Filed under: Editorials | |
I should probably preface this post by saying this is a RANT. Ok, you have been warned.
My kids are in elementary school. That means scouting and fund-raisers. My boys just brought home order packets for baked goods proudly touting “40% of every purchase supports your school!” Exclamation in the original. Last month we were standing in front of a local supermarket shilling popcorn for the local boy scout troop. Now, when I say “we” I really mean my wife and the boys since I was working that Saturday and find the entire practice ridiculous for the following reasons.
It isn’t sales, it is charity. I do not need popcorn, nor do I need cakes, cookies or pastries. Neither my waistline, nor my pocketbook will thank me for it. And I unless I am trapped on a 16 hour fight to Asia, a $14 bag of popcorn just isn’t something I will willingly shell out money for.
What’s wrong with it being charity? People give to all sorts of charities. What’s wrong with making a donation to a school to student group? I see nothing wrong with it. I completely support donations. Then 100% of your money goes to support the school or student group.
These sales are a bad deal for the school or group. Note: I do not have the percentage split in scouting fundraisers. I am using the disclosed percentage of a school fundraiser as a guestimate of the split for other fundraisers. Assuming 40% goes to the school or troop, you need to collect $250 for every $100 the school or group gets. In other words, the school or group is better off if you donate $10 than if you buy a $14 bag of popcorn. They get an additional $4.40!
Let’s compare this 40/60 split to administrative and other expenses in real charities:
- American Red Cross: 4.4% administrative expenses and 3.6% fundraising expense.
- Susan G Komen for the Cure: 10.5% administrative expenses and 6% fundraising expenses.
- Doctors Without Borders (USA): 1.3% administrative expenses and 11.7 fundraising expenses.
So, you can expect a 8% to 18% to go to operating costs with a charity. With school fundraisers (or at least the one I have data on), 60% goes to the business. For a $14 item, $8.40 going to the business (with no costs associated with putting products on store shelves and they get a built-in sales force). I obviously went into the wrong line of work when I went to law school. The real money is in fundraisers!
I respect the scouting ideals of self-sufficiency, integrity, preparedness. I don’t see these values in these programs! To me, it teaches kids that you can’t make money unless someone gives you a job!
What does this have to do with anything I write on this site? The jobs of the next 50 years will be based on creating wealth in new areas. Twenty years ago, the notion of the job-for-life-with-a-pension-after-retirement fell. The movement to a just-in-time-workforce with no benefits is increasing. Success is not going to be achieved by going where someone tells you and working for 8 hours a day. Success will be made based on what you can create; by finding taking disparate streams of information and adding value to them.
Our kids are growing up in a time where Twitter can take in millions in venture capital, over many rounds of funding, over several years without a revenue model! Zynga (Farmville) makes an estimated $240 million a year selling virtual goods for real money. Facebook’s revenues are estimated at between $1.2 to $2 billion per year.
That is the answer to what America can create in the new century. This is the new industry that may well fuel the economy. The important thing is that it is based on creating something new. It is not about being a better salesperson. It is not about producing widgets more efficiently. It is about creation. It is important that children be brought up with the notion of that making money is in their own hands and will be based on their own creativity.
An internet connection is the single most requisite important utility for the 21st century. The wealth in first half of this century will be created based on widely available fat internet pipes. One look at Facebook, Zynga, and Google confirms this. Smart communities like Chattanooga Tennessee realize this and are rolling out gigabit internet connections to residents and businesses alike. We need a modern version of the Rural Electrification Program for the Internet.
There will be failures and a smaller amount of success stories. However, that is the way it is with any industry! This is where organizations like the Boy Scouts and schools can help. They have the communication system to promote the business models (just as they can show kids how to make the most aerodynamic box car racers). School and groups should teach business. Help kids propose ways of making money. Calculate costs and profits. Make it an annual event. In addition to soap box derby competitions, let troops compete on the best business ventures. Have local, county, state and national competitions. Teach that innovation, creativity and good business produce their own rewards. A program like that focuses on resourcefulness, planning, preparation, self-direction. Isn’t that what school and groups like the Boy Scouts should be about?
CC image credit: shawncampbell