Projection of Revenues & Costs

Revenue

Our goal is to raise at least $200,000 in our first year of existence, with about half of this revenue being raised by December 2008. Meeting this goal will leave us with $100,000 to cover our organizational costs and salaries during our first year. Based on historical growth shown by DonorsChoose.org, we project that our second-year revenue will be on the order of $500,000.

Costs

Start-up costs and other expenses during the first six months of DiscoverScholars.org will consist mainly of 501(c)(3) filing and legal fees, website hosting and design fees, and employees’ salaries. Discussions with Terra Eclipse Design Consulting Group, a website design company, estimated the costs of setting up a complete version of the DiscoverScholars.org website at $10,000 - $40,000, depending on the capacity it is built to handle. In our projected budget, we use an expected amount of $20,000, and estimate that it will require about one month of work.

Additional expenses will include employees’ salaries, accounting fees, credit card processing fees, and the potential need for office space. We budget $40,000 for personnel during the first six months of the venture. This accounts for a $60,000 annualized salary for the executive director, and a potential buffer of $10,000 for additional labor as needed. This salary was set as a continuation of pay from the executive director’s prior position, and is likely below market value based on past work. If DiscoverScholars.org proves successful, the board of directors may decide to award a modest performance bonus to the executive director at the end of 2008. All salary considerations will be at the discretion of the board of directors, who will review employees’ salaries at least once a year, as laid out in the DiscoverScholars.org bylaws.

A summary of our expected costs from July through December 2008 is outlined in the table below. Note that we do not anticipate a need for office space in our immediate future.

Obtaining Initial and Ongoing Funding

Our initial method of securing funding for DiscoverScholars.org will be through reaching out to potentially interested personal contacts. As mentioned earlier, we also will use multiple online means to court start-up funding from potential donors in the online community. If suitable opportunities arise, we may apply for non-profit grant money as well.

Once DiscoverScholars.org is off the ground, three different sources of revenue will be responsible for maintaining the viability of the organization:

Our chief source of ongoing revenue will come from donors’ contributions. When donors make contributions to DiscoverScholars.org, they will be asked to give an additional percentage directly to DiscoverScholars.org, with 15% being the default. This same strategy has been utilized successfully by DonorsChoose.org, another prominent non-profit, with 93% of donors giving the extra 15% to fund ongoing operations[1].

We will supplant this income with revenue from web ads. These ads will focus on education-related firms, such as study abroad opportunities, deals on textbooks, etc. We hope that web ads will become an increasingly viable means of defraying DiscoverScholars.org’s operating costs.

Finally, we also will charge student applicants a low non-refundable $50 application fee. The primary reason for the student fee is to discourage specious applications, but it also will help to cover the costs associated with verifying students’ application information. We believe the fee is reasonably set so as not to discourage many students from applying to DiscoverScholars.org, and we will have a waiver procedure for students who are unable to afford it. As we cultivate a dedicated donor base, it may become possible for the application fee to be lessened or even eliminated.

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[1] “Want To Buy My Students a $392 Camcorder? A nonprofit uses the Web to work marketplace magic,” Slate, http://www.slate.com/id/2159771/.