How Donor Incentive Programs Backfire

Vol. 12 No. 7

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Tiered memberships. Financial incentives. Substantial rewards. These dangle like carrots tied to the proverbial stick, encouraging potential donors to reach for their wallets to make gifts to your private-independent school. But, are donor incentive programs really the way to drive donations?

Public radio stations and community theaters often use tiered giving systems. They offer substantial perks to participants to fund their annual programming, such as a CD of the month club, show tickets, t-shirts, bags, etc. These “gifts”—offered after the donation has been made—work to keep donors engaged after the fact.

But studies have shown that incentive programs may lead to a “crowding out” of a donor’s intrinsic motivations to give (i.e., donors now give for a gift or prize, rather than through a belief in a school’s mission and purpose). While the short-term benefits are seductive, the long-term repercussions of such a program discourage tiered reward programs.

Part of the problem with a tiered incentive system is that the implied hierarchy of rewards places the emphasis on large gifts instead of acknowledging the impact on gifts of all sizes. Those with limited ability to give may feel discouraged or discounted by not “reaching” the next tier.

And that leads to one of the biggest problems for private schools developing a tiered giving system—the absence of personal attention toward each and every donor. No matter the giving level, donors should feel as though their gifts made a difference for the students and mission of the school.

Donors should view the school as one of their top philanthropic destinations because they believe so strongly in the school’s mission—not because this charity’s “gift” will be better than another’s. If your school suffers from a lack of donors, this dearth is most likely the direct result of a lack of personal connection to the school.

One survey of donors in the United States, Australia, and the United Kingdom found that “having passion about an organization’s mission” was among the top three reasons donors give to their charities of choice. Sponsoring a “friend or client” for a special event were also huge factors for one-time gifts in all three countries. (Giving for “increased perks” was never mentioned as a reason for donating to a particular charity.)

What does this say about your private school’s fund-raising efforts? Developing a personal relationship with potential donors—both large and small—is the primary way to attract gifts. You want to recruit donors through personal messages about how your school has impacted the lives of its families and faculty. Have faculty and other parents thank these donors individually instead of “on behalf of the Board.” These small touches tell donors their gifts were appreciated and useful.

And if you want to encourage donors to give again, be transparent in how you use these gifts. Everyone wants to know that his or her money accomplished something substantial for the school—and that the funds went to what the school said it would. Answering the question, “How did my donation make a difference for the students?” will go a long way toward re-recruiting these donors.

Additional ISM resources:
ISM Monthly Update for Development Directors Vol. 12 No. 1 What Motivates Donors to Give?
ISM Monthly Update for Development Directors Vol. 9 No. 2 Now More Than Ever—Tell Donors What Their Gifts Will Achieve
ISM Monthly Update for Development Directors Vol. 10 No. 8 Let Your Students Tell the Story to Inspire Donors

Additional ISM resources for Gold Consortium members:
I&P Vol. 32 No. 10 Seven Gift Planning Tips for a Small Development Office
I&P Vol. 30 No. 4 A Comprehensive Development Model
I&P Vol. 34 No. 14 Anchor Your Case for Support to Your Purpose and Outcome Statements

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