Wait! Scrip is not just for churches and schools anymore. Increasingly, nonprofit cultural centers, health clinics, civil rights organizations and environmental coalitions are finding scrip to be a comparatively easy way to raise funds.
How does scrip work, anyway?
With regular scrip (which is issued as a gift card) a group — let’s say a disabilities center — 50 scrip gift cards from a grocery chain (or gas station, etc.). Each card has a face value of $100, so the total has a face value of $5,000. But the nonprofit pays only $95 per card for a total of $4,750.
The nonprofit sells the gift cards at the face value to clients, staff, volunteers, and others. In other words, a family might buy 2 scrip booklets worth $200 total and pay $200 for them. The family uses the scrip at one of the designated businesses. If the family shops there anyway, they don’t experience any difference in the expense, and the disability center nets $250 from its $4,750 investment (the typical commission for a nonprofit is 5% of the face value).
But 5% doesn’t sound like much to raise!
True. But suppose you have just 15 board members or staff or volunteers who spend $100 per week at a grocery chain such as Safeway or Costco. Each may be glad to buy $400 worth of grocery gift cards per month. Over the year you’ll make $3,950. (Compare this with how much work it is to raise $3,500 at a spaghetti feed or by asking board members for donations.)
And probably, you’ll have more than 15 members participating and often at higher levels, and in some cases, your small group of loyal supporters will also be willing to sell gift cards to their friends. Many small organizations easily raise $10,00 and $30,000 through their beneficiaries, volunteers, and members. And many of us are glad to have an easy and no-cost way to support organizations we care about.
What else is good about scrip?
Scrip can be used by supporters of all income levels, and many middle-class volunteers (for example) feel good about selling scrip to their neighbors. After all, if the neighbor already shops at Target or TJ Maxx, it’s not hard to ask them to buy scrip.
So what is e-scrip?
The advent of e-scrip has made it far easier to sell scrip to supporters who are not regularly at your site (that’s why scrip has traditionally been associated with churches, schools and sports teams who meet in person frequently). With e-scrip you can sell scrip to e-businesses and national chains to supporters around the country and the world.
With e-scrip, a nonprofit registers with a service such as Great Lakes Scrip Center or escrip.com (USA) or fundscrip.com (Canada), and the organization’s members and supporters register as well, designing the nonprofit as the one they wish to support. The service then issues store gift cards (such as Safeway’s or Best Buy’s) and uses credit card information to move 1% to 4% of the price of purchased items to the nonprofit as a donation.
What are the arguments against raising money through scrip and e-scrip?
Although many supporters of nonprofits welcome scrip as a way to donate, others are uncomfortable with the necessary sharing of private information, such as telling Wal-Mart where you donate. In other cases, someone may not like your nonprofit’s affiliation with a business of which they don’t approve. And for some organizations, tying donations in any way to consumer spending doesn’t feel right.
Any other downsides of scrip?
Regular scrip often results in a nonprofit handling a good deal more money than it ever has previously. For example, an all-volunteer group may be used to handling hundreds of dollars, but with scrip they may be handling tens of thousands of dollars in a short period of time. Doing so requires conscientious volunteers who have strong ability to manage funds carefully, promptly, and ethically.
An unintended consequence of scrip: the store treats the 5% as a donation on their own books, hugely and artificially inflating the size of their “donations” to nonprofits each year. The reality is that stores make a profit on scrip: often their profit margin is larger than the 5% (or other percentage), and people lose their gift cards or don’t get around to using them. So when you see those big donation numbers from scrip-issuing stores (like Target or Walmart), pour a few grains of salt on them (or maybe a whole salt shaker).
What are your top 5 pieces of advice about scrip?
- Experiment with scrip first with a small group of folks, and see how they experience it and how your organization feels about it.
- Second, poll your members and volunteers: “At which of the following businesses do you already shop regularly? Would you consider buying from them in a way that would benefit our organization — at no additional cost to you?”
- With e-scrip, be sure to choose a reputable, stable e-scrip broker (some have gone out of business leaving nonprofits cheated.)
- Consider telling supporters they should only buy gift cards from you for stores and services they already patronize. Don’t allow your profits from the scrip program to lead you to encouraging anyone to buy more than they would without scrip. (Bad wording: “Buy at Piggly Wiggly and support our disabilities center!” Better: “Do you already shop at Piggly Wiggly? Did you know you can support our families without it costing you a dime?”
- Have a committee of volunteers be in charge of the scrip program, and recognize them as leaders of volunteers and as star fundraisers. Regularly ask them how they suggest the scrip program be changed or improved, or whether they are tired of running it.
This article is adapted from a section in Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, by Jeanne Bell, Jan Masaoka and Steve Zimmerman.
About the Author
Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. Views represented in Blue Avocado do not necessarily express the opinion of the publication or its publisher.