Kevin D. Feldman
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