Fundraising treats



Fundraising treats

Fundraising Treats

A school plans a fundraising event, for which it has a sponsor and an equipment supplier (benches, tables etc). The sponsor agrees to pay an amount equal to 20% of the proceeds obtained, and the school agrees  to pay the supplier 10% of the proceeds.

Does it matter whether the equipment supplier is paid before the sponsorship money is obtained – or vice versa?  

Approach to solution

Suppose that the total takings are $1000.

(a) Pay supplier first

Amount to school after costs = $1000 x (90/100) = $900

Final amount to school          = $900 x (120/100) = $1080

(b) Obtain sponsors money first

Amount to school after sponsor = $1000 x (120/100) = $1200   

Final amount to school = $1200 x (90/100) = $1080

Solution and interpretation

From the school’s point of view – No ($1080 both ways).

From the viewpoint of the supplier and the sponsor – Yes.

(a) Supplier gets $100 and Sponsor pays $180

(b) Supplier gets $120 and Sponsor pays $200.

In (b) the sponsor has subsidised the supplier as well as sponsoring the school.

General insights 

  • The best solution to a problem may depend on the perspective of different persons involved: school? supplier? sponsor? all three?
  • Key terms need to be defined clearly up front – are “proceeds” to be determined before or after subtracting costs?
  • Is sponsorship to be applied to gross or net profit?
  • Team approaches can ensure that the interests of all players are  considered.

 

SP-star-3
Go to the Starting Points Forum to join the discussion or find more Starting Points

developed with DB Informatics