I don’t know how I missed it on Vox.com, but Non-Profit Quarterly recently pointed out an article the site about the effectiveness of swag in non-profit fundraising.
The TL:DR version is, other than instances when it reinforces your identity (i.e. NPR or New Yorker tote bags), it isn’t really effective in terms of raising more than the cost of the gift and processing. This is especially true in regard to the unsolicited gifts like mailing labels and Christmas cards some charities send you around the holidays in the hopes you will feel guilty enough to donate.
For the more detailed version: There are definitely times when those gifts can actually increase donations because they are tied to people’s identity:
Simran Sethi, a journalist who hops between North Carolina, Mexico, and Italy, told me she nudged up her donation from $50 to $75 once just to get the WNYC tote bag. “I just wanted to show my NPR pride!” she says. Lindsay Diamond, who works for the University of Colorado Boulder, admitted to ponying up more so she could snag a Tiny Desk Concerts hoodie.
…. Like Sethi, people may want them to show off their contribution or affiliation, or perhaps connect with other like-minded folks. Donation levels that feature increasingly valuable gifts do indeed promote “bump-up spending,” Yarrow says. “Even when we’re donating, we consider value pricing.”
I feel like I just read a conversation on Twitter this week where people were questioning whether an organization was saying they were committed to spending $8 million a year to raise $20 million (or something similar). If any readers saw that exchange, point me to it. (My recollection was that it was in regard to Boston Symphony, but I can’t find any such article so don’t quote me on that.) But practices like that are pertinent to this conversation.
But a bad design of the donor reward scheme can be problematic:
A man from Chicago — name redacted to protect the guilty — for instance, confessed to donating a dollar to NPR just for the socks. “It was a gift-of-any-size campaign, and I knew I was probably costing them money,” he says. (He redeemed himself by shelling out later on.)
For some donors, there may be a perception that the non-profit is wasting money on swag they could be spending on their cause:
If donors do end up contributing, they may chip in less than they can afford because the premium casts a pall over the organization’s financial efficacy. Or they might knock the charity off their lists entirely. Younger donors, especially, are becoming more strategic with their largesse.
Research bears this out. A 2012 study by Yale psychologists found that the offer of a gift reduced feelings of altruism regardless of whether the gift was “desirable or undesirable, the charity was familiar or unfamiliar, or the gift was more or less valuable.” The authors attributed this to a “crowding-out effect,” one that may create ambiguity about the donor’s perhaps-less-than-unselfish motivations for giving.
There was a mention in both the Vox and NPQ pieces that often the calculus being used is the long term value of a donor versus what you spend today on a gift for them. In other words, you may lose $5 sending them a donor premium today, but if they give $1000 over the next five years, it is worthwhile.
A 2018 study posted on The Conversation looked into that assumption:
Fans of using premiums to raise money for causes believe that they are worth it even if they simply get donors in the door but do not raise more money than giving them away costs charities. That’s because, at least theoretically, they can form a habit of giving. But some researchers have found that donors who are lured into giving by donor premiums are unlikely to give again when asked without an incentive.
What should nonprofits and donors take away from our study? We conducted this experiment with just one organization, but the preponderance of the evidence from our work and the findings of others suggests that unconditional premiums are not worth it.
Most interesting to me was a personal observation made by Niduk D’Souza at the end of her NPQ that donor rewards are used regardless of their efficacy due to the way development offices are evaluated:
However, it is this fundraiser’s experience that the metric most often measured, and presumably without coincidence, is one that is most easily aligned with nonprofit budgets and often a fundraiser’s own job performance metrics: how many donors were brought in this quarter, this year, by your portfolio, and how much did your portfolio raise, or is it worth, overall?
So, is it any wonder why nonprofits continue to give away crap?