Should We Use Premiums to Drive Donations?

In general, non-profits want to utilize fundraising strategies that are tested and proven. With limited budgets and altruistic goals, deviating from standard procedures often seems like too much of a risk. However, smart non-profits must examine their fundraising practices regularly to ensure that they aren’t using a tactic that simply drains money. One conventional practice to consider is the tradition of offering premiums in exchange for donations.

The promotional products industry generates over $20 billion dollars each year, and their primary consumer base is non-profit organizations. Non-profits realized long ago that the people love to get gifts, so they developed the practice of offering premiums in order to take advantage of this desire. Scientists have even determined that extrinsic rewards (premiums) trigger the same portion of brain as crack cocaine. With such a strong method of eliciting that sense of pleasure, non-profits naturally became dependent on the attraction of premiums!

How Premiums Succeed

Currently, premiums are incorporated into fundraising campaigns in order to drive response and increase gifts. Non-profits generally offer a front-end gift, a back-end reward, or some combination of the two. The most common front-end gift is address labels, while back-end premiums often involve a member magazine.

The non-profits that find the most success in the use of premiums usually couple the premium with a tangible goal or initiative. In addition, non-profits often create some sort of donor track that encourages donors to upgrade by contributing more in order to receive better premiums. Especially if you can figure out a premium that connects with your devoted audience, your non-profit is likely to see a spike in donations.

One trademark of effective premium offers is the possibility of opting out. Some donors may believe that their contribution is more helpful and valid if they don’t require the non-profit to spend money on a premium.

The Dangers of Premiums

One of the most commonly cited problems with premiums is that they serve as a drain on the limited resources of a non-profit. Many non-profits find that it is simply too expensive to develop, purchase, stock, and deliver premiums to their supporters. For these organizations, premiums simply aren’t worth the effort.

However, the surprising issue that stirs up debates about premiums centers around the psychological effects of a reward on the donor. Counter-intuitively, premiums cause people to reduce the amount of money they are willing to donate because the focus shifts from altruistic priorities to self-centered concerns. The temptation of a reward destroys a donor’s original instinct to give. Donation with the lure of a premium is (perhaps unwittingly) performed in self-interest rather than with a focus on philanthropy. In reality, this issue of dealing with extrinsic rewards permeates modern society, not just the realm of non-profit premiums.

Countering The Problems

Using premiums as incentive shows a focus on the short-term reward of receiving an immediate donation. A more intelligent marketing plan must shift the attention towards long-term support that cannot be achieved through premiums. Non-profits must learn to present their causes persuasively enough that they are appealing on their own without the draw of premiums.

However, this doesn’t mean that you should stop giving gifts to your donors! There are plenty of ways to encourage altruistic giving and still offer them a thank you present. One creative strategy is to send donors an unexpected gift shortly after they make a contribution. Using this method, you will continue to create a connection point with your organization through a premium without encouraging self-oriented giving.

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