises during school hours that compete with the national breakfast and lunch programs.2 The United States Department of Agriculture (USDA) regulates the nutritional content of national school food programs, but not competitive foods, such as fundraising chocolate.³ Because fundraising activities take place off school premises and not during school hours, the health policies do not apply. Also—and here's a very important distinction—Wolfgang fundraising chocolate is sold to adults and not to children.

If you are told there is a health policy issue, remember that these nutritional standards, based on the U.S. Federal Government's Child Nutrition Act, were developed as guidelines for food served on campus, during school hours in the cafeteria.⁴ Chocolate used for fundraising is not subject to the Child Nutrition Act.

Do the health policies apply when it comes to fundraising?

Chocolate fundraising takes place outside of school-sanctioned events and off school

premises, so it is not subject to the health policies. The same is true of other snacks sold off school premises, such as pizza and soda sold at concession stands during sporting events. The health policies only apply to food served on school grounds, during school hours in the cafeteria.

Is chocolate unhealthy?

No, if eaten in moderation. Chocolate has a lot of healthy benefits and, in the world of snack foods, it's one of the healthier options. Here are some of the benefits of chocolate:⁵

• Made from natural ingredients – cocoa beans, sugar and milk

• High in antioxidants, the molecules that may protect cells from diseases (one serving of dark chocolate has more antioxidants than a serving of blueberries!)

• Contains stearic acid, the acid that may reduce cholesterol in the blood

• Contains oleic acid, the acid that may increase good cholesterol levels (HDL)⁶

• Contains cocoa butter, a naturally occurring good fat like olive oil or canola oil

• No bad trans fats

• No preservatives or artificial colors⁷ • Low in sodium (salt)

• Contains valuable protein, calcium, and iron

Doesn't chocolate have a lot of fat and calories?

Chocolate should be considered a treat and not part of a main meal. The key to a healthy lifestyle is a balanced diet and regular exercise with treats included in moderation.

An average serving of chocolate has 13 grams of fat (most of which comes from cocoa butter, the good fat found in cocoa beans8) and 220 calories. A serving of apple pie, another popular dessert, has 360 calories and 17 grams of fat. A slice of cheesecake contains 411 calories and 25 grams of fat!⁹

How does chocolate consumption relate to childhood

obesity?

Chocolate consumption has not been proven as the main cause of childhood obesity. For instance, Americans are not among the top consumers of chocolate per capita, yet we are the most obese nation in the world. Data from the National Health and Nutrition Examination Survey, 1999-2004 (NHANES) states: Children candy consumers compared to non-consumers had significantly lower body weight, waist circumference, and triceps skin fold measures¹⁰.

The same study shows child candy consumers were 19% less likely to be overweight and 18% less likely to be at risk of being overweight or becoming overweight. Thus, these data suggest that child consumers of candy were able to balance energy intake and consume candy in amounts that do not appear to negatively affect health, as seen in the chart at the top of this posting.

What are some potential reasons for childhood obesity?

Children are less active today. Childhood obesity is the result of an imbalance between the calories a child consumes and the calories a child uses to support growth and development, metabolism, and physical activity. In other words, obesity results when a child consumes more calories that the child uses.

Wolfgang recognizes that childhood obesity is indeed a problem; one possible cause is that only 78.3% of schools provide physical education for their students, according to the most recent School Health Policies and Programs Study (SHPPS).¹¹ Fundraising programs like ours help to subsidize many of these school fitness and athletic programs.

To put this issue in greater perspective, consider these facts related to childhood obesity as shown in the diagram at the top of this posting.

There has not been a single local, state, or national policy that has banned fundraising with chocolate. In fact, the current language in Washington DC for the renewal of the school lunch program specifically exempts fundraising from the wellness regulations.

The health policies only apply to food served on school grounds, during school hours in the cafeteria. Chocolate fundraising takes place outside of school-sanctioned events and off school premises, so it is not subject to the health policies. The same is true of other snacks sold off school premises, such as pizza and soda sold at concession stands during sporting events.

Use the Wolfgang Sale to educate children on healthy lifestyles!

Chocolate and confections are part of a healthy lifestyle and should be included in our diets, but in moderation. Part of our responsibility as parents and educators is to teach children how to lead healthy lives now and when they are adults. Children who learn the importance of balanced eating will be better equipped to manage their own diet as adults. A WFC sale is the perfect opportunity to discuss these issues with children and teachers.

1. Use your kickoff to teach children about healthy eating:

a. Give them examples of Sometimes foods and Always foods.

b. Teach them the difference between a Meal, a Snack, and a Treat.

Chocolate is a Treat – to be used for smiles, pleasure, happiness, and

most importantly in moderation.

c. Remind them of the importance of play, sports, and physical activity.

2. Use your prizes to promote physical activity.

3. Remind your sponsor that the sale itself will promote walking as children safely

sell Wolgang in the community with their parents. Walking is one of the key differences between American and European lifestyles. Newer towns and developments are being designed to promote walking.

Sources:

1"Inside the Pyramid," USDA: http://www.mypyramid.gov/pyramid/discretionary _calories.html

2"Child Nutrition Reauthorization: An Overview of the Child Nutrition and WIC Reauthorization Act": http://www.candyusa.com/News/PublicPolicyDet ail.cfm?ItemNumber=1531

3"School Food Environments and Policies in US Public Schools" from Pediatrics: Official Journal of the American Academy of Pediatrics: http://pediatrics.aappublications.org/cgi/reprint/ 122/1/e251

4USDA Food and Nutrition Service links: http://www.fns.usda.gov/cnd/Governance/nslp- legislation.htm

5"The Health Benefits of Chocolate": http://www.facts-about-chocolate.com/health- benefits-of-chocolate.html

5"Chocolate: The Exhibition" at The Field Museum, Chicago: http://www.fieldmuseum.org/Chocolate/eat_healt h 2a.html

7"What's In The Foods You Eat," USDA Agricultural Research Service: http://www.ars.usda.gov/Services/docs.htm? docid=17032

8"Cocoa Butter: A Natural Fat": http://www.allchocolate.com/health/nutrition/fats. Aspx

9"What's In The Foods You Eat," USDA Agricultural Research Service: http://www.ars.usda.gov/Services/docs.htm? docid=17032

10"National Health and Nutrition Examination Survey, 1999-2004.

11SHPPS 2006: Topic and Component Specific Fact Sheets: http://www.cdc.gov/HealthyYouth/SHPPS/2006/ factsheets/topic_component.htm

FALL 2010 UPDATES

The Mackenzie Collection and 'Tis the Season are now sold out. All
the brochures are gone to other groups. We do not reprint, so there
is never any chance of us running out of product.

The good news is that we have several other wonderful lines that we
just added. WOW has many of the items from Mackenzie and Tis the
Season in a new format, plus it has new items not in the other programs.

We have added the entire line from S'kool Smartz and the entire line
from UniPak supply to take up the slack. These are quality lines that
we used in the past, and only left them because of higher
transportation costs for us. To serve our customers better we have
added them back.

Also we carry the complete line from Wolfgang Candy, in business
manufacturing quality Chocolate products in York PA since the
1920's. This is a family-owned company just like all the others with
which we work.

Check out all our lines at www.fundraisingcentral.net.

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Why use our giftwrap program instead of "theirs?"

1. The national giftwrap programs have changed. We have kept to our basic principles.

2. The national giftwrap companies expect parents to enter orders online. That's well and good for those who have high speed internet, but what about all those families in rural areas with dial-up internet?

3. Having parents enter orders online is promoted as saving hours of time for volunteers. What about the extra time each family has to spend entering orders. Can this reduce participation and sales in the long run?

4. One national company has gone to online-only ordering with no printed catalog. This makes it difficult for those without high-speed internet, including grandparents, people in rural areas, and those who do not have computers.

5. We offer all American-made wrapping paper and accessories. The national giftwrap companies use some imported wrap accessory items.

6. Our wrap supplier, The Giftwrap Company, is the largest wrap manufacturer in the world and we have an exclusive with them for fundraising.

7. Our wrap and gift catalog includes discount cards from Omaha Steaks. Their catalogs do not.

8. Our wrap and gift catalog includes discounts cards from Restaurants.com and their catalogs do not.

9. Schools and leagues can earn up to 60% profit on wrap items in our catalog. One national wrap company offers only 40% and the other offers up to 50%. Our profit bonus plan is based on the level of participation by your group--how many members sold out of those receiving brochures.

10. Our company and our business partners' companies are owned and managed by people experienced in product fundraising for schools--people with experience "in the field" running projects. Theirs are owned by groups of investors with no direct experience in fundraising.

There you have the top ten reasons you should be using our Mackenzie Collection. Go right now to www.fundraisingcentral.net and click on fall programs. Follow the links to view this wonderful program.

Then call us for an appointment, email us with questions, or just call or email to set up your sale for fall.

You'll be so glad you did!

Jewelry in our holiday workshops are kid safe

We use the "Elf Shelf" as our supplier for our holiday workshops. All of the jewelry is lead-free, cadmium-free, and nickel-free. So for a safe choice in your holiday workshop in your elementary school next year, give us a call.