5 Reasons To Be Wary Of Third-Party Fundraisers

I love raising money.

Most of the time.

The other day I stumbled across a Facebook post from a beloved nonprofit for a third-party fundraiser that brought back a slew of bad memories of wasted time and little return.

For those who are not familiar with the term, a third-party fundraiser is when a nonprofit relies on their supporters, community members, and businesses to create fundraising campaigns that benefit a particular nonprofit. These come in the form of restaurant nights or a business donating part of the proceeds of their sale, etc.

With only a couple of exceptions, which I’ll touch on later, I believe that third-party fundraisers do more harm than good.

“But wait!” you say, “Aren’t these a cheap and easy way to raise some quick money for my nonprofit?” The answer is yes, and that is part of the problem.

So what’s wrong with third-party fundraisers then? Here are five things that come to mind:

1. Opportunity Cost

In many cases, third-party fundraisers are driven by an organization’s internal audience. As part of the event, they direct their donors and volunteers to participate. The ultimate result is that an organization dilutes their donor base because their supporters feel like they have done their part by taking part in the third-party fundraiser. Let’s look at an example:

A Nonprofit Organization is offered 5% of the proceeds at a Family Restaurant from everyone who mentions their nonprofit one evening. The Nonprofit Organization thinks this is a good deal and advertise the restaurant night on Facebook, Twitter, and in their e-newsletter. Volunteer Vickie, a loyal volunteer and occasional $50 donor, sees the deal and brings her husband, three kids, and grandma and grandpa to this restaurant for dinner. For simplicity sake, let’s they are big spenders that wrap up the evening with a $100 check. Volunteer Vickie feels great about spending money at this restaurant even though in the back of her mind she knows she would have spent $20 on a home cooked meal. As a result,  Volunteer Vicki feels like she has done her part and ignores the solicitations she receives the rest of the year. So what is the result? The Nonprofit Organization loses $45. The Family Restaurant donates $5 to Organization A (5% of Vicki’s check), and Vicki forgoes her $50 donation because she spent $100 at the restaurant night.

2. Diluting Your Message

Let’s assume for a minute that your organization is unique. Your donors are all sophisticated, and you do not have to worry about them replacing their annual gifts with their participation in your third-party event.

You still have to worry about diluting your message. You have precious few opportunities to connect with you supporters to communicate the impact of your work. Why waste a social media post or an email on a fundraiser that raises a tiny amount of money? There is a lot of noise out there, and you should never waste an opportunity to communicate something positive about your organization.

I’m just going to throw this out there: Every time you think about using one of your limited communication opportunities to promote AmazonSmile, a restaurant night, or some other event that will only help you raise $150, don’t. Instead, dedicate that social media post or spot in your newsletter to thank that company who sponsored your event for $10,000 or that major donor who issued a matching gift challenge on Giving Tuesday.

3. Giving Up Control

Not only do risk losing money and diluting your message with third-party fundraisers, but you also risk doing serious damage to your brand when you choose to partner with a person or a company you cannot control. During my time as a fundraiser, here are just some of the third-party fundraisers I was asked to participate in: somebody walking across country, somebody riding their motorcycle across the country, less reputable companies who wanted to give a portion of their sales, and one very odd gentlemen who wouldn’t quite give me a straight answer to how he was raising money.

All those people wanted to use my logo. What a terrifying thought! It was clearly a no-brainer to turn them down. I did not know those people. I did not know how my logo would be used. There was no prior relationship with these individuals and organizations. These were easy; however, it is the conflicts that are hard to see or don’t even exist yet that should keep you up at night.

I recently saw a beloved organization advertise a third-party fundraiser connected to a seemingly legit t-shirt company. However, it quickly became apparent that all the t-shirts had specific faith-based slogans. This did not personally bother me, but this is a secular organization, and I could easily see somebody getting frustrated that their favorite nonprofit is pushing t-shirt sales with a specific faith-based message.

What seems innocent at first, can unexpectedly upset part of your donor base.

4. ROI: Overburden Your Staff With Little Return

A couple of years ago, a random restaurant reached out to my organization and wanted to give a portion of their proceeds to anybody who mentioned my organization’s name when it came time to pay the check. Already working 50-55 hours a week, I was asked to go work a booth at their restaurant located 50 minutes from my home for 3 ½ hours. How much did we raise that evening? Less than $100.

Before you agree to a third-party fundraiser, consider your return on investment. It it worth the staff time you are investing into an event? Could your staff be spending that time on other projects that could be raising you more money?

You ask so much of your staff already and let’s be honest; you are not paying them nearly enough. You should be protecting them and their time because one day, you will need to ask them to go above and beyond for something vastly more important than a restaurant and you don’t want them feeling bitter or overworked.

5. Stewardship Is Not Possible 99% of the time

Most third-party fundraisers are going to leave you with nothing more than a check. You will not even get a list of names, let alone their contact information or reasons for giving. Acknowledgement and stewardship are at the heart of any fundraising operation. You wouldn’t send out your end-of-year solicitation if you were not planning to acknowledge those who give. So why would you want to participate in a third-party fundraising activity where you could not even acknowledge the people who made an effort to support you.

Now, not all third-party fundraisers are bad. Some can have an enormous impact on an organization. Take Crew Carwash in Indianapolis as an example. They donate part of the proceeds from  every customer who gets a particular type of carwash on a specific day to a nonprofit. That have donated a lot of money to nonprofits around Central Indiana. Just check out the results from their partnership with Gleaners Food Bank of Indiana. And this wasn’t even the largest one they have done.

Crew Carwash bucks the third-party fundraiser trend for a couple of reasons:

1. It raises a lot of money for nonprofits. This type of money is hard to ignore.
2. They are a great partner and do much of the work and cover all of the upfront costs for nonprofits.
3. They are willing to use their own marketing dollars to advertise the fundraiser. You combine that with their a large marketing footprint, and it is a big win for a nonprofit.
4. They are a great brand to be associated with.

You have to weigh the benefits from the drawbacks. For every Crew Carwash Fundraiser, you have maybe have countless other events like the Color Runs that do little for nonprofits and make a lot of money for a for profit company.

While I do not want to issue a blanket statement about third-party fundraisers, I do want to issue a word of caution about hosting them or even participating in them. They can be a quick way to make a buck, but ask yourself, could we be doing something more?

Have you had success with third party fundraisers? Let me know in the comments below!