Discounting Charitable Gifts

"A survey last fall by American Express Publishing and Harrison Group found that 99% of wealthy consumers shop online, expecting goods to be discounted at least 30% from store prices." — Wall Street Journal, May 1, 2008

Twice in the last year my employer (and alma mater) has run a marketing campaign in which an anonymous donor promises $100,000 for each 1,000 gifts made during the challenge period. The goal is to drive participation by making each new gift, regardless of its value, worth an extra $100. The additional challenge money goes to financial aid, partly because it's an area of need, but also because it's broadly appealing to our constituency; an easy sell.

Challenges are a well-worn tactic of nonprofit fundraising: think public radio. They work because they lift gift value, but also because they create urgency. For us, the strategy works reasonably well. We usually see a few thousand donors fulfilling their pledges during these periods, many giving as little as $1, knowing their gift will amount to much more—up to 100 times more—when the challenge money comes in. But it's also not unusual for major annual fund donors, those who usually give in excess of $2,500, to fulfill their pledges during these campaigns, too. This is probably because we hit all non-donors hard with direct postal and email over a few weeks, and if you market, they will give. But we've always assumed the "extra $100" selling point probably doesn't carry much weight with these major donors.

But the above stat in the Wall Street Journal made me realize even the major donor might view such challenges as essentially a "discount" or "sale" on their charitable gift, because even a $2,500 gift yields a 4% premium if given during the challenge period. The donor doesn't realize a tax advantage of that additional money, but knowing it exists may make the donor feel like the "system" is giving them a better deal for the money.

This makes me wonder whether we could even more consciously leverage other mass-market phenomena like discounting, promotions, time-limited offers, and outlet sales without cheapening the enterprise. We're selling the undergraduate experience, essentially, but that's a pretty broad, generic product, even for an institution that has a strong reputation for excellence. What more specific products would connect with donors? And how can our product/marketing mix get more specific and targeted?

Comments

[Doug]

Have two annual Alumni Lectures. Each will be given by a professor chosen by the alumni based on how many contributions they send in (or dollar total, if you choose, but that would lower participation) in that professor's name. The fall lecture, perhaps, could be sponsored by the older classes and the spring lecture by the newer classes. The donor names would be shown at the lecture, of course, and on the web. Perhaps the lecture should be available on the internet, too.

This would be a way of showing gratitude and giving recognition to a particular professor who influenced them. Making the choice also forces a review of what they value in their education and who they esteem. If you assemble lists of the professors who agree to participate and who were present during the undergraduate years of each class, with a reminder of what they taught, it would help that review process.

If you already do something like this, excuse me. I'm not plugged in to current practices.

[Meg Houston Maker]

Excellent idea. No, we don't do that now. Yes, we should.

[Doug]

Thinking about it today, it seems to me that every 5 years might be better than annual. It would be a fair amount of trouble to set up, for one thing, and it would not be particularly useful to put alumni through the same exercise year after year. Spacing it out would give a greater sense of occasion, too, and urgency in some cases -- older professors may not be around for the next lecture. I could imagine some alumni traveling to attend.

[Meg Houston Maker]

To your point about travel, it could be yearly, at Reunion time, perhaps, or Homecoming -- one of those significant college holidays, as it were, when a lot of alumni return.

[Paul Prewitt]

I had a particular question in regards to "donor fatigue". With the two challenges that you mentioned what % or repeat donors did you get? Was there a significant increase in “new” donors from what you usually get in that time frame? Last and most importantly did the % of repeat donors (or those that didn’t give) comment on what they thought of the challenges?

[Meg Houston Maker]

Paul, thanks for these good questions. I'd have to pull some data to answer all your questions fully. We could also have a conversation off-line. Basically, the web team did worry a lot about donor fatigue, though the annual fund director was willing to risk it. In the end we heard from a few people that four emails in one month was too many. But the crazy thing is that every email campaign produced lift. And the challenge campaigns definitely produced a significantly higher number of gifts year-over-year for that time period.

We don't re-solicit once someone has made a gift, so if by "repeat donors" you mean harvesting LYBUNTs, I could get you that data.

[Paul Prewitt]

Meg, thanks for the details. I'd love to see any data charts or trend graphs that you might have for that data. Also, I'd like to figure out your "size" as I'm with the University of Arkansas. However, if we can find a way to do something similar then it could help everyone.

Thanks a bunch and I look forward hearing from you.