A premium is a small gift used to encourage donations. You might think of it as a bribe to get someone to make a donation now. Some nonprofits think that a premium encourages donations. Unfortunately, premiums can have the opposite effect.
People who give to get a premium aren’t really donors. They want the premium, not the warm fuzzy from making a gift.
Front-end premiums are gifts that are sent along with the appeal for money. Mailing labels are a good example of a front-end premium. When you receive the direct mail package in the mail, the labels are included.
Back-end premiums are gifts that you receive after you make a gift. Public television stations frequently use mugs and t-shirts as back-end premiums for donors.
I encourage small nonprofits not to use premiums for several reasons:
o Premiums will cost money. You will have to come up with funding to cover the cost of the premium.
o Some donors are offended if they think their gift is used to purchase premiums. They’d rather have their gift go toward programs that change people’s lives.
o Donors who give to regular direct mail letters typically give more (on average) than those who give in response to a direct mail package with a premium.
Good fundraising is based on relationships. Do you want to build a relationship with someone who expects to get something in return whenever they make a donation? Or would you rather have donors who give because they want to and because they believe in your mission?
While there may be a time that a premium might work, small nonprofits should not use premiums for fundraising.