Fundraising Effort at Morey Middle School Provides Lessons in Fair-Trade, Sustainability, and Social Enterprise
Social and micro-enterprise, sustainability, and micro-lending are certainly popular topics today in the not-for-profit environment. These concepts are gaining more widespread awareness and popularity; however, they are far from household words. While models of business benevolence and corporate responsibility can be readily found, the concept of social enterprise has not made its way into mainstream business teaching at any level of education. Hence, simple models of domestic social enterprise, i.e. for-profit companies specifically designed to address social, economic, or environmental issues, are not so easily found.
One such model was developed in response to a Denver Public Middle School’s need for supplemental funds. Schools, both public and private, face increasing budget shortfalls and turn to fundraising projects to support extracurricular events, special academic programs, and in some cases, books and materials not covered by tuition allotments. Existing commercially-organized fundraising packages, such as sale of pastries and cookies, oranges, chocolate, and wrapping paper, among others, do not individually yield a sufficient return to the school (generally less than 10% of the goods sold), to support the many funding needs. Consequently, schools end up running multiple fundraising efforts.
The substantial effort required to run and implement all these separate fundraisers has led to “fundraising fatigue” among administrators, volunteers, students and parents who are asked to participate in the myriad door-to-door selling events, and by neighbors and co-workers too frequently approached for money. While many of the commercial fundraising packages provide quality products and assistance, the products tend to be overpriced, in many cases perishable, and are not always something one would purchase for any other reason than a willingness to help students and schools.
This was the situation facing my son’s middle school when I was asked to co-chair the school’s fundraising committee. The sheer number of fundraisers was staggering. We needed a fundraising project that would raise the necessary funds, not require the students to sell to neighbors, co-workers, and extended family, and entailed minimal administrative involvement. Being a teacher myself, the ideal project would allow students to be involved in the effort, and could be linked in some way to business education.
One potential solution came in the form of fair-trade coffee grown and sold by a Honduran farmer-direct cooperative. The Fair Trade initiative is becoming an increasingly important topic in developing countries trying to combat poverty. As governmental and non-governmental organizations (NGOs) recognize the importance of Fair Trade, consumers are becoming aware of products that are labeled Fair Trade and are beginning to put increased pressure on the corporate world to be fair by providing proper treatment and a livable wage to their workers. That said, independent farmers have great difficulty exporting their product to larger foreign markets because they must operate outside of traditional distribution channels. These small farmers cannot make a sustainable living selling their coffee crops for the low prices commanded in the commodities environment, where the majority of coffee is bought and sold. This is due to a number of factors including limited crop capacity and the relative power of the traditional retail sector that purchases in huge quantities, and tightly protects costly product shelf space. Under these conditions, farmers often give up their coffee production in favor of more profitable crops (in some cases to drug crops), or leave farming altogether, abandoning their homes, and in many cases their countries, in order to provide for their families.
So began the sale of Morey Honduran Coffee, a fundraising project that would bring hand-picked, sun-dried, and pesticide-free specialty coffee directly from Honduran farmers and sell it on an ongoing basis during the school year to parents and staff who ordinarily and routinely bought coffee.
Because the beans were not traded on the commodities exchange, and because much of the marketing costs were minimized by the collaborative effort of the cooperative, the transfer price to Morey Middle School allowed the school to sell gourmet specialty coffee for a very competitive price, and make a 35% profit on each pound sold.
Additionally, the farmer-direct cooperative was able to return $1.65-$2.00/lb to the farmers, allowing them the means to be self-sufficient, to educate their children, and to build communities around their farms. Fair Trade, non-government organizations, such as Transfair, fight to keep the floor price of coffee around $1.10 per pound, to allow farmers to earn a “living wage”.
In addition to raising funds, the effort provided a wealth of educational returns. To administer the project, we formed an after-school business club for Morey Middle School students. Participants learned about the social conditions of the farmers, the environmental issues that plague the industry, and they learned first hand about how business works, coming to understand the merits of a social business. While operating the fundraiser, students in turn educated their parents through presentations at parent meetings, posters, and emails about the coffee.
It was “viral marketing” at its finest with parents paying a fair price for a gourmet product, the school receiving a fair return for their efforts, students and parents connecting with the global community, and the farmers making a living wage from their hard work. All this occurred with very little financial investment in packaging, advertising, and logistics.
Morey Middle School’s Community Liaison, Karen Duell commented, “Our after- school Business Club gave our students hands-on business experience while giving to their school at the same time. The students were able to apply a range of business skills that contributed to our school in a meaningful way. The students learned about marketing, money management, public relations, bookkeeping and many other business related skills. The skills they learned for their future career goals kept them motivated and eager to learn more as they knew they were contributing to a worthy cause and raising funds for their school. The funds they raised through this club went to assist our students and teachers with much needed supplies and awards. It was a great social enterprise experience for everyone!”
College students also participated in the project. Undergraduate marketing students from Regis University in Denver, Colorado developed a strategic marketing plan for the sale of the coffee. As part of a class project these Regis students presented to Morey school officials and administrators strategies around the 4P’s of marketing coffee: product, price, promotion and place. In turn, Regis students learned of the broader fair-trade effort, and the practical application of business models to start and run a sustainable social enterprise.
Three Regis College students, Keith Wood, Lauren DeRosier, and Chelsea Coalwell, interested in social business applications, then joined the effort by developing a business plan that would extend the coffee fundraising and business club curriculum to other Denver area middle schools. Working on their own time, and without college credit, these students submitted the social business idea, which required full start-up plans and financial projections, to a business plan competition sponsored by two Denver-area non-profit organizations - Friends of Micro Credit, and Micro Business Development. The students were selected as finalists in the competition and were given scholarships to the Social Business and Microeconomic Opportunities for Youth Conference held in Denver in March, 2008. The conference featured sessions with Nobel Peace Prize recipient Muhammad Yunus, who founded the Grameen Bank, the world’s largest micro-lending operation. The Regis students were given the opportunity to present their work at the conference, and met personally with Yunus regarding their project.
The concept of social enterprise is gaining steam as one possible means of addressing chronic unemployment, and poverty in general. The Honduran farmer-direct cooperative, whose product we supported in the fundraising effort, is itself a micro-enterprise. The cooperative employs not only Honduran workers, but also offers employment for workers here in the U.S. at a time of rising unemployment. The farmer-direct cooperative demonstrates how collaboration in the supply chain can reduce costs and provide a not-easily-replicated competitive advantage for products. This type of effort allows micro enterprises to compete on a very small scale with the giants in the industry by providing access to markets not readily available to small merchants. Finally, the entire effort brought together global players who shared profits, experience and risk in a fair manner, across the different distribution levels. With this fair trade coffee fundraiser, we created a model of social enterprise at a micro level, the whole of which was truly greater than the sum of its parts.
Meg Thams, Ph.D., is an assistant Professor of Business at Regis University.
