Giveaways, Trinkets, and Other Premiums

30 Apr Giveaways, Trinkets, and Other Premiums

30 April 2024

By David Allen, Development for Conservation

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 need to get “something” in return.

In fact, this is probably the case only rarely. Most donors decide what to give based on what is being asked of them. If it makes sense emotionally, and if they feel comfortable supporting the program, project, or outcome in question, they will make a decision one way or the other. Sometimes you can tip them over the edge by offering a premium, but not as often as you might think.

Instead, 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?

Importantly, 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 and reduced field trip fees. Benefits are provided every year. Those of you who know me know that I am not a big fan of tangible benefits. They reduce the value of the gift to the level of transaction.

Premiums are different – I’m just not so sure they work as well as we think they should.

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.

For example, 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?

Test it.

Here’s some tips about trinkets I think I know:

• Premiums DO carry a fair market value (FMV) that is not tax-deductible. I am not a tax attorney and I’m not qualified to provide IRS tax advice, but you should be generally safe if the items you are providing carry the organizational logo and/or the total FMV of the premium is less than 2% of the donor’s gift. You should consult a qualified attorney and./or read the IRS code to be sure.
• Premiums work best at lower donation values – to incentivize new monthly gifts, for example. They don’t work as well as incentives to increase giving 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 flute every year. The flutes 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!

A couple of final points: If you want to give a donor a gift, do it! The only IRS issue exists when your gift is essentially promised in exchange for theirs. (Did I mention that I am NOT an attorney?) If you wanted to take any of the items mentioned above and give them to a donor just to say thank you, you should be OK.

And consider that logo items, such as window clings, can be given in the appeal or renewal letter instead of the thank you letter. There is no possibility of a quid pro quo if the item is delivered before the gift is made. (And the value is minimal anyway.)

I 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.

Cheers, and have a great week!

-da

PS: Your comments on these posts are welcomed and warmly requested. If you have not posted a comment before, or if you are using a new email address, please know that there may be a delay in seeing your posted comment. That’s my SPAM defense at work. I approve all comments as soon as I am able during the day.

Photo by lmsverige courtesy Pixabay