Our Ask An Expert series features real questions answered by Claire Axelrad, J.D., CFRE, our very own Fundraising Coach, also known as Charity Clairity.
Today’s question comes from a nonprofit employee who wants advice on when it’s a good idea to give gifts to donors.
Dear Charity Clairity,
I know public broadcasting offers donors gifts in exchange for their donations at various levels. Since they’ve been doing this a while, I’m assuming this works? My boss really likes this idea, but I fear we’ll get donors who are more into the gifts than the mission. If so, will they be harder to retain? Also, it’s a lot of work to get donated gifts, and expenses to buy them. Do you think these gifts are meaningful to donors? Or would they feel better knowing 100% of their donation went to mission service?
— To gift or not to gift
Dear To Gift or Not to Gift,
That, indeed, is the question. And a good one.
You may be aware that I regularly admonish charities by saying “if you want gifts, you must give them.” So, you might think I’d advise you to “go for it.” But not so fast!
Giving does trigger one of Robert Cialdini’s original six principles of influence: reciprocity. If you do your donor a favor, they’re naturally inclined to want to return the favor.
However, the gifts you bestow don’t have to be tangible. And if they are tangible, they don’t have to be pricey.
First, let’s distinguish between three types of gifts:
- Front-end persuasive premiums
- Quid pro quo transactional gifts
- After-the-fact gifts of gratitude
Front-end premiums consist of address labels, greeting cards, refrigerator magnets and the like. The idea is the recipient will feel guilty about accepting the gift without making a donation in return. As a general rule, guilt-induced donations are not repeated because they don’t make the donor feel good. The donation is given begrudgingly. Research on front-end premiums shows negative effects unless the recipient perceives them as meaningful.
Quid pro quo transactional gifts are those you’ve mentioned, given in exchange for a pledge. Research reveals those who receive something more or less equal to the monetary value of their “gift” don’t feel quite as good as those who give without any expectation of “payment.” The gift “crowds out” the good feelings they get from giving.
After-the-fact gifts are my favorite way of demonstrating gratitude and building lasting relationships. In this case, it’s important to distinguish between unexpected and expected gifts. If you promise in advance that everyone giving $1,000+ will receive an engraved plate, the gift falls back into quid pro quo territory. I know many major donors who hate these gifts, while others love them. What to do? I have three suggestions:
1. Give a personal gift.
I love to bake, and used to deliver home-baked cookies for planned giving donors. Since they saw these as coming directly from me, and not paid for out of the nonprofit’s coffers, they accepted them happily.
2. Why not ask people if they wish to opt out of the gift?
Some will, some won’t. This way you’ll satisfy everyone, and likely reduce expenses as well. By the way, my general rule is never to spend more than 1 – 3% of the value of the donation on stewardship. So, an engraved plate may be merited for a $10,000 donation, but perhaps too pricey for a $1,000 one. Try to get inside donor’s heads, and use good judgment. Most donors don’t want you to spend lavishly on them.
3. Run an A/B test.
Send half the donors a gift and half a simple thank you letter. Track repeat donations to see if there is a difference in retention and downgrading/upgrading between the two groups. (Avoid this if you have a tight-knit community; You don’t want donors in Group B hearing from donors in Group A: “Didn’t you love the cute button they sent us?”).
My favorite gift of gratitude is a surprise gift of content. You can actually use this as a front-end premium as well. Whatever your mission, you’ve likely got lots of suitable (free) content at your fingertips. It may showcase your expertise (e.g., “5 Ways to Keep Seniors Safe at Home”), which is good for establishing your credibility and leadership. Or it may come directly from those you help (e.g., “Holiday Recipe from a Food Truck Loan Recipient”), which is good for establishing the relationship between donors and beneficiaries. Take a look at additional gifts of content suggestions here.
I hope this helps you decide why, when and how to gift!
— Charity Clairity
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