Ask the Experts: Vendor/Client Relationships, Part II

A direct-mail provider in the Chicagoland area recently posed a question about an experience he had with a client organization. We had several fundraising pros tackle the question and ran a number of responses last week. This week, a few more.

My company partners with many nonprofit organizations. Several of them annually ask us for donations back. We make it known that our policy is to review what we have done for organizations in December, and if a company wants us to make a donation they may [ask us], in writing, at that time.

About six weeks ago, one of these nonprofits contacted us (via e-mail) asking if we would consider making a $1,500 donation to a special event they were having.

In spite of the fact that our policy of a written request in December was not followed, we decided to show good faith in the relationship we had with this nonprofit and sent a donation for $250.

(As an aside, this organization’s policy is to pay its vendors in 90 to 120 days.)

The donation was met with the following response from the chief development officer/vice president of marketing: “The president of the Foundation is very disappointed in your level of commitment. It reflects poorly on me personally and my relationship with her and the Foundation. Your company was the Foundation’s largest vendor last year in terms of dollars spent. I know times are tight, but the success of the Foundation is dependent on the generosity of its friends and associates. Please re-look at your level of commitment. Thanks in advance for re-considering.” (I have condensed the remarks for time and space).

After re-considering, we decided that we financially could afford to give no more; we had given at a level at which we were comfortable. Upon receiving this information, this was the response from the nonprofit in question (again condensed): “As I know you are very well aware, we have alternatives in meeting our printing and mailing needs. These alternative vendors have given $1,000 to the Foundation. It appears as if all parties might be better off parting ways.”

I guess my question is, where do the standards of right and wrong fall here? Is it ethical, what was done and the way it was done?

Our experts respond:

Wow. Interesting story. I think if this happened in a for-profit operation it would be called a kick-back. If in government, probably a bribe or extortion.

Does the nonprofit not know where that $1,000 gift from Vendor B is coming from? From Vendor B’s profits from dealing with them or other clients, of course!

While I admire their honesty in this (much better than to be lied to and told their service wasn’t up to par), I wish the client had been more honest and said, “Here’s what we want you to donate to us when we ask. Build that into your price schedule.”

All of which goes to prove my thinking that you’re better off letting your competition have some clients.
— Rick Christ, partner, NPAdvisors.com

Ugh. I’ve heard of things like that happening before, but it’s definitely sketchy. Threatening to fire the vendor if he/she doesn’t pony up with a forced donation makes this sound like a shake-down.

In a way, I guess I’d rather a nonprofit apply the screws to one of their vendors for a coerced donation than hiring/firing vendors based on who takes them to a fancier restaurant or buys them more drinks at a conference. I’ve even heard of one fundraiser who considered firing a vendor after receiving what she considered a sub-par holiday basket.

I think the funniest part of the story is that the vendor felt the need to point out, “As an aside, this organization’s policy is to pay its vendors in 90 to 120 days.” I really don’t feel too bad for the vendor. If they were cunning, I guess they could just make the donation and then figure out a way to nickel and dime the nonprofit on the next invoiced job.
— Steve Froehlich, senior director, direct response, ASPCA

You can always view a situation like this from two points of view: the charity’s and the vendor’s. Since I work with a vendor, let’s start there. Our company works exclusively for the nonprofit sector, and we work hard to be part of the nonprofit community. We know the nonprofit sector carefully shepherds its donors’ contributions, and we therefore work for our nonprofit clients on slim profit margins that most self-respecting commercial firms would consider embarrassing.

In addition to doing our best to control costs on an everyday basis, we also make contributions to the nonprofit sector as a whole, as well as to individual charities. Our staff contributes its time as volunteers, and through various company and staff events, we make monetary contributions to nonprofits — not only to clients, but also to worthy non-client charities that come to our attention for various reasons. And sometimes our clients have special events like anniversary dinners, to which we are invited, and with which we always try to participate. These have always been invitations, though, not command performances.

As we see the world, we believe donations from our company and staff should be voluntary, not a condition of doing business. If a charity started “asking” us for donations, with veiled threats of terminating our business relationship if we didn’t come [through], we would probably be glad to part ways and wish them well. Once you mix “everyday low prices” with “blackmail,” slim margins become negative, and the idea of a partnership loses all meaning.

I’ve had this conversation at professional roundtable events with people from the charity world, so I know a bit about how they see the world. Many charity fundraisers believe their vendors should be willing to donate to their cause as a “good will” gesture in return for the nonprofit’s business. They also believe that vendors are fungible, highly competitive, making a lot of money, and anxious enough to have their business that they should and will acquiesce to expectations for major donations. And if not, they will go to a different vendor.

I am often surprised at this. You wouldn’t ever approach individual donors and twist their arms this way, even people whom you know to have lots of money. So why would you do this with your vendors, even if they seem to be making a lot of money from doing business with you? As I see it, this is indeed a question of ethics — shouldn’t donations always be voluntary and not coerced?

Nonprofits want us, as a vendor, to maintain a high ethical standard. It may come as a surprise, but as a vendor, we want our nonprofit clients to maintain a high ethical standard, too. We don’t see nonprofit clients as fungible — we value every one of our clients dearly — but a strong-arm “request” for us to donate at a dictated amount, in a dictated time frame, as a condition for continuing our business relationship would quickly signal the end of a beautiful friendship.
— Joel Zimmerman, director of consulting services, Creative Direct Response

Got a tough question relating to fundraising? Or maybe even a not-so-tough one? Send it to mbattistelli@napco.com, with Ask the Experts in the subject line, and we’ll do our best to get you some insights.