NONPROFIT BRANDING: Fundraising Premiums: Pro & Con

When we requested topic suggestions from readers, Steve at Michigan Public Radio asked us to comment on the use of branding products in fundraising. His words: “Pros/cons of not using premiums in your fundraising campaigns (I know this might be a touchy subject for you).”

This is not touchy at all. It’s fun to discuss whether fundraising premiums, (also called contribution incentives) can attract gift income that you would not otherwise receive – and whether that result is worth the effort and cost. (We’d love to have readers contribute to the discussion by posting their own views and experiences in the “Comment” section.)

It’s a big topic. We’ll cover it in several installments. First – a list of the Pros & Cons. Subsequent posts will get into more interesting terrain – how those pros and cons relate to fundraising dynamics of an affinity market. We’ll have plenty of examples to offer in those posts, and we hope to respond to questions and challenges from readers as we go along – so  send us your thoughts in the “Comments” box.

Let’s start with the negatives – they are pretty persuasive:

  • Premiums can be expensive.
  • They haven’t been as effective in attracting first time gifts as they have been with renewals and upgrades.
  • If used incorrectly, premiums won’t raise extra money. They may not even pay for themselves.
  • Unfortunately, many nonprofits do not use them correctly. This group includes some of our clients!
  • Premiums can be a pain in the neck to store, to package and to ship to contributors.
  • Selecting premiums can be intimidating. And confusing. There are so many promotional products it can be difficult to make an informed selection. (One reason this blog exists.)
  • Before the fundraiser it is tough to predict how many units to order. Some nonprofits order too many and end up with extra products they don’t need.
  • After the fundraiser it is easy to tabulate results and order the exact quantity needed. But if the premium is custom-imprinted with your logo, production time adds a several week delay before the promised incentive gets to your contributor.  (This is an important consideration because satisfaction delayed is satisfaction diminished.)
  • The print space, broadcast time, visuals and messaging used to present the premium to the potential contributor can distract from the solicitation message itself.

That’s my list of Cons. They seem pretty persuasive to me. (Have others? Send them in.) Now for the list of Pros. There are only two:

  • Products with the logo of an affinity-organization build its visibility, reinforce its market niche and enhance brand loyalty of supporters who own them.
  • These premiums are badges of membership in a nonprofit’s community of support – badges that are gratefully received and proudly used by your affinity market. Thus – they attract revenue.

This is where the energy originates: as the value of your mission increases in the eyes of a supporter, so does the likelihood that the person will want to own evidence of affinity. To that constituent, it seems like a perfectly reasonable step to renew a contribution or upgrade to a higher contribution level to acquire an attractive premium with the desired logo.

That’s the Pro & Con roster. Two persuasive Pros. Nine persuasive Cons. (Maybe others that I didn’t think of – so remind me.) Watch for the next installment on this topic. It will post on May 31. That is where we will get into the real substance of this important topic.

In a perfect world your mission would attract all the revenue you need.

But this is not a perfect world! That’s why many nonprofits use fundraising premiums to attract additional revenue. Many have learned to do it economically and productively. Many – but not all.  The Nonprofit Branding Blog is one way we share lessons we have learned with those who want to become more adept at ordering and using promotional branding products as contributor incentives and as marketing tools. If you want to validate our background so you know whether we have enough experience to assist your organization, click on the “ABOUT” tab at the top of this page.

2 thoughts on “NONPROFIT BRANDING: Fundraising Premiums: Pro & Con

  1. This is a good list, but I think you missed the biggest con….or at least the biggest perceived drawback I’ve heard….using premiums creates a dependency on them among both the organization and your donors. In other words, people aren’t pledging to support the work you do, they’re pledging as a way of “buying” this year’s cool new logo item or other premium. No offense to my public TV friends, but I’ve often heard it said that’s what many public TV pledge drives are all about. People pledge just because they want the CD or DVD. I know from personal experience in PTV that we’d often get calls from viewers wondering when the DVD “they just bought” would arrive. There are many Development Directors (especially in radio) that cringe at that thought, and loudly extol the benefits of having a premium-free pledge drive.

    I understand the very good reasons behind that, but as you pointed out, those stations miss an opportunity to build visability for their brand among the public and enhance loyalty among thousand of their most faithful listeners. And of course, the listeners/donors themselves are helping to pay for that branding effort.

    • Interesting comment, Steve. Don’t think it is much of a concern, though.

      From what I can see, that kind of transactional fundraising is pretty much confined to the example you gave – public television. It is neither the nonprofit norm nor its ideal. All sorts of nonprofits sell merchandise to raise money, but they don’t fit the example because they price the merchandise at close to the normal retail price. We just don’t see the $50 box of Girl Scout Cookies!

      It seems to me a pretty clear distinction is inherent in the issue you raised. At one pole are organizations whose fundraising premiums relate to their mission, represent their brand and reflect their public service program. Whether the nonprofit is the World Wildlife Foundation, the Notre Dame Alumni Association or a public radio station, those premiums attract contributions from people committed to the mission, to the brand and to the program represented by the premium.

      That’s a pretty satisfying arrangement. Constituent zeal causes some supporters to acquire products that declare their affinity. That distribution results in a nice uptick in the organization’s branding strength. Those constituents voluntarily contribute financial support to get those branding-products. They pay for the privilege of marketing their favorite cause. That is even better!

      At the other pole is the example you gave. But Steve, I think the public TV practice is something of an anomaly in the nonprofit world. It is such an odd approach. Most stations broadcast fundraising programs that have little or nothing to do with the station’s regular fare. Consequently, premiums offered in those fundraising specials represent neither the programming regularly offered to the public nor the local station that broadcasts it.

      As a consequence, those premiums completely fail to enhance the brand of the station or the programs it offers regularly. Moreover, nearly all of those products are available in commercial establishments ranging from Borders to Wal-Mart.

      Fortunately, retail operations operating within the fundraising tent are divided by a pretty clear line from mission-related contributor incentives. That line is respected by nearly all organizations. So I think the nonprofit sector faces very little risk that this practice will damage credibility or creates a class of constituencies that confuse consumerism with commitment.

      The dynamics that drive solid use of branding products in nonprofit fundraising and marketing are complex, interesting and well researched. Those dynamics are fun to think about and write about. And the better I do this job the more the blog will help our nonprofit colleagues in public broadcasting and beyond. So, Steve – stay with the blog. Ask questions. Push the discussion. I’ll do my best to respond.
      John

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