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Charities and Trade Exchanges: How Consultants and Nonprofits Can Benefit from Bartering (Part 2)

In Part 1 we covered:

  • The Modern-Day Barter/Trade Exchange Organization
  • Bartering Non-Cash Gifts
  • Key Benefits of Bartering for the Consultant
  • Key Benefits of Bartering for the Nonprofit

In this issue, we will cover the following points:

  • An Exciting New Development!
  • Three Ways to Give Non-Cash Gifts Using the Bartering System
  • FAQs About Bartering, Consultants, and Nonprofits
  • A Sampling of Trade Exchange and Association Web Sites

An Exciting New Development!

Where I live, The Norfolk Foundation is the largest of the community foundations serving the Hampton Roads area of Virginia. The Foundation established a matching gift program called “Arts Match” that provides a 1 to 2 match on cash donations made to eight area arts organizations. It just so happens that these 8 nonprofits are also members of the local trade exchange, The Barter Authority. The Norfolk Foundation has agreed that they will match barter gifts to these organizations as well. In other words, if Ed’s Pet Supply has $500 worth of birdseed that it wants to sell through The Barter Authority, when Ed sells it, he can donate that value to The Virginia Symphony, with the Symphony getting a $250 match from The Norfolk Foundation. Pretty neat!

Maybe the other community foundations across the nation would do the same.

Three Ways to Give Non-Cash Gifts Using the Bartering System

Here are three alternatives for using a trade exchange to immediately benefit a nonprofit organization:

  • Donors not belonging to a trade exchange can give non-cash gifts directly to the charity, at which time the member-charity can market the donated items within the trade exchange and redeem them at 100% of their fair-market value.
  • A member of the local trade exchange, or member of the national bartering network, can market and exchange goods and services, donating 100% of the redeemed fair-market value to the nonprofit. The charity can then spend that donated value for needed goods and services anywhere in the local or nationwide trade exchange network.
  • A member of the trade exchange, or a member of an exchange in the nationwide bartering network, can donate any of their accumulated trade value to the charity, whereby the nonprofit can redeem that value within the trade exchange network for needed goods and services.

Let’s look at three very different, real-life examples of how bartering can help nonprofits:

  • Barter Authority member, KidTech is a nonprofit that provides computer training to children and adults in Hampton and Newport News, Virginia. The organization also teaches young people how to recycle and rebuild PCs. KidTech rebuilds so many computers that they barter them out at fair-market value. In turn, KidTech uses the credited value of the rebuilt computers to pay for travel and lodging for conferences, building maintenance services, consulting, etc.
  • An excavating company and trade exchange member has a truckload of gravel that was refused upon delivery. Rather than haul it back to the yard and dump it, the owner can donate the value of the gravel to support his/her favorite nonprofit that also belongs to the trade exchange. Trade exchange staff would act quickly to find another member who would accept the gravel at fair-market value. The value of the gravel would then be credited to the account of the charity that could, in-turn, use that credit to acquire office items, seamstress and photographic services, etc.
  • In addition to their regular workplace giving programs, some Barter Authority members support the United Way of South Hampton Roads by donating accumulated trade value to the nonprofit. The local United Way is also a member of The Barter Authority.

FAQs About Bartering, Consultants, and Nonprofits

As a consultant using barter, won’t I get stuck with clients who never want to pay cash for my services?

Yes, that’s possible. But that’s not always bad. Some trade exchanges represent hundreds of businesses providing goods and services from A to Z. So, if you can spend your accumulated trade value on things that you normally pay cash for…that’s good, isn’t it?

Also, remember that your job as a consultant is to help your clients operate more efficiently, be more effective, and raise more money. If you are accomplishing this, then before long your clients will be able to afford paying you in cash.

Won’t feelings get hurt when some of my clients’ donors discover that their family heirloom was redeemed through barter?

It’s possible, but not likely. Most donors understand that their non-cash gifts won’t be hung in the charity’s foyer or wind-up on the founder’s finger. If they believe in the charity’s mission, then they should be glad to see their treasure converted to cash to further that mission. As I recently asked one of my clients, “Would your partners rather see their donation at work, or collecting dust in this closet?”

Charities should be talking to their donors anyway. By telephone, e-mail, or letter, when thanking the donor for their non-cash gift, charities should let them know of the donation’s intended use. It might look something like this: “Thank you for you generous gift of pottery. Please know that the proceeds from your gift will be used to carry out the important work of healing young children in war-torn Iraq. Should you have any questions, please don’t hesitate to contact me.”

Won’t my clients receive some donated items from people wanting to rid themselves of junk?

Yes. However, much of that can be avoided if the charity communicates to both donors and staff about the kind and condition of items that will not be accepted.

Aren’t some trade exchanges better than others?

Yes. Like consultants and nonprofits, some trade exchanges don’t do a good job. It is up to you and the nonprofit to practice due diligence when shopping for a trade exchange. Here are a few things to look for in a reputable trade exchange:

  • Number and quality of businesses in their network.
  • A broad range of goods and services represented.
  • Satisfaction of the trade exchange’s members. Ask some of them if they’re satisfied with the service and value.
  • Policing of trade exchange members. Check to see if the trade exchange has a policy of expelling members for not delivering quality goods and services at fair-market value. If they allow businesses to remain in the network after receiving numerous complaints, then there’s a problem.

By now you should have a workable understanding of how the bartering or trade exchange system works, and how a consulting practice and nonprofit organization can participate in and benefit from this alternative economy.

If you are a consultant, consider using barter as an alternative to your cash-paying clients. It can benefit you in more ways than you know. If you are a nonprofit, shop your local trade exchange(s). And when you find a good one, join, and encourage your donors to make non-cash gifts in addition to their regular giving. In doing so, you will help to lift more of your donors to higher levels of partnership, while attracting new partners and prospects. Besides that, you will be able to purchase the goods and services needed for your nonprofit, while conserving cash that can be used to sustain or expand your programs.

I know that for some of you this may require a major paradigm shift for your consulting firm. It may even require overhauling some of the things that you do. We have all been reading the articles bemoaning the sad state of philanthropy, and how some nonprofits are rising to the new challenges, with many having great success. Try new things. Take some risk. Be flexible. Would you rather be “sitting with the ducks” or flying with the eagles?

A Sampling of Trade Exchange and Association Web Sites

Please investigate the following Web sites to become more familiar with the barter or trade exchange concept:

Kansas Trade Exchange, Inc., Wichita, KS – http://www.kansastradeexchange.com

Metro Trading Association, Troy, MI – http://www.metrotrading.com

The Barter Authority, Norfolk, VA – http://www.thebarterauthority.com

To locate a trade exchange in your area, check out the following trade exchange association Web sites:

Trade Exchange of America – http://www.tradefirst.com

The National Association of Trade Exchanges – http://www.nate.org

 

About the Contributor: Kevin D. Feldman

It seems like yesterday when my experiences as a marketing executive for a “Big Three” automaker and as a volunteer serving Detroit-area nonprofits culminated with my accepting a full-time position with a nonprofit organization serving disadvantaged youth and adults in Detroit, Michigan. As a vocational training Program Director, I developed partnerships with city, state and federal agencies and funders, transportation providers, large and small businesses, and other supportive service providers to create pathways to gainful employment. My work involved fundraising as well, cultivating and winning support from corporate and foundation donors. As an additional source of revenue and jobs, I also created a “social enterprise” that provided real-life work experience for young people while providing them a wage. During this time I was also asked to serve on the founding Board of Directors for the Greater Detroit Employment Opportunity Association. I also served as the organization’s first Executive Director.

As a volunteer, I served for 12 years as a leader for “special needs” Boy Scout Troop 390, and simultaneously as a therapeutic horseback riding instructor for a local 4H Club. During this time I arranged for both groups to make history by being the first team of developmentally and physically challenged children and adults to march in the Michigan Thanksgiving Day Parade – and they led the Parade! Because of the national attention raised by this historic event, doors opened for new financial and volunteer support for both organizations. This inspired me to start a nonprofit marketing firm, Commun-a-Care, Inc., that among other accomplishments created the very successful “Feet Don’t Fail Them Now” campaign for the March of Dimes walk events.

My professional and volunteer experiences led me to a successful career as a fundraising executive serving both large and small nonprofit organizations. A student of fundraising and nonprofit management, I have learned much from both failures and successes – and continue learning as the Nonprofit Sector and fundraising evolves.

In my private practice as an independent fundraising officer, my clients have been small to mid-size nonprofits that are beginning or broadening advancement programs, or those organizations experiencing a funding crisis. Working with only a handful of clients at a time, I have occasionally served in interim roles as Executive Director and Development Director, providing hands-on leadership to grow and stabilize an organization’s revenue until a permanent hire is made. Desiring to spend more time with my family, I am now seeking to leave my practice for full-time employment with one nonprofit organization based in the Greater Chicago Area, or allowing me to work remotely. As my business draws to a close, I am also serving as a part-time, commission sales associate with Sears Holdings Corporation. I intend on leaving this position when hired as a full-time nonprofit executive.

In my work as the Development Director for a nonprofit continuing care retirement community in Chicago, I built from the ground up a lucrative and sustainable fundraising program. In a relatively short time I had closed large cash and planned gifts, as well as acquired valuable works of art for an auction event. Having created and developed the organization’s online giving storefront, we quickly added new donors making one-time and recurring gifts. In addition, I had assembled a team of seniors for the “Resident Benevolence Committee,” where the focus is to raise money for a Scholarship Fund for hourly staff, and the Care Assurance Fund for seniors who outlive their resources. After receiving high praise from Board members for making quick progress toward goals and objectives, my position was eliminated by the CEO with duties given to a current contractor, a Virginia-based marketing firm.

As the Vice President of Marketing for an international nonprofit organization, I was responsible for managing a $1.2 million expense budget and raising more than $15 million in annual support. With help from my talented team, we revived several revenue streams that had been shrinking in recent years. Challenged with having to raise 50% more in funds than any previous radio campaign, we more than doubled the amount and set a record for donor acquisition. With direct mail income from major donors lagging, we changed the style from an appeal letter to a business proposal, resulting in a swift and generous response from that segment of the donor file. Fighting to stay alive since its inception, the organization’s Artist-Partner program held great potential for donor acquisition. Tapping the network of thousands of US churches, and enlisting the help of popular recording artists, we were able to revitalize the program, resulting in the remarkable growth of donors and dollars.

A devastating tsunami struck South Asia. With missionaries in the impacted areas, several of this missions organization’s 3,500 supporting churches were demanding a report on the welfare of workers in the region. Church leaders requested a plan for delivering aid to the region, with instructions for how their congregations could help. With only one week under my belt as Director of Marketing Communications, I was tasked with creating a communications and fundraising strategy that would best disseminate this vital information and raise the needed financial support. My team produced a video that would be shown to congregations across America. Direct mail, email and website updates kept donors and prospects apprised of the latest news from the field. The results of the relief campaign exceeded expectations. With a goal to raise $1.5 million to provide relief to victims of the tsunami, our efforts raised almost $2 million – with churches and congregations contributing most of it!

In my work with an international nonprofit broadcasting company, I created the fundraising storefronts and developed Web content for the organization’s websites. Wearing a second hat, I also developed their first corporate and foundation relations program. Because of my work with both areas, I made a remarkable discovery that a significant number of active donors were wealthy, yet for years supporting the organization at the $20-a-month level. But that was about to change. When my plan for quickly cultivating these donors to higher levels of support was adopted, it soon revolutionized the organization’s major gifts program adding thousands of new prospects and millions of dollars to the bottom line.

Currently, continuing to consult nonprofit start-ups and those that faced with closure, I also serve full-time as the Development Director for a Chicago-based animal rescue, shelter and adoption organization.

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