Premiums: Please and Thank You!

by Sasha Daucus

The word ‘Premium' is used to refer to two different things in fundraising:

• 'Please give' premiums
• 'Thank you' premiums

‘Please give' premiums are small gifts, that are sent out with direct mail, in an effort to tip the scales in the direction of encouraging someone to make a donation. Sometimes these are called ‘freemiums', because no donation is required in order to receive them. The most common use for these kinds of premiums is to increase responses from people who have not donated to your regular appeal.

All kinds of organizations use ‘please give' premiums.

‘Thank you' premiums are given in response to a donation. Barbara Campbell, a FundRaiser Professional user, says that they are "our way of saying thank you. We look at it as true appreciation." Campbell works at Publishing Management Associates, a consulting firm that provides marketing, advertising, and business management services to both nonprofit and for profit organizations. She manages fundraising campaigns for the Institute on Religion and Public Life.

"Premiums are a way to say thank you," agrees Yvonne Allen, another FundRaiser Professional user. Allen is the Membership Director at WBJC-FM, an all classical, user-supported music station.

‘Thank you' premiums are most often used for on-air pledge drives for community TV and radio stations, although many other kinds of organizations may also use them.

Choosing the Right Premium

Choosing the right kind of premium for your organization is an important step. "Know your people, and do your best to predict their interests," says Campbell of Publishing Management Associates.

Allen of WBJC-FM agrees. "You have to gear your premiums strictly to that audience, what they are listening to, what you are playing. If you are offering something that has no connection to what your station does, then I wouldn't use those premiums; but if you look at the age of your listeners, their education, their preferences, what they tend to do in your area, then that is what you gear your premiums to." WBJC-FM offers classical music CDs, tickets to classical music performances, and certificates for meals at local restaurants.

For Campbell and the Institute on Religion and Public Life, "books are the premiums we use. We use a wide variety of authors. All books in some way are true to the Institute's mission."

Organizations usually need to go through some testing to find the premiums that work best for them.

Purchasing Premiums

Nonprofit organizations often receive a discount when buying products to use as premiums. Nevertheless, purchasing premiums can be expensive and judging the correct amount to buy is an art. After experimentation, both Campbell and Allen have refined their purchasing process.

Allen says they purchase the largest amount at the level of their most common contribution level. They don't purchase a lot of the higher level premiums, which are used less often.

"Don't overbuy," advises Campbell. "It is awfully easy to get caught up in a scenario where if you buy 500 coffee cups you save money on the quantity. But do you really need those coffee cups? You don't want a lot of money invested in something that you don't use. Something that you end up with a pile of at the end of the year. "

Sending Out Premiums

The donor management issues for the two different kinds of premiums, ‘thank you' and ‘please give', are very different. ‘Please give' premiums are enclosed in fundraising letters. They can be handled through the normal routes used for managing letter campaigns.

‘Thank you' premiums, however, need their own management system. Premium gifts must be matched accurately to a specific donor, in response to a specific premium level. The accuracy and timeliness with which these types of premiums are handled reflects back on the organization.

Some nonprofits use a outside ‘fulfillment house' to store and ship premiums, others do it in-house.

FundRaiser software helps with either method of fulfillment. "The FundRaiser premiums module is a very simple thing," says Campbell. "If you enter the premiums correctly into the module, along with the giving levels then it kind of runs itself."

Campbell has chosen to go with a fulfillment house. For the nonprofit they work with, "there are 15 different premiums with 150 of each in inventory." They also use premiums in direct mail which requires an inventory of 3,000 books. "We have five people on staff here and we're not geared to handle that."

WBJC-FM on the other hand manages their premiums in-house. A fulfillment house is "really expensive," says Allen. WBJC-FM used to use one, but they brought it in-house "because we needed to cut down the budget and find ways of combining and removing things that were costing us a lot."

First, using FundRaiser Professional, "we process the donations. Then we print out labels and send premiums out. Because our giving is increasing, the number of premiums is larger," Allen says. "We have interns that come in and package the premiums. That gives us time to process donations and still the premiums are going out. We segment which premiums are going out and just print those out. FundRaiser Professional gives us the ability to track inventory and tells us when we need to order."

Premium Problems

Premiums are controversial in the world of nonprofits. They are expensive, can attract members who are more interested in the premium than in the cause, and even loyal members may become dependent on receiving a premium in order to make their donation.

Says Allen, "Public Radio stations are trying to get away from premiums because they cost money and stations need the money for operating costs." On the other hand, premiums do stimulate donations. Allen isn't sure how to resolve that dilemma. For now, WBJC-FM continues to offer premiums in their fundraising drives.

Words to the Wise

Allen, after several years of managing premiums, suggests that if a nonprofit decides to use premiums, they "do it on a limited basis. Don't offer them on all levels, just do it at the higher levels. Then you won't have to purchase as many, because there are fewer contributions coming in at the higher levels."

Campbell emphasized the need to buy wisely. "Know your people, do your best to predict their interest and don't overbuy. It is better to reorder, rather than have a bunch of stuff that you don't need, even if you have to pay a little more."

Sasha Daucus edits the FundRaiser Software newsletter, focusing on articles that help nonprofit organizations feel more comfortable with their donor management software tools. In her free time she enjoys cooking and listening to world music from the Mediterranean region.

Resources

WBJC-FM
http://www.fundraisersoftware.com/solutions/premiums.html

Overview of the Premiums Module
http://www.fundraisersoftware.com/products/premiums.html

Premiums Management in FundRaiser by Larry Weaver
http://www.fundraisersoftware.com/library/newsletterarchives/2007fr1tip.html

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