Ever asked for a "kickback"?

Yesterday, I was quite suprised when I encountered a first! I

went to bid on a job - school portraits for a small (80 kids) k-8

christian school. Durring the "interview" with the owner/principal,

I was asked indirectly 3 or 4 times how much of a "kick back" he

would get. He told me that Lifetouch studios was going to give him

25% of the protfits they generated off of the school portraits, and

that he "was really hoping for around 40%" (hint hint...). Never

having encountered such an ordeal, I calmly pretended that I didnt

hear that at all, and actually ended my sales pitch right there.

Over the next 10 minutes of ranting about how great the school is

for my kids (although I mentioned that I DONT have kids) the subject

was brought up indirectly 2 or 3 more times. I couldnt get out of

there fast enough! Did I do the right thing, assuming that not only

this is illegal (IRS), but pretty sleezy as well? I have no

experience dealing with schools, but I figured that a small one

would be safe for extra income. The shocking thing is that the

whole time I was getting "god blesses and praise jeasus" from

someone who was blatently lying (I assume - Lifetouch giving a 25%

kickback). Was I right, or is this the way this business is?

In the UK it certainly used to be common practice for photographers to pay the school a commission on the kids' portraits. The money went into the school funds, of course, not into the headmaster's private bank account! I imagine that's still done today.

I've done photos for schools, the "kickback" is normal - as the previous poster said the money goes into a school fund or similar. 40% is a bit high though.

 

David

We (or I) are located in NW Florida. The 'county-wide' school photo business for senior-yearbook images is *every year* done with a company/studio in Alabama. Local support? Why would one expect such a thing in a public school system?

 

 

 

You elected to decline bidding on the job. That will earn you zero __ and if that makes for a better night's sleep, that is good.

 

 

 

Next time, offer a one percent donation greater than Lifetouch (and maybe after the cost is subtracted from your sales,) and make sure it is a check payment that shows a 'donation' to a public school or church school. Anything 'donated' with proof of payment is a tax deduction made by your business.

 

 

A "kickback" can be a donation, but never pay in cash.

I would report the incident to the school's board of directors, or whatever organization oversees the school's affairs. I'm sure they would like to know.

 

There is nothing wrong with the school getting a cut -- you are using their resources and space, and they are facilitating your business with the kids. That said, it should go to the school itself and not to the principal. And like the other poster mentioned, never pay it in cash, and always pay it to the school directly.

I think you might have misinterpreted the principal's intent. I doubt he was asking for a kickback to him directly. We've used Lifetough for our baseball league, and they typically donate a certain amount per purchase back to the organization. The business sense here is that the organization is encouraged to use them because the organization gets something from it, whereas simply lowering their prices would have no benefit to the organization. I think you'll have to offer some sort of refund (or "kickback) to be competetive.

 

Bill

Whatever his intention was, I can assure you that there are some organizations where a kickback is required part of the process.

Kickbacks are slimy & sleaszy forms of doing business, and usually amount to a form of bribery in exchange for the granting of a benefit or financial contract. AFAIK - It is almost ALWAYS ILLEGAL in dealing with federal, state, or local governments. If you want a real opinion - Contact the local District Attorney office and ask. If you want to find out if the Principal knows he's doing something wrong, call him and say you have some concerns, and would he recommend you contacting the district attorney for clarification on the matter.

 

Or -- Why not just say - give me the job at double my usual rate, or I'll accuse you of child molestation???? A kickback is no less a form of bribery than extortion.

 

The whole point of having kickbacks be illegal is to keep the business playing field even for all. You can offer discounts or added services all you want, but to have to submit to paying someone back for getting work is not right.

 

I think you made the right choice, and will be made even more right if you call the D.A. - Who knows, I could be wrong and the DA might say all is fine, but I kinda doubt it. If it is illegal, it would be a bit surprising a principal might jeapordize his job & career for a few hundred or thousand dollars - but crazier things happen every day, and even the best people can't see the line when fleshing out their own personal greed.

 

Gary Crabbe

http://www.enlightphoto.com

There are differences when the issue is a mutual and open business arrangement, in return for the school providing access to the facilities, aranging for communications with the parents, handling the orders, etc., etc., that your business will pay a fee or make a donation of some percent of total sales, a certain amount per package, etc. This is visible in the contracts, allows a reasonable comparison of prices, and can be discussed with the customer base (as needed) so they know that a portion of their payments are part of the school or league or organizational fundraising. There are a wide variety of "fund-raisng" activities with the purpose of making money for the organization and the business. Nothing illegal about that. I don't think there is much room to squeeze much more blood out of a turnip that size. If they are thinking we want package/prices equivalent to Lifetouch's and 40% versus 25% then that may be a business negotiating point, estimating what they think is a maximum sales package price and still an amount meeting their "goals."

 

All that can be clearly and legally contracted. But if the return to the school includes a separate or hidden payment, that's a different situation. You should review what can be done legally with your attorney and accountant. If it's the school gets 25% and "I" get another 15% then that seems to be shakey even if potentially legal.

This is common... Lifetouch is the one all of the schools talk about. Now if you want to do high school portraits for seniors, it is now costing about $800 to be listed at each school and a kickback of around $75 for each student that you photograph. You will also run into to the same thing with a number of churches for their directories.

All of this sounds highly illegal and unethical to me. Regardless of whether it is established practice or not. If Lifetouch is giving kickbacks without having a legal review done and if they're "greasing" the wheels by giving kickbacks...man oh man..This sounds like the old recording studio payola scheme to me...

I don't care how established it is... it still seems sleazy to me. I would rather have the cost of the school and facilities documented so that a fair reimbursement can be made. This idea of ever increasing "donations" is a hidden cost that just seems wrong. If the hosting facility wants a cut of the profits, that's just a cost of doing buisness and should be spelled out clearly and honestly up fron to both the students and the bidders. Ironicly the only illegal thing that the pricipal did was disclose the ammount of "kickback" that he gets from lifetouch.

Kickbacks are illegal. Fundraising that provides a portion of the proceeds to the organization is common and legal. You don't think those kids selling fruitcakes, peanuts, giftwrap, etc., are just doing it to keep the teachers busy??

I always offer 10%. Sometimes go to 15% to beat my competition (good 'ol Tempest). That's 10% of profit, not revenue.

 

Last school of about 80 kids I did, I sent them a cheque for ?141.

The wording is the problem in this discussion. A "kickback" is illegal; a profit-sharing arrangement is not. I'd guess a lot of principals don't know the difference any more than photographers do.

 

I would guess having to pay the school a portion of senior portraits done off the school premises probably IS illegal, especially if the school financial record books don't show that as having been done before (it may pay to have a friend ask about that at a school board meeting: "Didn't the school get about XXX-thousand dollars last year from photographers? Where did the money go?").

 

Someone suggested writing it clearly into the contract--an excellent idea that will separate the "kickbacks" from the profit-shares. It will also give you something to show the IRS auditor to deduct from your taxes.