Redefining fundraising: PTO Thrift Shop profits create cash for AAPS

The PTO Thrift Shop began as a small sale 18 years ago. The nonprofit now donates hundreds of thousands of dollars every year to the public schools. See slideshow below for more photos.

By Tara Cavanaugh

On the south side of town, tucked away on South Industrial Highway, rests a little thrift shop that is nearly a million-dollar enterprise.

Blink and you’ll miss it. The shop looks like the several other small secondhand stores on “Resale Row,” with a small storefront, a warehouse and two dozen parking spaces.

The PTO Thrift Shop exists solely to benefit the Ann Arbor Public Schools. Since its small start 18 years ago, it’s found homes in several buildings, survived a fire and IRS threats, and most recently has been overwhelmed by a surge in profits.

The little nonprofit shop is a real enterprise now. And it’s giving away its money as fast as it can.

Big checks, big smiles

On frigid night this past January, Sheila McSpadden sat in the chilly warehouse in the back of the thrift shop, bouncing with excitement and waving a check.

She was surrounded by the other thrift shop representatives– many whom are parents and district staff members– who also attended the meeting to pick up their payments.

“Tomorrow, I’m going to drop this check off, and they are going to be so excited!” McSpadden said, rattling off a list of clubs at Roberto Clemente Student Development Center that could use the $1,100.

Although McSpadden’s happiness was palpable, her check was small compared to other schools. The shop gave out more than $42,000 at that first distribution meeting of 2012. Every January, May and September, the thrift shop distributes checks to the schools who have representatives (which currently is all but two). The schools can use the money however they please.

The distribution meetings are just one way the shop has turned fundraising on its head, and it’s much more effective than the usual sales-based fundraising.

“We always seemed to be asking people to buy things,” said Susan Farrell, a rep for Dicken Elementary. “You would buy them not necessarily because you really needed cookie dough or more gift wrap, but because you wanted to support the school. But the shop is the way to support the school without selling stuff.”

Actually, the shop reps are selling something. They’re selling the shop by encouraging schools and extracurricular groups to participate in thrift shop promotion. That’s right: the more schools promote the shop, the bigger those thrice-yearly checks get.

Turning promotion into profits

It takes a lot of people to keep the thrift shop going: 18 part-time and 6 full-time
staffers, a six-member board, and Ann Farnham.

Farnham’s technical title is director of promotions and community relations, but she’s become the shop’s walking nerve center. She wears a bluetooth earpiece tucked behind her short red hair. She’s never without her iPhone or her MacBook Air. She responds to emails within minutes. And she’s dead-set on pushing the shop to its full potential.

And why not? Like she says: “Just because you’re a nonprofit doesn’t mean you can’t be entrepreneurial.”

Farnham started working at the shop as a volunteer, back when individual volunteers worked for an hourly wage that often helped their children go on school trips. But in 2009 the IRS warned the shop such compensation was illegal, and the profitable shop found itself sitting on hundreds of thousands of dollars that it didn’t know how to distribute. It needed to change its entire business model.

Farnham had several ideas. She started showing up to the monthly board meetings, even though she was just a school rep and didn’t have to attend.

“She came in and she started to give us all of these PR and advertising ideas and opportunities,” said Janet Fritsch, board president of the shop. “She was really big into things like Facebook and Twitter and websites.” Farnham, a Canada native, had worked in promotion before moving to Michigan.

At first, the board was a little hesitant to implement Farnham’s ideas. “It did take us a while to glom onto what she was saying,” Fritsch said. “We really hadn’t thought in that direction.”

“You already book ads in programs for sports teams that do nice glossy programs,” Farnham told the board. “What if you offered to everybody who prints up anything an opportunity to promote the shop, and you would give them fundraising money in exchange for this promotional consideration?”

After all, advertising in a school program isn’t really advertising– it’s PR. “It fits the mission,” Farnham insisted. “Why don’t we connect our activity with our mission and make that be a distribution stream?”

Turns out, she had some pretty profitable ideas.

Promotional fundraising at work

The most popular ways for schools to raise money through the thrift shop are surprisingly simple.

Any time a full-page promotional PTO Thrift Shop ad is printed, say in the Rec & Ed program or on the back of a school’s newsletter or directory, it’s earning money for the school– and the shop.

“We want our money to be working for us,” Farnham said. “I’ve whittled this advertising budget down to very, very little, so that what actually goes out, outside of the ‘family,’ is minimal.”

Many schools and groups use the weekly “Show Your Support” program, in which the shop pledges to give away $1,000 a week. Three or four schools or groups compete for part of that money by selling thrift shoppers on their cause.

Shoppers are given one plastic token for every $5 they spend. On the way out of the store, they pass a table with posters from the different groups or schools competing for money that week. A big plastic jar is in front of each poster. Shoppers put their tokens in the jars, picking whatever cause they find most appealing.

A “Show Your Support” promotion the week of Jan. 30 to Feb. 3.

“The more attractive you make your group look, the better you’re going to fare, but you never know who you’re up against either,” said Martha Kershaw, who has been a rep for eight years.

At the end of the week, the tokens are counted. If a group collects 30 percent of all the tokens that week, it earns 30 percent of that $1,000, or $300.

It’s a much easier way for schools to make money than selling wrapping paper.

And it’s a great way for the shop to increase its sales. Between January and December last year, the shop brought in over $874,000.

Pushing profits and potential

Fritsch, the board president, attributes part of the success to the tough economy. After all, thrift shop profits were strong even before Farnham’s promotional fundraising.

“People just became more conscious of what they were spending,” Fritsch said. “People also became more aware of buying local, recycling, reusing, and just more conscious of their environment. I think it was a national gravitation towards this whole thrift shop concept.”

Still, she admits: “We had no idea–absolutely no idea what was really the potential way back then.”

Fritsch is one of the original founders of the shop, along with Ann Holz. Holz took a trip to North Carolina in 1992, and she stumbled upon a lucrative thrift shop in Chapel Hill that donated its profits to the public schools. Holz, an AAPS parent who long loathed gift-wrap fundraisers, replicated the idea in Ann Arbor.

The Ann Arbor PTO Thrift Shop achieved a name and nonprofit status in 1993, and it started as sale in the Tappan Middle School cafeteria in 1994, earning $5,000.

As its donations increased, it became more profitable, bouncing from building to building in search of more space. It occupied the old schoolhouse that used to be located on the corner of Eisenhower Boulevard and Ann Arbor-Saline Road; the space that is currently home to the Salvation Army on State Street; then another space on State Street that burned down in 2007, turning the entire inventory into dust. It was back in business just a month later in its current location on South Industrial.

“Out of the ashes, who knew?” said Farnham. “The catastrophic fire, the IRS decision, and here we are. I think it’s a remarkable story.”

Farnham’s five-year goal for the shop includes hitting a million dollars in sales. She’s confident it will happen.

But more importantly, more money for the shop means more money for the schools.

“When people are donating to us, there’s an understanding we’re doing everything in our power to make the best of that for the public schools,” she said. “I feel like we’re really living up to that trust right now.”

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