Are you aware of the ongoing debate in nonprofit fundraising circles regarding donor perks? The chief raison d’être to favor them stems from a sincere desire to recognize and show appreciation to sponsors and benefactors. However, some donors resent having their money spent on “tchotchkes” (Yiddish for “trinkets”). They prefer to earmark all funds for their intended purpose.
It boils down to this: Know your donors and what motivates them. Misreading your donors, or working against their wishes, can only end badly. Particularly true for individual donors. One-on-one relationships allow you to build trust. They have likely determined how efficiently and effectively you are using funds. Don’t disappoint them. Often, catering to the needs of groups of patrons is easier. But make sure they stay happy.
To encourage donations, organizations often provide perks in advance. Some charities present them to donors as a way of thanking them or recognizing their generous contributions. Organizations sometimes give these away as a goodwill gesture.
A nonprofit might also use perks to market its programs without a quid pro quo. Their goal is to have recipients use their services or refer friends or family to them.
Definition of Nonprofit Donor Perks
Defining terms is helpful, as there are countless perks, like uncountable blinking stars in a cloudless night sky. Sometimes these benefits are tangible; sometimes they are intangible. Either way, donor perks are donation incentives. Sean Kosofsky is a nonprofit consultant who writes for “The Nonprofit Fixer.” In a story online called “The Big List of Donor Benefits (150+),” he provides a concise definition:
“Donation incentives are benefits that nonprofits offer to potential donors to both encourage and recognize their contributions. Donor benefits are often tied to donation levels, with greater perks offered for larger and longer-term commitments.”
Almost everyone has received a perk from a nonprofit in their lifetime. You probably received calendars, bookmarks or self-addressed mailing labels from non-profits at some point. There are, of course, many more examples, but you get the idea. Even though it is not obligatory, many donors donate because of the benefits they get. That’s the goal. Of course, the charity appeals to them, too.
Perks also depend on the nonprofit’s budget. Larger organizations often have a line item in their annual budget for these rewards. Giving nonprofit perks is really no different from rewarding consumers for regularly shopping at their favorite store or purchasing their products. My bank provides rewards for various bank services. The local supermarket chain gives me points for buying groceries there. For buying goods at Costco, a public wholesale membership warehouse, I receive a bonus check at the end of the year. Retailers offer an endless list of perks. Nonprofits try to mimic this approach in distinctive ways.
What Other Perks Do Nonprofits Offer?
Public TV and radio stations that rely on donor contributions offer perks during their fundraising seasons. WQXR-FM, the New York classical music radio station, offers CDs featuring classic greats if you commit to a yearly membership and a monthly minimum donation. For similar commitments, PBS and NPR supply tote bags and umbrellas. Some telethons offer the same arrangements for long-term donations. Listeners and viewers respond well to these tchotchkes.
Sponsors may receive sterling silver or gold-plated award pins, a signed copy of a recent best-seller or even personalized apparel at galas. We once presented donors with framed lithographs of different sizes, colors and shapes at an annual dinner of a nonprofit. Staff handed these to our benefactors at each table, enhancing the donor experience. Golfers also often leave nonprofit-run tournaments with hefty swag bags filled with goodies.
I once met a philanthropist in Texas who was extremely excited to show me a perk his favorite charity created for a capital campaign. After presenting me with an outsized case statement brochure they also produced, he ushered me into another room. Tables showcased intricate models of the campaign building designed by the project’s architect. They were presenting them to select major donors. However, everything looked extravagant and outlandish. In the end, the campaign failed because the excessive costs of the brochure and models turned prospects off.
So, remember: Nonprofits can offer their sponsors an endless variety of tangible perks. They should, however, be cost-effective, practical and tasteful.
Are There Intangible Perks for Donors?
Are there alternative intangible perks you can offer donors that are not costly? Absolutely. “The Nonprofit Fixer” story cites many examples, including:
- Publicity and public recognition (e.g., mentioning donors in e-blasts, newsletters, annual reports).
- Appreciation (e.g., phone calls, letters, awards).
- Program-related (e.g., VIP reception invite, input on proposed initiatives, concierge registration or check-in for special activities).
- Event-related (e.g., introducing guest speakers, signage recognition at events, reserved seating).
- Access to assets (e.g., offering tours of venues, inviting to meet & greet events, providing special discounts on products or services).
- Access to the community (e.g., being invited onto the board, entry to special meetings, invitation to periodic ‘happy hours’).
- Personal touch (e.g., provide unpublicized surprise benefits, share personalized videos from senior executives, offer something fancy, such as a wine tasting).
IRS Regulations
What does the Internal Revenue Service (IRS) say about perks disclosure to donors? The rules are clear-cut:
“The regulations adapt a de minimis standard whereby goods and services of an insubstantial value provided by the charity for payments of $75 or less will be ignored.” Anything above this amount, the IRS also is clear: “A disclosure statement must be provided by the organization to the donor because the donor’s payment (quid pro quo contribution) is more than $75. Failure to make the required disclosure may result in a penalty to the organization.”
Nonprofits need to know this regulation to avoid possible penalties. To find more information about the IRS ruling, consult the section on “Quid pro quo contributions.”
Conclusion
A March 21, 2024, blog with “Fundraise Up” an online giving company, reminds us why donor perks matter:.
“Donor recognition plays an important role in the donor engagement lifecycle, the process of converting first-time donors into loyal and long-term supporters. Effective donor recognition can build a strong emotional connection between the organization and its donors, resulting in many benefits for both the nonprofit organization and the donor.”
According to the story, donor recognition can raise donor retention rates, boost fundraising, enhance donor engagement and improve an organization’s reputation. The key to giving donor perks to accomplish these objectives comes back to what I mentioned earlier in this essay: “Know your donors and what motivates them.”
Insofar as the raging debate is concerned, let’s just call it a draw.
Norman B. Gildin is the author of the popular book on nonprofit fundraising “Learn From My Experiences.” He is the president of Strategic Fundraising Group, whose singular mission is to assist nonprofits in raising critical funds for their organization. His website is www.normangildin.com.
