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 t's
fuzzy math. You're about to buy a birthday gift for Mom when you
pull out your wallet and look at the charge cards. The "blue"
card, you recall, has a 1.9 percent annual finance charge, while
the "green" card is at 11.9 percent. You use the blue card. At
the end of the month the bill comes for the blue card and says
the rate is really 1.9 percent a month, or 22.8 percent annually.
Your $100 purchase will cost you $122.80 if you put off paying,
compared to the $119.90 you would have paid with the green card.
You feel taken.
If you're not careful, something similar could happen to you
with web-based fund-raising programs that promise rebates to your
schools for purchases made online. If you think this is a path
to economic salvation for your annual fund-raising woes, think
again.
Online fund-raising was spawned from an idea by a California
science teacher who now operates the biggest, and perhaps easiest
to understand, of the online fund-raising companies -- Schoolpop.com.
But not everyone plays by the same rules in this fledgling industry,
and, unlike the carefully regulated nonprofit environment that
schools usually play in, these companies are for-profit concerns
operating in the free market and armed with the goal of becoming
the next high-flying dot-com. In effect, these firms are operating
as marketing agents for the Amazons, L.L. Beans, and Macys of
the world.
The people behind these online systems know that the way to
go is directly to the independent, cash-strapped schools -- not
to the school boards or superintendents, whose oversight might
introduce more red tape and protect schools against complaints
about commercialism.
Consider SchoolCash.com. At the Kent Center School in Kent,
Conn., principal Edward Epstein signed up with the company, looking
for a way to tap private-sector dollars without expending too
many precious resources. The school "did no other publicity than
to pass out letters to students and their parents to explain the
program," Epstein says. "We've already received over $200 from
SchoolCash, which is very good for a school our size. It has not
cost us a penny."
The company's literature, developed by Porter Novelli Convergence
Group, a Boston public relations firm, quotes Jonathan Carson,
chairman and CEO of the FamilyEducation Network and SchoolCash's
new owner: "A teacher buys $100 of books on Amazon.com, and his/her
school receives $20!"
Sounds great, but a closer look at the SchoolCash web site says
Amazon is offering only a 4 percent rebate -- or about $4 per
$100 purchase, a sizable drop from what the promotional literature
promised. And there lies the fuzzy math. What might be a hot,
high-take offer from an Amazon provider one day might not be available
the next. The more traffic SchoolCash drives to Amazon, industry
officials say, the more likely the rebate amount is going to decline,
not increase. 
The high rates are often designed to drive traffic to the site,
the presumption being that repeat customers who have set up a
password, logged their credit card, and determined that their
child's school is going to get the money aren't going to look
at the fine print again and again. Subsequent purchases on some
sites might be at a lower percentage return than initial buys.
But the customer is captured.
Driven by profit
Many online fund-raisers, industry sources say, might subsidize
or inflate the rebates to get traffic. They might even go into
the red, using some venture capital to create the impression that
they are bigger, better, and fatter than their compatriots.
After all, their primary business is operating as marketing
arms of Amazon and the scores of other companies that advertise
on their web sites. The connection to schools is tenuous; the
connection to businesses is a hard, taut tether, driven by profit.
"Online fund-raising will become a central part of a school's
fund-raising strategy," says David Conti, senior marketing director
of SchoolCash, which says on its web site that it has 280 merchants
participating. Conti acknowledges that the rebates vary from merchant
to merchant and in an interview states they range "up to 15 percent
of your purchase" -- never mind the fact that his own promotional
literature says the Amazon rebate is 20 percent.
Asked about the discrepancy in rebate rates, Conti says the
issue isn't easy to address. "There is a wide range of rebates,"
he says. "Each vendor offers a different rebate program depending
on their merchandise and specific price points." In April 2000,
for example, SchoolCash ran a "virtual book fair" special with
Amazon.com that gave 20 percent rebates to schools. "That was
a special promotion," he acknowledges. "Most rebates today are
in the 5 percent to 10 percent range."
The confusion is compounded by misleading media accounts. A
Lexis-Nexis search of hundreds of newspaper accounts over the
past year turned up numerous instances of misunderstanding, misinterpretation,
and misstatements about the capabilities of the new fund-raising
tool. For example, on May 23, 2000, the Washington Post reported
that a portion of any Internet purchase made through SchoolCash
-- usually 10 to 20 percent -- goes back to the school. And
a Jan. 18, 2000, story in the St. Louis Post Dispatch listed SchoolCash
as offering a 10 percent rebate on purchases from Amazon -- not
the 20 percent cited in the company's literature, and not the
4 percent a school is likely to find by clicking on the SchoolCash
web site.
In contrast, online fund-raising industry leader Schoolpop.com
says it will channel 3.75 percent back to a school from Amazon,
and Yourschoolshop.com will offer 4 percent, much more in line
with the number on the web site.
Consider Cash2Schools, with 245 merchant listings (sometimes
several variations of same outlet). A June 6, 2000, press release
from the company states: "Up to 20 percent of the purchase price
is donated to selected school of choice." The web site offers
some small print, saying: "Each merchant supplies us with a quarterly
report that tracks sales and amount raised through Cash2Schools.
Once a minimum of $25 has been donated to a school, Education
Planet will forward the payment directly to the school." And digging
deeper produces even more fine print, under the FAQ section: "Does
Cash2Schools make a profit from the sales through its site? The
merchant will donate a commission of up to 20 percent of the purchase
price to your school. Cash2Schools will take up to 20 percent
of the commission."
A cursory reader might presume that a $100 purchase means a
donation to the school of $20 -- 20 percent. But the company takes
a $4 commission, leaving the school $16. And the school won't
get even that unless other consumers buy enough products to raise
the donation to the $25 quarterly threshold. In an industry where
some officials estimate the average family makes purchases that
could result in contributions of $67 in a year, the donation dribbles
in bit by bit -- and is not tax deductible, as is a direct contribution
to the school.
Red flags and advice
Rea Callender, who set up School-pop.com almost two years ago
and is now fending off challengers, can arguably be considered
the founder of this industry sector. A 38-year-old former middle
school science teacher and son of a school fund-raiser, Callender
is quick to raise the caution flags on the behalf of schools,
advising them not to select, or work with, a provider simply because
the company offers the highest rebate. The proof of success, he
says, is the range of buying options the consumer has.
"You want to offer the largest number of choices; that's the
key thing that a school should think about," Callender says. "The
second most important thing is the service that the fund-raiser
provides, the literature, the support, the explanations, the record-keeping."
Those elements, Callender says, are Schoolpop's advantage.
Callender advises staying away from companies that emphasize
the number of schools they work with, which he considers a misleading
piece of information. Any company can claim to reach out to all
110,000 U.S. public and private schools by tapping into online
resources that link to every single one of them. When customers
-- parents, students, or school officials -- buy online through
one of these fund-raising dot-coms, they designate the school
they'd like the rebate to go to. The online purchase triggers
a message to the dot-com's marketing staff. Then, and only then,
do most of the dot-coms contact the school to offer the rebate.
"So far, no one has said no," Callender says, though some web-based
fund-raisers admit that a couple of unnamed schools have refused
the rebates.
Using this method, Schoolpop.com has touched 17,000 schools
and is adding to that roll through an extended marketing agreement
with an arm of Reader's Digest -- which has traditionally worked
with schools through its QSP Inc. division to develop candy and
magazine fund-raisers -- to reach a total of 40,000 schools. "No
one else has done that," Callender says, adding that Thomas Ryder,
chairman and CEO of the Reader's Digest Association Inc., sits
on his board of directors.
When the school learns that there's money in the till, even
if it's only a few dollars, Callender explains, literature and
promotional materials are channeled to the school for distribution
to students, parents, and staff. The school's internal promotion
for purchasing from these private, for-profit companies might
cover anything from magazine subscriptions to high-ticket consumer
goods from Sharper Image.
Issues of time, energy, and commercialism come into play. Pushing
brandless chocolate or People magazine is one thing, but what
about driving customers to a commercial site with an eye to a
meager 1 percent profit -- a number that frequently appears on
many of the web sites as the rebate available from some outlets?
Callender also suggests that schools look at what the dot-com
is providing. "We pride ourselves at offering our shrink-wrapped
version of fund-raising," he says. "Most of the time, except for
private schools, fund-raising is a mom-or-dad operation. We know
these people have long, hard jobs helping the band or the PTA.
We give them quality marketing materials. If there're 2,000 kids,
there are 2,000 brochures. And there's a different one on a quarterly
basis; and there's a three-foot by five-foot banner for the school
fence."
A sure thing?
From the school's point of view, the conclusion seems simple:
Why not ask parents to stop going to the shopping mall and start
buying online instead? It's no more money out of their pocket.
And even if the rebate is modest, the school will get something.
But consider the implications: Unless the school provides the
technology, the formula favors households with computers, Internet
access, and the expendable income (and experience) to trust online
purchasing.
The trend is not over. Callender, for one, is now branding his
work through Chase Bank credit cards. When you make a purchase
on a branded card, anything from a tank of gas to an oven, a percentage
of that sale is headed back to the school -- again with the bank
using the school connection as a market driver.
Ask corporate officials why they do not work through school
boards, superintendents, or other administrators, and the question
is likely to draw a pause -- even from Callender. He then says
that approach doesn't work because the program is geared toward
individual schools.
Another answer might be that these providers are seeking to
avoid district-level scrutiny, which might recognize the potential
discrimination in a system that favors more affluent communities
on the "have" side of the digital divide and leaves out the "have-nots."
Online fund-raising doesn't level the playing field; if anything,
it tilts it a bit more.
The debate swirls in the aftermath of a highly critical report
by the General Accounting Office that took a swipe at commercial
activities in schools. The report, compiled in 2000 for U.S. Rep.
George Miller, D-Calif., and U.S. Sen. Christopher J. Dodd, D-Conn.,
challenged the direct commercial activities involved in fund-raising
through the sale of candy, magazines, and gift wrappings, among
other things, but did not specifically broach the subject of supplemental
fund-raising.
"Because advertising is ubiquitous in America, it is difficult
-- if not impossible -- to distinguish between the effects of
advertising to which students are exposed inside and outside of
schools," the report states. "Distinguishing between commercial
and noncommercial activities can be difficult because commercial
activities are an intrinsic part of U.S. society."
While many business-school ventures are philanthropic, the report
says, they might not be completely altruistic: "For example, a
business may donate cash or equipment to schools ... but may also
mention this support in its advertising and use this donation
as a tax deduction." Similarly, in traditional fund-raising, a
parent can make a donation directly to a school and use it as
a tax deduction. Contributions in the form of rebates for online
purchases, however, are not tax deductible.
The University of Wisconsin-Milwaukee, which operates the Center
for the Analysis of Commercialism in Education, has just begun
tracking fund-raising as one of eight elements of commercialism
in the schools. The center's preliminary finding: It's too early
to draw a conclusion, but "any activity conducted or program participated
in to raise money for school operations or extracurricular programs
is considered fund-raising."
Center director Alex Molnar, a professor of education at the
school, fears that commercial activities are now shaping the structure
of the school day. "The effort to more fully integrate the schoolhouse
into corporate marketing plans by securing control over as many
school-based advertising media as possible may well be the trend
to watch over the next decade," he has said. "If so, we can expect
schools to serve as launch pads for marketing campaigns that resemble
high profile movie releases complete with multiple tie-ins for
a variety of products and services aimed at children and their
families."
Miller, who is a senior player on the House Education Committee,
promises a closer examination of commercialism in the future,
saying he wants to "ensure that learning, not commerce, remains
the priority in school. If there is a reasonable balance that
can be achieved, we need to know what that is. Right now, it is
clear that commercialism is increasing without much knowledge
of its breadth or impact on our schools."
The bottom line? There might be no reason to turn down a few
bucks from online purchase rebates, but it's a good idea to consider
what the company wants you to do in the way of promotion. Meanwhile,
don't give up on the bake sales.
Myron Struck,
the founding editor of School Technology Report, is managing
editor of States News Service in Washington, D.C.
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