02 May Giveaways, Trinkets, and Other Premiums
I fielded a question about premiums again last week. I get these periodically, because it seems intuitive that if someone is going to join, or give, or upgrade, or renew, they will need to get “something” in return.
This is probably the case only rarely. Most donors want to support the work we’re doing because it is work they value. Why do we have such a hard time believing that?
Now, to be sure people will often take advantage of token items that are offered once they have already decided to give, but the gift itself is just that – a gift.
If you are in the organizational habit of giving away trinkets in exchange for membership renewals and upgrades, I suggest that you test them and see if they actually have the desired effect.
Ask everyone at the $50 level to give $100, and offer half of the group a coffee mug if they do. Will it make a difference? Will the difference be worth the headache of buying and mailing the mugs?
Here’s some tips about trinkets I think I know:
- Premiums are different than benefits. Premiums are offered to incentivize a particular action or activity – like upgrading to a $100 membership, for example. They are only given the first time someone does something. Benefits are things that accrue to members at certain levels – like discounts on merchandise, reduced field trip fees, and invitations to annual events. Benefits are often provided every year.
- Premiums DO carry a fair market value (FMV) that is not tax-deductible. However, the FMV for a “token item bearing the organization’s name or logo and costing less than $10.70” (according to the IRS) is calculated based on the actual cost of the item to the land trust. That means if you only paid $1.25 for the logo mug, that’s the FMV, and you don’t need to worry about what that mug might be worth in a retail store. And if the donation is $53.50 or more (I’m not making this up – find the rules on the IRS website), you don’t have to worry about the value of the “token” premium anyway. So – giving away a mug as an incentive for a member to go from $25 to $50 might not be such a great idea (Only $48.75 of your donation is tax-deductible.) But a mug to go from $50 to $100 is a good idea.
- Premiums don’t work as incentives to go from $250 to $1,000, unless it’s a little more upscale and really corny. Offering a nice quality logo fleece jacket, taking a picture of its presentation, and then posting the picture to Facebook (Doris gets fleeced by the land trust) does work.
- Be careful with benefits that are tangible, because fulfillment will be an issue (even assuming the donor wants another one.) The best benefits are experiences – field trips, special events, and so on. Tangible benefits that can be consumed (for example: jams, honey, wine) are preferable and are even better if you deliver them in person – another excuse to visit a major gift prospect.
- One exception to the tangible benefit rule: the annual Zoo Ball in Oregon used to offer a dated champagne goblet every year. The goblets were of reasonable quality and owning an unbroken sequence became a form of social capital.
- If your outreach events offer discounts to members, let the discount be equal to a membership. Field Trip = $15 for members, $50 for non-members (includes membership). After all – that’s what you want!
One final point: Rick wrote to me several weeks ago.
Even worse [is when] they send me actual coins in the window in the envelope….
The reason organizations put things in envelopes is for texture. It makes the envelope more interesting, and therefore makes it more likely to be opened. I’m not a fan of the nickel approach, either, but I do like window clings. They are ultra-cheap and often get displayed (by kids, usually) on cars and windows even if the recipient does not give money. Nothing wrong with that!
Have you tested premiums and giveaways recently? Got some data you can share?
If so, I’d love to hear about it.
Photo by Sylwia Pietruszka courtesy of Stocksnap.io.