A Trinket for a Donation: Not Always Worth It

The Theory

More than half of fundraising solicitations try to entice donors by including a gift as a token of appreciation. But do the gifts really help boost a charity’s finances?

Some economists at Texas A&M University and elsewhere are skeptical. They tested the use of a variety of donation rewards and concluded that including a gift usually costs more than it’s worth.

The Test

The researchers sent solicitations to 140,000 of the institution’s donors who hadn’t given in at least one year. Some potential donors received a gift with their mailing: either a cheap plastic luggage tag or a nicer leather one. Others did not receive a gift, but they were told that if they made a donation, they could receive one. A control group of potential donors did not receive a gift and were not promised one.

Results

There was no significant difference in donation rates for donors who were offered a gift on the condition that they make a contribution versus those who weren’t promised a gift. Donors gave more frequently when they were given either a regular or a premium gift upfront, but with both the leather and plastic tags, the institution incurred a loss when the cost of the gifts was factored in.

“Unconditional gifts can get people through the door, but they don’t pay for themselves in the short run,” says Jonathan Meer, one of the study’s co-authors.

Dig Deeper

Don’t ditch gifts just yet. The experiment didn’t consider the ability of gifts to signal a person’s priorities. The offer of a tote bag emblazoned with an NPR or NRA logo, for instance, might be highly desirable for some donors and elicit larger gifts.

Also, it’s possible that gifts may be more effective with recent donors, Meer says, if they feel like a thank-you and not a quid pro quo.

Find It

“It’s Not the Thought That Counts: A Field Experiment on Gift Exchange and Giving at a Public University,” by Catherine Eckel, David Herberich, and Jonathan Meer, was published in the Economics of Philanthropy, August 2018, by The MIT Press.