Solicitation of Vendors

A non-profit organization's intention to solicit its vendors for cash contributions in support of its general operating campaign or a capital building or renovation project has a number of unique twists and turns which must be considered in detail before asking for the money. Soliciting a charitable gift based on a prospect's wish to support something of personal value and for what is good for her or his community is a purely philanthropic act, and it is a vastly different transaction from a non-profit expecting a donation based on a business deal because a company or firm sells products or services to the organization. This latter situation could cause people within a non-profit to want to exert pressure—sometimes unfair—on vendors to make contributions. Along with the caveats cited in this article for greater sensitivity to the vendor solicitation issue, it should be kept in mind by those exerting such pressure, that the organization is, after all, getting something for its money from the vendor's products or services.

The Challenges of Determining a Meaningful "Suggested Ask"

Determining a suggested asking amount for each vendor will most likely be a guessing game. Yet setting a reasonable and accurate contribution amount is essential. Otherwise, simply asking them to contribute "something" is like raising money in a vacuum. Most prospects, including vendors, at least on the surface, will welcome and better understand a suggestion of what would be an appropriate contribution for them to make.

There is one unique reason for finding it difficult to come up with a meaningful suggested asking amount for a vendor's contribution of cash relative to the business they conduct with your organization: you don't know the vendor's profit margin.

A non-profit organization may have many vendors. Some may be paying significant dollars for the products/services they provide. Some could be making out very well financially. Others could be making very little profit—or just breaking even, for reasons only the vendor could know. A vendor might even lose money, hoping for a greater portion of the business to come as a result of the relationship with the non-profit. Typically, a non-profit organization's fund-raisers simply do not know the financial status of vendors. At no time was our organization able to find any reasonably useful and available figures relative to the vendors' profit status. It was not our business to ask, and if we did, we could never verify the number. Vendors would work their prices according to what to them would be a fair profit, and what the competition was getting for the same products or services.

The only time we did have some idea of the profit made by vendors doing business with us was when a vendor protested about an overdue payment and said something along the line of, "You know, we are making very little money on this deal." Even that declaration was something we could not know to be true.

That's why I suggest that a non-profit organization should not arbitrarily set a desired contribution based on the volume of a vendor's business. I believe that no "ask" can be of meaning relative to a percentage based on the amount of business. Nor would I advocate asking for the same amount across the board from all vendors. Both methods would be equally meaningless. You would not do that with your base of prospects for any other type of fund-raising campaign in general, so it does not figure that such an arbitrary way of soliciting vendors is much different.

How Much and From Whom?

In each and every instance, we followed the same procedure prior to making any solicitation to a vendor.

The first thing we did was to consult closely with the person or persons responsible for maintaining the vendor accounts—the ones doing the buying—be they from finance or purchasing, depending on purchasing responsibilities within the organization.

We reviewed each vendor, one by one, with care. We did so in the way we prepared to solicit any other business for our other, philanthropic-style fund-raising campaigns. Prospects were identified and the "ask" was developed according to the vendor's giving potential that we determined from gifts (if any) they made to other organizations and from what our board members and others close to the corporate community could suggest.

Some vendors were not solicited for various reasons—best known to our organization's staff purchaser. And we respected and heeded those opinions and directives. Sensitivity abounded. We found at times, when we thought the profit margin was meaningful, that the "politics" of solicitation were not right. Perhaps we relied greatly on a particular vendor to supply a critical need, one not otherwise readily available. We did not want to enter into a contentious relationship by seeming to force a contribution, and possibly find ourselves without a supplier, with nowhere else to go.

The "Ask" Is a Matter of Timing

In the case of general operating support/annual fund, you may have long standing vendors whom you would solicit at an appropriate time on an annual basis.

Relative to a capital building or renovation project, an organization should have solicited the appropriate vendors for in-kind contributions well in advance of construction and before contracts were final. While all are at work, in midstream, the vendors/contractors should not be asked for cash contributions. Considering the usually hectic activity to meet many tight and demanding construction schedules, and other factors as detailed below, it simply would be the most inopportune time to ask for donations.

  • Prior to taking on a capital project, an organization should have the required number of viable major giving prospects researched, identified, and assigned to volunteer solicitors to be reasonably assured the capital campaign would meet, or exceed, the goal. Campaign officials should focus only on ensuring that the best and maximum effort is being expended where it should to those philanthropically-motivated major prospects. And I don't think it's with the construction vendors at that time.
  • Consider, however, that you did solicit vendors, and that you received cash contributions from some of them. Later, your original construction expense budget could be off the mark, and there could be expense overruns—and serious ones at that—resulting in the need for your organization to pay the donor/vendors' legitimate, and unforeseen, additional costs. This situation would be ripe for suspicion, even resentment, that the vendors would somehow be making up now with creative expense demands for the contributions they had given earlier to your organization.
  • Should you have yet another capital asset to develop in the future, and you did solicit construction vendors successfully for the current project, you can be sure that the next vendors will build in additional expenses, just in case, because they would know that you will ask for money.

When it's all over, and the impressive building is up and running, when you have paid your bills, and when you have researched the gifts your major vendors have made to any of their other clients, then you go ahead and ask for their donations with the most influential members from your Board of Trustees.

Another alternative is that you could consider asking if they would pay for, and host, the celebration/dedication event of the capital project. They could see this more as good public relations and marketing support, rather than the bad donor relations of you hitting them up while they were putting things up.

Hidden Risks

Beware of another aspect of vendor solicitation from the other side—-when a vendor either offers a gift without being asked, or too eagerly agrees to give when asked. In my experience, this should suggest that care be taken in either case that the contribution does not have "strings" attached with any hint—or encouragement—that the gift the vendor will make might lead to more purchases from the vendor by your organization.

At one time, we had to make clear to a law firm the unacceptability of their suggestion that their new annual fund gift to us would be possible if our organization gave the firm a share of the legal counsel we annually engaged and paid another firm to provide. A fair request, and good marketing on their part to be sure, but when contributions are tied to business deals, the situation has far too many risks.

In Summary

Soliciting vendors requires great sensitivity and appropriate timing. Keep in mind some basic suggestions:

  • Don't let anyone from your organization make harsh, and what could be unfair, demands based solely on the assertion that a vendor "should give us money because of all the money they are making on us."
  • Take great care in determining the "suggested ask" as you do not know the vendor's profit margin.
  • You must seek the direction given by those in your organization who personally deal with vendors. As well, talk to board members who are close to the corporate community to help identify which vendors should be solicited, and use their judgment when determining the ultimate "suggested ask."
  • Solicit for in-kind gifts prior to contract signing for a capital building or renovation project.
  • Never solicit "in midstream." Wait until the capital building or renovation project is completed.
  • Use the best of your Board to make the solicitation.
  • Beware of conflicts and consequences associated with vendor solicitation, such as when a contribution is offered outright, suggested, or implied, with conditions attached.

Those are my views regarding solicitation of vendors. I welcome your comments.

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One response to “Solicitation of Vendors”

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  1. Tony Poderis says:

    I had an off-line comment from a reader of my “Solicitation of Vendors” article, expressing his concern and disapproval of a leading official at his organization. The board member was urging the development director to force a contribution from a vendor by, as the board member stated, “making the vendor pay to play.” In other words, make contributions or we will not make purchases. Such action is wrong and foolish for a number of reasons, as are cited above. My correspondent was going to point out to his board member the fallacies and risks of such an attitude and practice.

    You look for the long-term benefits with a vendor coming from respect by not treating the supplier as a mere peddler, and demanding that the company make a donation because the organization purchases products and services. Maybe sooner, than later, that vendor may be the only vendor in position to supply the organization with an immediate and critical need.

    I do not like the idea of “squeezing” money from anyone, including vendors. I come from a unique position of having been a vendor, thus I know the feeling.

    Following my Development Director career, I was for many years a non-profit fund-raising consultant. To many of my clients, I was a “vendor,” and some did try to “squeeze” me too, in a sort of “pay to play” atmosphere. To those thoughtless few, it mattered not that I provided the best I could with my particular “product,” and that I always traveled well beyond for what I was paid to that proverbial “extra mile” on their behalf. They still wanted to “squeeze” more in the form of a donation.

    That resulted in no building of trust for a long-term relationship with me, where later, were they to be in a fund-raising bind, I would not be receptive, nor respond, to their further needs for fund-raising counsel.

    Don’t let anyone from your organization make harsh, and what could be unfair, demands based solely on the assertion that a vendor “should give us money because of the money they are making on us.” There could be a time when you need them more than they need you.