Ideas On Scrip Fundraising As A Business

New Markets & ServicesNew ChannelsNew Revenue Streams

Ideas On Scrip Business Model By David Carrithers

Intellectual Property Registered To D. Carrithers at Protect Rite (R692-10768) and WorldWideOCR

11/29/2005 Confidential Information - © 2005 David C Carrithers. All rights reserved. 2

Goal Of Presentation

Share D. Carrithers insights & thoughts on the Scrip industry

Take some of D. Carrithers ideas to the next level of sharing



Scrip Thoughts – Current Situation Fundraising is a constant and ever present demand of

every school, charity and religious organization in the US Scrip fundraising was created by the National Scrip

Center in 1987 as a way to address Catholic school’s funding shortfalls

The scrip model required the scrip middle man to invest more capital in inventor, security and handling as the volume grows

The scrip industry focus has been on bulk sales managed by volunteers at schools

Orders range in size from $100 to $20,000 with as many as 5,000 individual items in an order



Scrip Thoughts –Current Situation Very non-professional, fragmented market – no national

leader No automated systems to process the orders, very

manual (both by the scrip middleman and the charities) Volunteer customer base is not loyal to the processors,

always fighting whatever % the scrip fulfillment house is keeping

Expectations by volunteers at schools is if they order on a Monday they want the scrip by Thursday or Friday at the latest – concentrated buying creates concentrated issues

To date, in the last ten years five scrip companies have gone out of business, most at the point where they begin to grow



Scrip Thoughts –Lessons The National Scrip Center began developing and

piloting a variety of new products offerings, etc. The goal was to change the model:

Scrip Direct – removing the volunteer handling from the process, allowing parents to order online and with a credit card

ScripCenter.org – the first web based scrip ordering system, including a program promotion web page, tools and an inventory management system – managed over $50 million via site within 3 months

SuperGiftCard.com – a web based sudo-affilate program targeted at non-foot traffic charities (human societies, etc.) with the target being the commercializing of the scrip business, included a new model to both the charities and the supporters

CardScrip.com – a credit card fundraising program that includes web shopping, bill pay and buying gift certificates

Incentives With A Heart – allowing companies to buy certificates and donate % to charity of choice



Idea One – Fund America Go direct to the supporter Create the first national fundraising program

that is targeted at the supporters lifestyles, buying habits and shopping interests

Go where they live, they shop and they spend, creating a loyalty program to and for the charity of their choice

Potential to build first database of supporters, multiple charities – tying shopping to giving

Take the risk out of fundraising



Idea One: Fund AmericaFlip The Scrip Model1. Brand as a national, secure, stable fundraising

provider, developer, marketing/promotion group2. Sell direct to supporters, eliminate all handling by

volunteers (allow them to chose a charity to support)3. Sell to a wide variety of larger charities, allowing

them to promote and market the program to supporters

4. Do not sell in bulk, only individual orders5. Do not sell as scrip, sell as a shop and earn program6. Sell only certificates and gift cards that can either be

deactivated or the inventory has no value until shipped



Idea One: Fund AmericaFlip The Scrip Model7. Provide web tools to allow charity to promote

program to supporter base, including a affiliate web linking approach allowing for tracking

8. Make it as simple as possible for charities to use, promote, etc.

9. Change the model to one where, quarterly the charities are paid earnings from the shopping program

10. Do not compete with scrip – not a scrip company11. Ordering and customer support is 100% web based12. Over time add new products and offerings into the

new national channel that are developed, packages or negoated by a Charity Network



American Association Of School Administrators

National Catholic Educators Association

Coalition For The Advancement Of Jewish Education

SchoolsReligious

OrganizationsClubs

HospitalsCharitiesHuman

SocietiesCommunity

Service Organizations

Target Over 1.8 MillionUS Charities

Ford Foundations

http://www.caje.org/register/fs_memb.html



Idea One: Fund AmericaWhat Makes It Profitable? Only offer certificates and gift cards that are

deactivated or have no value until shipped Make the supporter pay shipping, handling,

processing costs, etc. (including make profit in the shipping)

Have levels of offering: Everyday Living: grocery, gas, big box

2% to charity / 2% to 3% to ABN Retail Shopping: clothing, white goods

5% to charity / 3% to 5% to ABN Travel: 10% to charity / 5% to 8% to ABN

Pay charities every quarter, generating float



Idea One: Fund AmericaWhat Makes It Profitable? Charge charities a processing fee (3%) for handling

program development, credit cards, etc. Only issue funds to charities if the earnings are over

$150 If at the end of the year the earned amount is under

$150 sweep the account and retain 50% breakage, the rest back to the charity

Orders under $100 ship regular US postage Create “bundles” like weekly living bundle (gas,

grocery, fast food and a movie pass) or birthday bundle, etc. Create one % back value for the combination, creating more % to Fund America



Idea One: Fund AmericaWhy Is It Different? By positioning it as a loyalty program with a bigger

reward, flip the perception to one of “found money” – the program development company now seen as a value added partner

Going after every charity the scrip players are not, larger more national organizations

Can still pick up all the selling pluses of scrip (i.e. no kids selling cookies) and can go after the fringe scrip users (smaller organizations) OR summer programs (no volunteers needed)

Any size charity can use, scalable - GLOBAL None of the existing players are thinking like this



Idea One: Fund AmericaWhy Is It Different? Collapses the relationship to a one-to-one,

supporter to the fundraising company Allows the program provider (FA) to know the end

user – NO scrip program knows the individual supporters

Separates the buying transactions over many vs. a concentrated few, allowing for better expectation setting and fulfillment timing management

Ability to build a data base of hundreds of thousands, and possibly millions of names



Idea One: Fund AmericaWhy Is It Different? Inventory with no value Allows to create a selling force of thousands by

getting zealot supporters of charities across the US to bring this forward to their charities, religious institutions, clubs, etc.

Allows the retailers to disconnect from the concern of “discounting of goods” at time of purchase, to one of added value. The consumer gets 100% buying power, the charity gets found money and the retailer gets brand loyalty



Idea One: Fund AmericaOther Ideas Charge charities a fee to handle credit card offers,

backing out fees Create a gift card (real &/or virtual) that allows someone

to give it as a gift, and the card is redeemable on the site for any other certificate product (creates float and breakage potential), allow card to have additional dollars added to over time

Create other products, including credit card offering, new custom developed or re-packaged offerings/products into channel

Every new offering, that does not require physical fulfillment generates an improved net margin

Create a multi-merchant gift card that is activated and loaded (re-loaded) by the supporter via the web, put a program together that allows the charity to give the card away



Idea One: Fund AmericaOther Ideas Create a new “charity currency” that is 100%

managed by FA, possibly processes via the existing check processing systems at retailers (maybe even tapping into Federal Reserve processing) – this currency that cares is standardized, branded by with the retailers logo (improving processing and handling)

Could be a single stand alone merchant certificate or a multi-merchant, coalition grouping

A partner would issue the secured currency and settle with the merchant after the transaction takes place, minus the fees and commissions to the partner and the charities



Idea One: Fund AmericaOther Ideas Develop a service program that would allow product

manufactures and others to easily develop and launch programs that support charity. Many companies give free product away, or discounted services and fees (like cell phone companies, etc.)

This could include creating track-able charity promotions, custom promotion certs, etc. that allow the retailers to use these programs as part of their promotional budgets and dollars (i.e. Weber Kettle gives away over $2 million a year in free product, and also does cross promotions with other companies)

This would allow for the professionalzation of this charity based promotions to be launched, tracked and paid



Idea One: Fund AmericaPotential Revenue Possibilities Conservative Example:

100 Supporters each buy $250 in a year = $25,000 in certificates purchased via 200 orders ($125 average per order)

Earnings @ 5% to charity = $1,250.00 Gross Profit to FA = $1,637.50

@ 5% via cert commissions = $1,250 + 2% on float of $1,250 = $25.00 + 1.3% on shipping and handling of $25,000 = $325 + 3% program fee from $1,250 = $37.50

Gross profit per order of $8.18



Idea One: Fund AmericaPotential Revenue Possibilities Conservative Example Continued:

Get .5% of 1.8 million charities in US to use = 9,000If each charity has 500 supporters = 4.5 millionIf 10% reached & use = 450,000 supporter customersIf each spends $250 a year = $112,500,000 (900k orders)

Earnings @ 5% to charity = $5,625,000 Gross Profit to FA = $7,461,750

@ 5% via cert commissions = $5,625,000 + 2% on float of $5.6 million = $112,500 + 1.3% on shipping and handling of $112.5 M = $1.5 M + 3% program fee from $5.6 = $168,000 + 8% breakage ($75 to charity/$75 to FA) = $56,250

Gross Profit per order of $8.29

Est. 24 months to get to this volume level or greater



Idea One: Fund America Potential Features Website, allowing either supporter to choose up to 5

charities to support in over the year, or a charity to promote via a link affiliate approach off their website

Quarterly e-statemnts to charity and to supporter of funds raised

Year end statement to charity and to supporter Payment by credit card, e-check, bill pay Charity promotion tools, web banners, materials and

web training on getting the most (all via the web) Allow supporters to pre-enroll credit cards they have

so that they earn loyalty points in their program of choice (good for them, good for the charity)



Idea One: Fund AmericaPotential Features Offer direct giving option – dollars to charity direct Add in other options and offerings over time, including

credit cards (i.e. 5% back on all gas purchases to charity), new certificate products/ gift card products, bill pay, etc.

Create wish list approach, allowing charities to solicit supporters to donated certificates to the charity

Planned giving – allowing a supporter to schedule giving over a 12 month period, including auto ordering

Develop option for companies to buy cert./gift card offerings to use in employee and incentive programs (% back to charity of choice) – only bulk option.



Idea One: Fund America

Website: FA

Supporter Can Set Up & Select Up To 5 Charities To Give To

OR Charity can set up and create link in program and offer to base

Easy & Personal

Option 1: Supporter enrolls & shops – allowing charities of choice to earn as they shop and use

Option 2: Charity links to their website, & every time a supporter clicks thru the charity earns (one time shopping) or enrolls for on going the charity earns

Mar

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D

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Option 3: Target affinity card programs as an extension to existing options

Option 4: Corporate buying for incentives & employee programs

Features:Buy gift cards & certificates and earn for the charities of choice

Simple to use, schedule and track contributions

Quarterly and yearly statements of contribution

More than certificates & gift cards, all my buying, expenses and transactions help

All the tools my charity needs to promote and grow their earnings

I can buy once or set up a long term program

Larger National organizations will brand the site & materials with their organization logo, etc.

As new offerings, products are added available to all supporters and charities

National Charity Loyalty Program



Rough On Start Up$$$?TBD – 6 months to launch Web site

Content, navigation, design Development Needs

Plans & actions for promotions, sales, marketing, branding, communications

Product development & managementRetail partnerships/ NBDFulfillment & customer view

Management Team - TBD



Launch Thoughts

Develop concept presentation and test concept with a grouping of merchants

Launch targeting one state or a region to work the bugs out in the system, sales approach and marketing message

Need a top-notch, small but dedicated team to make this generate the right buzz, velocity and support by the merchants



Risks Not going into this with the right spirit about helping charity Being tempted to take on inventories with limited or no

terms Not able to get the merchants and partners comfortable

with the idea Not seeing the bigger picture of more than certificates/gift

cards – about building a national channel Not investing the right dollars and people to the

development and launch Possible Competition: Some old NSC team members are

“messing around” with some level of the same ideas – limited funding, fulfillment ability, no brand, etc.



Think About The Possibility

Tapping Into All Types Of Transactions

Tapping Into All Forms Of Commerce

A Few Realizations 2/03



Think About The Possibility

Tapping Into All Types Of Transactions

Tapping Into All Forms Of Commerce

A Few Realizations 2/03

Keep In Mind That Each Of These Interactions & Relationships Also Represent An Opportunity For FA

To Find A New Corporate Customers



Summed Up ThoughtsIdea One: Fund America With the right team and right spirit this

could be a gross profit business of between $8 and $11 million a year – which could be taken internationally

Could be first national fundraising program that makes long term sense

Could do good while making good



Idea TwoPrivate Currency Management There is no single source in the world to go to and work

with on establishing and managing private or alternative currencies

Establish an organization that builds relationships and partnerships with all the key technology providers, fulfillment players, etc.

Most companies in the financial transaction world are bank focused, retail processor focused, fulfillment focused, etc. not marketplace/ outcome focused

Many consumer product companies, promotions companies, etc. don’t have a clue where to start when wanting to do something that might require a unique payment approach



Idea TwoPrivate Currency Management While many gift cert companies have many of the

elements of this concept, along with relationships to potential partners – this is the act of formalizing and creating clarity around this business

Target loyalty programs, gift card/cert offerings, consumer promotions houses and programs, malls, etc.

Create a group of product offerings that can be customized, personalized or used off the shelf

Some retailers want to get out of the gift card/certificate management business – take it one for them and share the profits, etc. Become their turn key management provider

No matter the idea or currency – point to dollars, no mater the technology or payment platform this is the source to start with



Idea TwoPrivate Currency Management

PRIVATE CURRENY MANAGMENT

Credit, Debit, Stored Value, Points, Miles, Gift Cards & Certificates, Smart Card, IFR, Wireless, Cell

Phone, Biometric

From Concept Development To Complete Turnkey Management

Production & Fulfillment

Legal

Market & Sales Development

TechnologyCustomer Service &

Order Processing

Product Communications

Funds ManagementTransaction Management

Lobbying & Collation Building

New Product Development

Promotions• Fees

• Revenue Sharing

• Transactions



Thank You

I appreciate the opportunity to share my thoughts and ideas

Best In Spirit!David [email protected]

Government & Nonprofit

Ideas On Scrip Fundraising As A Business