A nonprofit CEO, Dorethea, asks, “Should I send holidays gifts to donors?”
Well, Dorethea, it depends on what type of gift and which donor segment (small, mid-size, or major givers) you have in mind. It also depends on your previous conversations or donor surveys. A gift can work to your advantage, but it can also work against you.
Dorethea was asking about sending gifts to her major donors. What defines a major donor varies. An easy way to define your major donors is to look at the range of giving from the top 20% to 30% of your donor base. In this case, Dorethea’s major giving range was $35,000 to $125,000, and she had 52 donors in that range. However, others may want to know about smaller giving donor segments, and whether they should receive gifts too — what we in fundraising call “premiums.” I’ll start there.
Donor premiums are usually small gifts offered in exchange for donations. Think bumper stickers, coffee mugs, or tote bags. They seem like a great way to acknowledge supporters and turn them into regular givers.
Donor premiums can be a smart part of your fundraising strategy. However, it’s not as simple as it appears.
Not all holiday gifts to donors raise more
A Yale study in The Journal of Economic Psychology explains the counterintuitive effects of thank-you gifts on charitable giving. They focused on small gifts — pens, coffee mugs, or tote bags for example — offered as thank-you gifts to solicit charitable donations. They define “thank-you” gifts as low-value, non-monetary gifts offered to individuals who donate to the charity. You make the donation, you get a small token gift.
Their study describes a series of experiments that showed — contrary to expectations — that rewarding contributors actually cuts donations in most circumstances. The Yale researchers who conducted the study, George Newman, and Jeremy Shen, found that the most probable reason for the negative effect on contributions was that the gift activated a feeling of selfishness in donors, which, in turn, reduced altruism and cut the average donation.
Premiums may actually decrease charitable giving by reducing response rates and total dollars raised. They can change the mental calculus for the best donors and transform them from high-quality, high-motivation donors to non or lower giving donors. In some cases, the extrinsic motivator — the premium — isn’t nearly good enough to match or exceed the intrinsic motivation, the altruism of giving.
The lesson is that quality matters more than quantity. A powerful personal note that makes it to your donor’s fridge is worth 100 tote bags that end up in the trash.
A smallish premium can reduce a donor’s intrinsic motivation and ironically suppress giving. Premiums tend to be most effective for non-donors and, in some cases, lapsed donors. Doesn’t that make sense, given that those donors often have low engagement? Premiums, generally, are best used to boost donor acquisition by “sweetening the deal” so to speak. Some say that for your existing, active donors, there’s less of a reason to make a special offer because they’re already engaged. Should you do away with donor premiums? Not necessarily. Consider these examples of what works before you decide.
What gifts works?
The Yale study found that when nonprofits connected the premium with their mission, there was no reduction in gift size. For example, instead of saying, “If you donate, you’ll get a free tote bag,” frame the premium as an opportunity for the donor to help spread awareness. Explain to the recipient that a tote bag, bumper sticker, or coffee mug can be a conversation starter with someone who might be interested in supporting the cause. Think of all those bumper stickers you just couldn’t bear to throw out.
By connecting the premium to your mission, you encourage donors to advocate for your organization while letting them enjoy the gift. The negative effect found in the study took place when organizations offered the premium upfront as an incentive to donate. Since an unanticipated “thank-you” gift cannot create a feeling of selfishness, it presumably does not crowd out altruistic feelings.
Ask the donor
The majority of my experience has been with giving major donors reasonable gifts that I knew would resonate with their values. I knew the major donor would welcome a certain type of gift because I had relationships with them or our organization had asked them in a donor survey. In a conversation I’d ask, “At year end, we’d like to send you a token of our appreciation that reflects who we are. It’s generally a book related to our mission or a handmade craft produced by our clients. Is that okay? Yes or No.” I recorded their answer in the donor’s record for future reference.
Examples of gifts that work
- As part of their year-end drive, The Fellowship of Reconciliation, a nonprofit organization, sent me a book on the life of Dr. Martin Luther King. It contained a handwritten note from the Executive Director asking if we could set a time to talk. In reading the book, I recalled why my membership in the Fellowship was so important, and I gladly agreed to the call.
- The esteemed philanthropist, David Rubenstein, asked me if I wanted a copy of his important book, How to Lead. I was thrilled to be asked and responded, “Yes” immediately. While not raising funds, David intended to contribute to our sector’s public education, a noble goal.
- The international nonprofit, Bread for the World, asked me for my input on their holiday card designs. I liked being asked. There were six designs, and I could pick three. When their year-end appeal comes, I always donate.
- Without asking, the ACLU sent me a copy of the U.S. Constitution. I was very moved. But in this case, I was already a declared legacy donor, so they knew I was in their court. I can’t remember the last time I read the U.S. Constitution, so it was a good refresher.
Lastly, there’s giving the gift of a real relationship. It’s probably the most valuable gift you can give. It starts with regular phone calls to the donor, occasional Zoom meetings, and handwritten notes.
All of these examples convey the values of the nonprofit, and all were winners.
Have you sent holiday gifts to donors? What gifts have worked or do you think will work for your donors? Let us know in the comments below.