August 2005

Funding the Industry

It was the bottom of the third inning, and we were getting creamed. The other teams had gotten off to an early start, leaving us in their dust. My fellow White Sox desperately needed to get something going, and we needed to do it quickly. Suddenly, our technique of staying with what you know began paying off. The hits started coming, we took the lead and held it for the rest of the day.

As much as I wish I were talking about a real baseball game, the closest I came on this day was a little friendly competition between volunteers at the American Floral Endowment’s (AFE) five-year Phone-A-Thon. On June 8-9, I was one of about 20 volunteers that met at FTD headquarters in Downers Grove, Ill., for the first of two fund-raising sessions, and just to add a little more excitement to the event, we were divided into baseball teams to compete against one another on our quest for $2 million.

Despite “Take Me Out To The Ballgame” playing in the background and the abundant peanuts, we were there for a pretty serious reason: to raise money so the Endowment could continue its mission of funding industry-related research.
In addition to the Chicago meeting, a second group met at Teleflora headquarters in Oklahoma City. In total, we had about 49 volunteers and hundreds of potential donors. Each group spent two days making phone calls and asking people to renew or begin pledging. Between the two groups, we raised $1.2 million, short of our goal, but the pledges continue to come in. Not bad for a few days’ work.

AFE Basics

If you’re unfamiliar with the Endowment, let me give you a bit of background. The American Floral Endowment was incorporated as a not-for-profit 501(c)(3) organization by industry leaders in 1961, and though it was originally known as the Society of American Florists Endowment, it is not and has never been part of the Society of American Florists. AFE has only one mission — to make the floricultural industry profitable for all segments by funding research and educational programs.
Over the past 43 years, generous contributions from every segment of the industry have enabled the Endowment to invest more than $12 million to help find solutions to industry problems. This fiscal year, AFE funding is approximately $440,000. The corpus, which cannot be spent, has more than $10 million to ensure that this funding continues. With numbers like this, it’s easy to see how AFE has evolved into the floricultural industry’s major funding organization.

One of my favorite things about the Endowment is that it is supported by every segment of the floricultural industry. This makes it very unique. It demonstrates that all segments of the industry are interrelated and that the industry’s strength comes from the retailer, grower, wholesaler, importer and allied trades being united. In addition, it illustrates that advances directly affecting one segment also help to impact other segments. This philosophy is incorporated into all Endowment programs.

Research funded by the Endowment spans everything from new pests to post-production protocols to consumer consumption and is conducted by some of the leading academic researchers in the industry. The Endowment is probably best known for the Consumer Tracking Study, an all-industry study based on comprehensive consumer research. The Consumer Tracking Study measures such things as channel preference, frequency of purchase and product trends. Past research funded by the Endowment is summarized in Special Research Reports that are sent to all donors and are placed on the www.flora-links.org Web site.
In November 2004, representatives from every segment of the industry were invited to a special summit meeting to help determine what areas of interest should be prioritized for AFE funding. Highest priority concerns for the industry leaders attending were: flat consumer demand based on decreasing numbers of new customers and increased competition from other consumer products, and thinning company margins at all levels, primarily due to increasing expenses associated with wages, healthcare, transportation and energy.

Based on this meeting, the Endowment set the following funding priorities, which will govern the funding of projects in the coming years:

• Management Protocols for Floriculture Crops
• Management Systems for Diseases of Floriculture Crops
• Management Systems for Insects Affecting Floricultural Crops
• Post-Harvest Management Systems for Floriculture Crops
• Plant Breeding and Genetic Engineering of Floricultural Crops
• Studies Related to Consumer Marketing

What’s Next

Business experts often state that to be competitive an industry should allot a minimum of 10 percent of its gross dollar value for research annually. A low-ball estimate of the floriculture industry’s value is $19 billion annually, which means we should be spending $1.9 billion dollars on research each year.

Clearly, the funds derived from the $10 million corpus are not adequate to meet this criteria and neither is the industry’s estimated total funding level of $2 million annually. We are obviously under-funded, and a few days of calling is not going to remedy that. What we need is a continued, on-going pledge from everyone in the industry.

I want to thank the people who gave during the Phone-A-Thon. It was a huge success because of you. And for those of you still thinking about pledging, now’s the time. AFE is continuing to accept pledges at (618) 692-0045.