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Cause Marketing by the Bag

When I was in nonprofit management I heard a lot of pitches from retailers or suppliers wanting to sell something to my list of supporters. But there was always a sticking point. Oftentimes they wanted me to just turn over my donor list. That was a nonstarter. Later they wanted to put my logo on their merchandise or sales platform, usually without any upfront money. Those terms, too, were unacceptable.

Now a West Coast coffee roaster called Newhall Coffee Roasting Company offers an approach and terms that I think a lot of nonprofit managers could swallow.

Sell fresh-roasted coffee with your nonprofit branding on it and you get to keep a “significant percentage of the proceeds.”

Called Newhall Coffee for a Cause, all sales take place on a customizable webpage and Newhall handles all fulfillment and returns. Marketing materials like fliers, brochures and postcards are also available to participants.

Very few would-be partners get this part right. The biggest 500 nonprofit charities in United States all have their own marketing departments and webmasters. Every other charity… a number which is in the tens of thousands… doesn't have the same resources.

Good for Newhall for making this so easy for charities.

All that said, I have reservations about Newhall Coffee for a Cause.
  • Any proceeds are going to a taxable to most nonprofit charities.
  • Suppose Newhall inadvertently introduces some substance or chemical into the beans sold in my branded bag that is subsequently found to be a carcinogen, whose liability is that?
  • The quarterly payment is probably fine for the largest nonprofits, but for smaller ones it’s a burden.
  • The “significant percentage of the proceeds” is too vague and not helpful.
  • Are there any minimums?
  • How much customization does Newhall permit in packaging and branding materials?
Probably some of these questions are addressed in the agreement nonprofits sign with Newhall, but it wasn’t visible on the webpages I could read.

(The photo illustration comes from Springwise.com).

Comments

Alan Lewis, CGO said…
Good afternoon! First off, on behalf of Newhall Coffee, I would like to thank you for the objective and encouraging review of our program. We are doing our best to develop a program that is truly a win-win for our non-profit partners and American small business. As a new program, we appreciate the input we receive from our early adopters, as well as sources such as yourself. The questions you've posed are valid, and I would like to address them here, if you don't mind.

(1) Any proceeds are going to a taxable to most nonprofit charities
(A) Unrecognized business tax income, or UBIT, can be a concern for many charities, particularly smaller ones who have very focused missions. We are also aware of concerns related to focusing beyond the scope of a non-profits core focus, whereby potentially jeopardizing its charitable status. We have attempted to mitigate this concern by providing partner organizations the option to remit full payment to us, and in turn, we remit a donation back to the charity. We are doing this with several notable 501(c)3 organizations, and so far, so good. For organizations that have established the ability to re-sale for fundraising purposes, this does not seem to be an issue. If someone out there has more detailed information on this, it would be great to learn more.

(2) Suppose Newhall inadvertently introduces some substance or chemical into the beans sold in my branded bag that is subsequently found to be a carcinogen, whose liability is that?
(A) Like with any food product in the United States, manufacturers are required to carry product liability insurance, which we have. Notwithstanding this, we understand how something like this could adversely affect a partner organizations, as well as our, reputation. With that in mind, we take our manufacturing processes very seriously, adhering to generally accepted manufacturing practices, as well as USDA and organic certification for related products.

(3) The quarterly payment is probably fine for the largest nonprofits, but for smaller ones it’s a burden.
(A) This is good input, similar to what I received while working with Team in Training today. Like any new program, we have envisioned certain parameters, yet are willing to adapt to the needs of our partners, as long as they're within reason. While our stated policy is quarterly, we are open to working with partners on this.

(4) The “significant percentage of the proceeds” is too vague and not helpful.
(A) The proceeds from a given product changes depending on the blend and size. For example, we offer two pound bags of whole bean Patriot Blend through our site, which generates a different donation than purchasing as 12 ounce bag of Community Blend. That said, generally we remit forty percent (40%) of the proceeds, which is our gross profit to our partner charities.

(5) Are there any minimums?
(A) There are no minimum order requirements when participating with our online program. Direct sales and retail partnership programs do have minimum order requirements. For most charities, signing up online and promoting through existing channels is the easiest and most cost effective way to begin redirecting coffee profits to their respective causes.

(6) How much customization does Newhall permit in packaging and branding materials?
(A) When partnering with charities in the development of a custom label, there are very few restrictions (within good taste), other than what space is available. Partner organizations are provided with the center of the front label to brand their cause, which is the predominant "real estate" on the bag. Labels are affixed to Newhall Coffee standard packaging.
Good afternoon!

First off, on behalf of Newhall Coffee, I would to thank you for the objective and encouraging review of our program.

We are doing our best to develop a program that is truly a win-win for our non-profit partners and American small business.

As a new program, we appreciate the input we receive from our early adopters, as well as sources such as yourself. The questions you've posed are valid, and I would like to address them here, if you don't mind.

(1) Any proceeds are going to a taxable to most nonprofit charities
(A) Unrecognized business tax income, or UBIT, can be a concern for many charities, particularly smaller ones who have very focused missions. We are also aware of concerns related to focusing beyond the scope of a non-profits core focus, whereby potentially jeopardizing its charitable status. We have attempted to mitigate this concern by providing partner organizations the option to remit full payment to us, and in turn, we remit a donation back to the charity. We are doing this with several notable 501(c)3 organizations, and so far, so good. For organizations that have established the ability to re-sale for fundraising purposes, this does not seem to be an issue. If someone out there has more detailed information on this, it would be great to learn more.

(2) Suppose Newhall inadvertently introduces some substance or chemical into the beans sold in my branded bag that is subsequently found to be a carcinogen, whose liability is that?
(A) Like with any food product in the United States, manufacturers are required to carry product liability insurance, which we have. Notwithstanding this, we understand how something like this could adversely affect a partner organizations, as well as our, reputation. With that in mind, we take our manufacturing processes very seriously, adhering to generally accepted manufacturing practices, as well as USDA and organic certification for related products.

(3) The quarterly payment is probably fine for the largest nonprofits, but for smaller ones it’s a burden.
(A) This is good input, similar to what I received while working with Team in Training today. Like any new program, we have envisioned certain parameters, yet are willing to adapt to the needs of our partners, as long as they're within reason. While our stated policy is quarterly, we are open to working with partners on this.

(4) The “significant percentage of the proceeds” is too vague and not helpful.
(A) The proceeds from a given product changes depending on the blend and size. For example, we offer two pound bags of whole bean Patriot Blend through our site, which generates a different donation than purchasing as 12 ounce bag of Community Blend. That said, generally we remit forty percent (40%) of the proceeds, which is our gross profit to our partner charities.

(5) Are there any minimums?
(A) There are no minimum order requirements when participating with our online program. Direct sales and retail partnership programs do have minimum order requirements. For most charities, signing up online and promoting through existing channels is the easiest and most cost effective way to begin redirecting coffee profits to their respective causes.

(6) How much customization does Newhall permit in packaging and branding materials?
(A) When partnering with charities in the development of a custom label, there are very few restrictions (within good taste), other than what space is available. Partner organizations are provided with the center of the front label to brand their cause, which is the predominant "real estate" on the bag. Labels are affixed to Newhall Coffee standard packaging.

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