For Spring and Fall 2013, I was Secretary for a fairly new RSO called The Supply Education Group. The Supply is a worldwide nonprofit organization with a mission to activate the urban slum youth to transform their communities through service learning. In order to reach our $1000 semester goal, our UIUC chapter has been conducting food sales on the quad, partnering with popular restaurants, and collecting change from students all across campus.
When our chapter was created in 2012, there were six members on the executive board with following positions: President, Operations Coordinator (Treasurer), Fundraising Coordinator (2), Movement Coordinator, and Secretary. Operations managed all finance-related matters. Fundraising was responsible for planning fundraising events and reserving spaces for those events. Movement dealt with spreading awareness. Secretary covered logistics and emailed members of upcoming meetings and events. The founder decided it'd be a good idea to switch out the board every year, so within the course of two years, in addition to the change of board members, the organizational structure has also altered drastically.
During my year on board, as an attempt to bring about commitment from our members, we formulated three teams: Organization, Awareness, and Taking into Action. There would be a board member leading each respective team. The members would then choose a team after self-evaluating their strengths. However this structure was ineffective and short-lived. At this point, it was time for members to apply for board for 2014. As of now, I can see that the RSO has been growing with the perspective of a general member. In terms of structure, there are now nine board members with positions geared toward awareness. Although now more members are committed, it may seem that there is more room for disagreement.
Transaction Costs
Like I mentioned earlier, in order to reach our $1000 goal for The Supply, we had quad fundraisers, where we sold foods like chicken noodle soup, fondue, buffalo chicken nachos, crepes, etc. In a generation where cash is becoming a minority source of payment, many buyers use credit/debit cards to make their purchases. Thanks to our Square reader, we were able to accept those methods of payments. However when it is used, the seller is imposed a 3% charge, which is our transaction cost. Since our prices were no more than three dollars, it wasn't a big deal at all.
Another example of a transaction cost would be the purchase of the skewers for fondue, plates for the crepes, cups for the soup, and other miscellaneous means of placing the food before giving them to the customers.
In term of time, the board members spend a lot of time in order to set up these fundraisers and make the exchange of food to money most efficient. Also there is time spent on making the Facebook events in order to spread awareness. We face transaction costs everywhere, even when buying equipment like slow cookers for the buffalo chicken at Walmart or bargaining with people on the Free & For Sale Facebook group which have students who may sell cheaper slow cookers.
I didn't understand in your explanation how large The Supply Education Group is and how many non-board members there are. Or does the board comprise the entire membership?
ReplyDeleteYou also didn't describe at all what happened after the food sales. Did you simply take the $1,000 and send it to the national organization? Or did members of the board go to the inner city in Chicago or St. Louis and supervise the distribution of funds to the appropriate people?
I also didn't quite understand the food sales. Where did the food come from? Was it done by donations? If so, did the donations come from outside the RSO entirely? It would seem that the receiving of donations would be as critical as the selling of the already donated food.
Then you mentioned a complete rotation of of the Board, which seems inefficient to me in the sense of there being no memory of how things were done the previous years. When I've been on national level committees that do service work, there were multiple year commitments and the membership started at different times. So each year there were always new members as well as other members who'd be rotating off. What reason was there for not doing this?
Switching to transaction costs, what you've identified - the credit card fees and paying for items to accompany the food - are really production costs. If you motivated people to come to your food sales or to donate food, that promotion effort would be a transaction cost. If you had to schedule your events to get a sufficient audience, that scheduling activity would be a transaction cost. We'll discuss this more in class on Tuesday.
Thanks, Professor Arvan, for your comment. I apologize for being so vague in my post.
DeleteThe Supply at UIUC had around 10-15 non-board members in 2013, but this year, we have closer to 30-40, which is really impressive since it's an new and still unpopular RSO.
After the food sales, our treasurer would send in the money to The Supply Headquarters in New York via an online funding page or a check in the mail.
So in previous years, we had to pay for the food supplies out-of-pocket, so basically it was our sense of contributing a donation to the organization. So for example for the buffalo chicken nacho fundraiser, we bought the chicken, chips, ingredients to make the sauce, and a crockpot. And then on the quad, we would combine the food to make the nachos then and there. This year, we received a generous funding from an organization called Minority Business Student Associations to get us started with our quad food sales. With the money we received, the board members purchased the food ingredients and any equipment necessary.
The board did have a complete rotation, yes, but the old board members still eased the new board members into the system for a semester. Thus for spring 2014, we, the previous board, helped with the logistics. But it ended up not mattering, because the new board changed the whole system and fortunately it was a lot more efficient way to run things. I'm not completely sure why the founder wanted us to switch out the board every year, but I would assume it's because she wanted more people to have the experience with the organization. I realize that being on board made me more passionate about the cause.
In terms of transaction cost, I realized I had a hard time understanding what it was at first, but with your comment, I think I get it now. Thanks again. If anything else still seems vague, please let me know.