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In 1991 the National Scrip Center was operating out of a church rectory in

Petaluma with four women taking orders by hand.

Today, the nonprofit group, now based in Santa Rosa, employs 85 people,

uses computers and is so busy that a shipping company regularly sends a jet to

Sonoma County to pick up its overnight deliveries.

The National Scrip Center generally is considered the nation's largest

distributor of scrip retail certificates, the hottest school fund-raiser in

the county, if not the nation.

``It's the easiest fund raising,'' said Maggie Bridgman, a volunteer scrip

coordinator at Sonoma's Flowery Elementary School, which raised $8,000 last

year. ``I've done gift wrap, I've done book sales, I've done the Halloween

carnival, and those are major, major work.''

Begun under the auspices of the Catholic Church, the Scrip Center is now an

independent nonprofit corporation. The center's officials estimate they have

helped volunteers raise more than $50 million in eight years to benefit

schools, churches and youth groups.

The center serves an estimated 170 schools and nonprofit groups in the

county, and 6,200 nationwide. In the past eight years those groups have sold

more than $1 billion worth of scrip.

Scrip has been around in simpler forms for at least two decades. It relies

on retailers selling large volumes of gift certificates at a discount to

nonprofit organizations, who then get parents to pay full price for the scrip

and use it when shopping for everything from groceries to holiday gifts.

However, the Scrip Center revolutionized the marketing of the certificates.

Before the center's existence in 1987, a school often needed $5,000 or more

in cash to buy a single store's scrip at the maximum discount. When the center

began, it became a sort of scrip broker, where schools could obtain small

quantities of certificates from several different retailers. Schools and youth

groups signed up in droves to take part in the program.

Today the center stocks certificates of 125 different stores and

restaurants, including Sears, Price-Costco, Albertsons, Wherehouse, Fresh

Choice, Sizzler and Longs.

Last year alone the organization sold nearly $240 million worth of scrip to

schools and other groups, according to its financial returns. Those nonprofit

groups earned somewhere between $12 million and $15 million, center officials

estimate. The center, meanwhile, earned nearly $4 million.

As a result of the center's success, a handful of for-profit businesses now

also market scrip on a regional or national basis. Several others do so on a

smaller scale. And more and more retailers seem willing to accept

certificates. One scrip company estimates that 300 major corporations used

scrip last year to donate $50 million to nonprofit organizations.

Still, some retailers have balked at the growth. Among them, The Dayton

Hudson Corp., owner of Target and Mervyn's stores, no longer sells scrip.

The corporation was selling $30 million in certificates a year when it

pulled the plug on the program in late 1995, said Sandra Salyer, a spokeswoman

for Mervyn's. Salyer and a Target spokeswoman said Dayton Hudson already

donates 5 percent of profits to community groups.

Moreover, its officials objected that so much of the money went to

``middlemen'' such as the Scrip Center. The corporation is pursuing other ways

to make contributions to schools, the representatives said.

Limit amount

Meanwhile, both Safeway and Lucky stores now limit the amount of

certificates that any one organization can buy, effectively making nonprofit

groups deal directly with the local stores rather than going through a broker

such as the Scrip Center.

Debra Lambert, a spokeswoman for Safeway, said scrip had ``caught on like

wildfire'' and store officials in 1995 moved to put some ``reasonable

restraints'' on the sale of certificates.

One reason was the profit margin on groceries is small, Lambert said, no

more than 2 cents on the dollar. Also, the Scrip Center had been buying

certificates through Safeway's California division, then selling them to

nonprofit groups in other areas around the western United States In those

cases, she said, the California division ``was not reaping the benefit of the

sale.''

To outsiders, scrip can sound mysterious. It relies on a retailer's

willingness to offer a discount in exchange for guaranteed volume, cash up

front, a tax deduction and community good will.

A school will buy the certificates at discounts ranging from 1 percent to

20 percent. It sells the scrip to parents at face value and pockets the

difference -- averaging about 5 percent. Thus, a school earns about $5 for

every $100 worth of scrip.

Scrip distributors and school volunteers like to say parents don't need to

spend an extra dime to make the program work. People just need to learn to

shop with the certificates.

Most retailers say the fund-raiser provides them a means of giving back to

a local community.

Ernie Shelton, an owner of the Food For Thought markets in the county,

called scrip ``a fairly painless way for us to support causes and institutions

and fund-raising efforts.''

Shelton, whose stores sell certificates both to the Scrip Center and

directly to nonprofit groups, said some businesses are drawn to scrip because

the purchased certificate amounts to ``a guaranteed sale in your store. And

there's some advantage to preselling, obviously.''

Another plus for retailers is that not all consumers use the certificates

after paying for them. A Scrip Center official said one retailer reported up

to 17 percent of the company's certificates are never redeemed.

``Scrip in itself is a profitable thing for a vendor,'' said John Coyle,

president of Scrip Plus, a Fresno-based competitor of the Scrip Center.

Retailers ``would only do it if there's value. They are not in business just

to donate money.''

Outselling competitor

Coyle maintains that the for-profit Scrip Plus, which once had an alliance

with the Scrip Center, is now outselling its Santa Rosa competitor. He said

Scrip Plus now serves 6,000 nonprofit organizations and can provide

certificates for 250 different companies covering 300 retail chains.

Scrip Plus has made inroads into Sonoma County, partly by offering

nonprofit groups bigger discounts with some merchants and by providing a way

for parents to buy scrip with credit cards. The company plans to reach a half

billion dollars in sales next year, said Coyle.

The Scrip Center, which hasn't conceded the No. 1 spot in sales, estimates

it can hit the billion dollar mark annually by 1999.

Both groups say they have plans to test market electronic scrip cards,

which would act something like a debit card that offers a rebate directly to a

school or youth group's account.

The Scrip Center traces its beginnings to a financial crisis in 1987 at St.

Vincent de Paul Catholic school in Petaluma. The parents learned about scrip

and decided they would raise funds by buying the certificates directly from

Safeway.

Their efforts succeeded so well that they expanded to other stores.

Monsignor Thomas Keys, the vicar general of the Roman Catholic Diocese,

monitored their success and decided to form the Scrip Center. Operating under

the auspices of the Diocese of Santa Rosa, the center took scrip fund-raising

to a new level: making a variety of certificates available to several schools.

In an effort to create its own identity and reach out to more non-Catholic

groups, the center's leaders formed a new nonprofit corporation. In 1995 the

center began operating as its own entity, though in financial returns it lists

the diocese as a related organization. Seventy-six percent of the nonprofit

groups it now serves are non-Catholic.

The Scrip Center's success has won accolades from participating retailers,

as well as a visit to the White House for Keys, the chief executive officer.

Keys, 52, whose soft-spoken brogue gives hint of his roots in Derry,

Northern Ireland, acknowledges that shopping with scrip requires some

``behavior modification.'' But he says the program can help nonprofit

organizations achieve their fund-raising goals.

``I see the struggle that goes on in each school'' over finances, Keys

said. Scrip is ``an opportunity for parents to raise money without spending an

extra penny.''

According to its financial return made public, the center in 1995 reported

a loss of $600,000. Keys suggested the losses will end and were caused last

year mostly to depreciation and the purchase of new equipment.

The nonprofit group's expenses include $1.3 million for salaries and wages,

$660,000 in shipping, $600,000 in interest, including a mortgage on its office

building, and $137,000 to insure the shipped certificates.

Of the center's five officers, Bishop Patrick Ziemann, Keys, businessman

Cono Di Pietro and attorney John Klein, none receive compensation. The fifth,

Wendy Perryman, the Scrip Center's chief finance officer, received $57,744

last year.

The center paid $122,400 directly to the Diocese of Santa Rosa and handed

out grants totaling $32,534, including $10,025 to the diocese's eduction fund.

The center's chief management consultant, Tony Culley-Foster of Washington,

D.C., received $120,000. Culley-Foster, who was in Santa Rosa last week,

developed the center's five-year business plan and provides ongoing

consultation.

Cautious view

The head of the Northern Ireland-U.S. Chamber of Commerce, Culley-Foster

has known Keys since boyhood. He helped arrange the monsignor's 1995 visit to

President Clinton as part of a delegation from their native country. Clinton

later wrote a letter praising the work of Keys and the center.

The center on Friday night held its own award ceremonies. It honored

several schools and people involved with its program, including former Santa

Rosa bishop Mark Hurley, as well as five businesses participating in the

program.

While several volunteers sing scrip's praises, some school leaders

nonetheless take a cautious view of the fund raiser. A spokeswoman for the

state Parent Teachers Association strongly objects to the common practice of

schools sending the valuable, cash-like certificates home in the hands of

students -something also discouraged by the Scrip Center.

The PTA representative also has questioned the wisdom of asking volunteers

to take responsibility for anywhere between $100,000 and a half million

dollars a year worth of cash, checks and certificates.

``The thing that worries us about scrip is the amount of money a volunteer

is handling,'' said Joyce Peariso, the volunteer treasurer for the state PTA.

She fears the people safeguarding the money and certificates would find

``their life in jeopardy'' from robbers.

Scrip Center officials have voiced a similar concern, seeking not to

publicize their Santa Rosa building's address or some details of the operation

out of concern for the safety of their employees.

As well, the Internal Revenue Service has yet to bestow tax-exempt status

on the Scrip Center, which is recognized as a nonprofit corporation by the

state. Culley-Foster said the matter of tax status eventually could become a

``test case'' in court.

IRS spokesmen also say school organizations and other nonprofit groups with

at least $25,000 in gross sales have long been required to file financial

returns that account for the money that passes through their organizations.

Those groups that fail to file may face a fine of at least $10 per day. A

recent newsletter of the Sonoma County district PTA suggests there has been

``widespread negligence'' by groups failing to file such reports.

However, even skeptics concede neither criticism nor accounting hurdles is

expected to stem the flow of schools and groups rushing to buy and sell scrip.

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