Donation premiums: do they work?

publication date: Apr 20, 2012
author/source: Sumac Research
Do you ever wonder if giving premiums or token gifts for donations works? You know, offering labels on the front end as an incentive to give, or a T-shirt on the back end as a bonus for giving? There's a lot of controversy surrounding the issue. Here's what people have found and what the research says:

Experience says yes

Without a doubt, organizations that use premiums do experience an increase in giving. It worked for the Sierra Club. It also seems to work when converting regular donors to a pre-authorized payment program according to Harvey McKinnon. And if you talk to nonprofits that use mailing labels, they'll tell you they see much higher response rates with them than without.

In fact, everyone who uses premiums seems to be a firm believer that they work! But if that's true, then why does research say something different?

Research says no

In 2011, Cygnus Applied Research conducted a research study with over 22,000 donors in North America. According to that study, giving premiums as an incentive for giving or in response to a gift has an overwhelmingly negative impact on giving. 77% of people surveyed had a recent experience of receiving token gifts.

According to the study, "The overwhelming response was negative to questions concerning whether donors appreciated premiums, whether related or not to the work of the not-for- profit that sends them. As well, 63% said they do not want to receive token gifts of any kind so that as much of their gift as possible goes to the purpose for which they gave; only 18% commented favorably."

In a personal interview, Cygnus president Penelope Burk warned that because fundraisers only see the positive effects of giving token gifts (the 18% that seem to like them and may give as a result), they assume it's working. The problem, however, is that they cannot measure the negative effects (the hundreds gritting their teeth in annoyance, thinking "this is what you spent my donation on?").

What to do

So what's the deal? Do donors say one thing and then do another? Or, are premiums really having a negative impact, leading more donors than nonprofits realize to walk away?

What do you do when the research says no, but experience says yes? It's difficult to know for sure, but the best advice is this: if you do offer premiums, make sure they are optional. In an online forum a woman admitted that "for years I gave $39 to my local PBS station, because if I gave $40 or more, I would get a tote bag and I already had three!"

You don't want donors thinking you waste their donations on premiums, especially premiums that they don't need or want. So the simple solution is to just make back-end gifts optional. Of course for front-end gifts the debate lives on. Until we know for sure what kind of impact they have, you'll just have to use your best judgement. [Or test - Ed.]

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