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Property Management Versus Suppliers: The Donation Threat

Are donations really required?

Seeking donations from vendors have become the standard for many of us on the property management side. Is it really the answer to our lack of budget for resident retention programs or corporate meetings?

Many on-site teams are instructed to request donations from our vendors for resident retention programs and even office supplies! At what point does it become the responsibility of the vendors to fund our retention programs?

Vendors are the bread and butter of our industry, without them we could not perform to our fullest ability. They are not meant to subsidize our onsite teams and corporate offices with donations. Yet there is a fear among vendors that if they do not grant a donation request they will lose our business.

In a recent survey, 94% of property managers said they would not stop using a supplier if they didn’t donate. However, 81% of vendors feel they would lose business if they do not contribute and 50% stated they actually had lost business when they did not contribute.

Although only a small group of property management companies make donation requests mandatory, suppliers feel threatened with loss of business if they do not contribute. In a relationship where both parties should be partners in success, asking for donations can sour that relationship - whether the implication to lost business is real or just feared.

What’s in it for the vendors?

In the same survey, 76% vendors feel they have been taken advantage of by a property management company. Contributions do not lead to more business for our vendors. The donations serve as no guarantee that the property management company will even retain that vendor’s services.

I know of one professional who does not care that their property has not used a company in three years they will still ask that company for donations; we are not talking property donation but a corporate lunch sponsorship. Another vendor told me that they were asked to sponsor a corporate training class. When they told the property management company no, that the vendor just did not have it in their budget, the response was along the lines of “Didn’t our company just contract you for a rehabilitation project?” I have even heard regional managers even state that vendors and suppliers are only good for taking property management employees out to lunch.

Considering that 22% of suppliers were asked for over $10,000 in donations over the course of the year to management companies alone, this system seems to cause quite a bit of resentment between two parties that should be partners. Suppliers are not offering contributions out of a sense of partnership, but rather reacting to the possibility of losing future business.

It seems to me that if we are asking suppliers to foot the bill for our events and programs, we need to have clearly define their benefits for participating, beyond simply the hope of continued business with us.

I don’t believe suppliers are looking for a “free ride” if they donate for events, but they do hope that their support of the events/programs will make the future sale easier in some sense.

It’s all about the relationship

The vendor and property management company relationship should be one of a business partnership. We need our vendors just as much as they need us to succeed. When you are putting together your property/corporate budgets, make sure you include room for your resident retention events & corporate events. 50% of vendors in the same survey stated that it was appropriate to request a donation once a year. I recommend all of us to remember this and use that request wisely. You may never know when you will need a vendor for a job referral, and if you ask all the time for donations they may hesitate a little too long to refer you.

Vendors are in the business to make money, just as we are, and it is something that we all need to remember. The next time you receive a donation of any kind from a vendor, please remember to send them a thank you card. Please keep this in mind when they donate breakfast or lunch at your apartment association event.

Suppliers, share this blog if you’ve ever felt like you had to donate in order to keep a client.

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This comment was minimized by the moderator on the site

Jolene. Can I use this in our next newsletter? This is great.

  Laura Reese-Williams CAS
This comment was minimized by the moderator on the site

Laura you are more then welcome to use it for your next newsletter. Would you like me to email you the word document? I'm glad you liked it and want to share it with your readers.

  Jolene Sopalski
This comment was minimized by the moderator on the site

Dealing with property donation requests seems to be one of the necessary evils of this business. I try to apply a formula when deciding what/if to donate (I'll sadly admit that I almost never say no for fear of reprisal). First the property must be reasonably paid up, next I look at what my avg commissions for that property are in a 30 day period and then apply a % to that. Most don't ask but the fact that some ask at all I find creepy. I don't blame most managers for this, it seems that its just the way they were trained. The requests do seem to be concentrated by mgt co.

How would a prop mgr react if a resident asked (by email no less)for a gift card to take his family out to a holiday dinner, after all the resident has been giving his leasing business to this property for several months now.

What would be the reaction if I replied to a request by saying I'll give you a $25 gift card OR I'll donate $50 cash in your name to the local food bank/toys-for-tots/etc.

  Matt Henderson
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I truly laughed out loud when I read the response above regarding how well would it go over if a resident called to ask for money for a holiday dinner. What a hilarious picture that would be!

Shelby

  Shelby Weidler
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I agree that we should not ask vendors for donations for our parties or resident events, but I have asked and it does make me feel uncomfortable. I hope that I have never made anyone feel that they would lose business if they said no.

  De Ann
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I agree. Over and over, I've seen managers wear vendors so thin that the vendors no longer care if they do business with the property or the property management company. Although no one wants the other digging a deeper hole in their pocket, everyone is entitled to a profit and no one should not have to pay for the "privilege" of doing business.

And Matt, you hit the nail squarely on the head.

  jellybelly
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For a number of vendors to earn business with a property or management company it has been through a bid situation and already they are "close to the bone" so to speak, in the profit department. There seems to be no benefit in making donations and more often than not, the donation seems to go unnoticed. This is true with apartment associations as well. Whether you sponsor an event or breakfast, relationships are fostered by a vendors one on one interaction with a property manager or management company and nothing to do with me sponsoring an event. I have never had a potentential client come up to me and say, "You sponsored the ABC event luncheon, we would like to do business with you." Likewise, programs such as Toys for Tots that are taken on by any property should not be the responsibility of the vendor to enusure its success. This whole "donotion" and "sponsorship" racket has made me rethink my association involvement and whether or not my comnpany will continue to pay tribute in hopes of gaining business.

  Timothy
This comment was minimized by the moderator on the site

I don't mind making donations to sponsor a company when it will help my business--such as in a situation where I help sponsor your annual conference, but you're having a trade show that I get to participate in to meet your decision makers. Asking a supplier to give you a gift card for your pool party is along the same lines as a resident asking if you can sponsor a grocery store gift card so they can buy their child a birthday cake and some party favors for their birthday party--after all, they pay you a lot of money to live there and have been a resident for x number of years and just signed a renewal.

  Amy Moye
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I personally am surprised that this has become an issue. I didn't know that many property managers or companies asked for donations. I just recently thought of the idea of partnering with area companies or vendors for our annual holiday party for our residents, however, it's more for allowing area restaurants, stores, insurance brokers, etc. to gain business from us more than anything. I was the first one in my company to think of doing this. Some companies are even more than happy to do this with us, especially insurance agents. So I am shocked to hear that some management companies are abusing the privilege of this partnership.

If I do ask for a donation, I only ask from those who I know will benefit from it, or from the vendors who we do a LOT of business with. For instance, last year an insurance agent co-hosted our holiday party with us and basically purchased most of the food and prizes for it. In return, we referred probably over 20 residents to them for renter's insurance, and the agent was ecstatic that we did this!

As for how I would feel if a resident asked me for a gift card in return for their business, I will say that we do offer Renewal Bonuses every year to our renewing residents, and one of the options is a $100 gift card to the local grocery store. If I have a good "customer" such as a renewing resident, I will reward them. And at this time our renewal bonuses are better than our move-in specials. So I would say to those vendors, if you have a good repeat customer who doesn't ask for much, maybe sponsoring a little something once a year isn't bad, but if you are getting hounded by companies who don't use your business then I probably wouldn't bother. I like how Matt calculates that company's worth to him. That makes sense to me.

  Kelly
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Kelly, I think that the way you're going about it is an appropriate way to ask for donations because you are giving the vendor an opportunity to benefit by being there to mingle with your resident's and make contacts, etc. and that makes sense for companies like restaurants and insurance companies because they can gain business from it. Perhaps the issue is regional. I do agree that people tend to abuse it though (at least in the southeast it seems.) A lot of the big management companies ask for $2,000-$10,000 for corporate sponsorships (my company falls into the 22% that spends over $10,000 annually in donations per year) for annual meetings and in exchange you get to attend a trade show. You can justify those type of sponsorships, but its hard when you give $5,000 to a company for a corporate sponsorship where you may only be doing $32,000 worth of business annually to justify giving another $50 gift card to 5 of their properties to sponsor pizzas at a pool party when you are a company who can not benefit from doing business with their residents like most of the multifamily vendors are. We try to limit our donations within an organization to corporate sponsorships, but we may do smaller site-level sponsorships if we are working with a company who hasn't already benefitted from a corporate sponsorship on a case-by-case basis. I think the way you're going about it is a fantastic approach though.

  Amy Moye
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