In Defense of Premiums

This is my third attempt at writing this post this week. Every time I try I end up getting a bit lost in my thoughts and therefore my words. I guess that's because the topic is so controversial, and my head and my heart don't always align on this one.

I was listening to a podcast from a session given by a fundraiser I know and respect on the weekend (yes, I'm slightly ashamed to admit it, but I am that person...the one who downloads sessions from conferences I didn't attend and listens to them in my free time). She was speaking about acquisition and said 'A lot of charities that don't have an offer have to use premiums.' My stomach turned when I heard it. A thought shared by so many in our sector. But it troubled me because I work with so many amazing charities...ones with very real and very tangible offers that are easy to understand and that are inspiring to donors...and I send premiums on their behalf.

Today when I received my daily email from The Agitator that was all about premiums and linked to an article by Kevin Sherman suggesting that premiums are like crack-cocaine that feeling came rushing back. It's not a feeling of anger - believe me, I get it. I don't love the notion of premiums or the thought that we are 'guilting' people into making a gift. And the argument they offer makes so much sense. But I don't believe the issue of premiums has been presented in its entirety.

As I mentioned, I send premiums on behalf of a number of charities here in Australia. And I have to say we are seeing some amazing results. At the moment, premium response rates in Australia are extraordinary, and these mailings are generating a LOT of income. Even with the higher costs, some charities are breaking even or netting income on their mailings. If you've ever done acquisition you know that's incredible. I can't argue the fact that average gifts are lower...they are. And we expect that. But the good donors...the ones that may have also given to a non-premium appeal are still responding, and premium mailings are still generating gifts of $1,000 and higher. The difference is they are also bringing in many more small gifts which are helping to cover the costs of those mailings. And many of these new recruits do go on to give second gifts to future non-premium appeals.

Will this continue? I don't know. But for the time being it is providing a valuable income stream, allowing charities to increase their net income and do more good. And believe me, we are continuing to dig deep into the data and to watch the behaviour of these donors.