Fundraising Incentives are Bad

I was recently at the Peer-to-Peer Professional Forum, a gathering place for peer-to-peer fundraisers, in Orlando. Several good friends said this to me: “You have baggage.” Aghast and confused, I asked, “What baggage?” They didn’t even know me in the early ’80s. There was no way they could possibly know about—nope, it wasn’t that. “What is it?” I begged to know.

“Katrina,” each said in her own way, “it is product. You have product baggage. I know the story on your baggage, but others don’t. You have to tell that story.”

So here is my baggage.

I have had several 10,000-hour thresholds in my career, all of them related. What’s so special about 10,000 hours? Let me defer to our human behavior specialist, and my hubby, Otis Fulton.

Per Otis, “In his 2008 book ‘Outliers,’ Malcolm Gladwell wrote that ‘Ten-thousand hours is the magic number of greatness.’ Gladwell contended that it’s ‘an extraordinarily consistent answer in an incredible number of fields … you need to have practiced, to have apprenticed, for 10,000 hours before you get good.’”

The message in “Outliers” is that people aren’t born geniuses, they get there through effort. Gladwell’s examples include:

Bill Gates, who through an unusual convergence of good fortune, was, as a teen in high school, able to start coding on a state-of-the-art supercomputer. The Beatles, who refined their sound playing eight-hour gigs in smoky German clubs for years before they invaded America.

Those opportunities to practice early and often—along with the requisite smarts and talent—allowed them to revolutionize software and modern rock and roll.

I started my company in 1989. My first 10,000 hours happened by 2007 or so. By that time, while likely not having achieved “genius-hood,” I had spent 10,000 hours on promotional products procurement and fulfillment for nonprofits. I had worked with, most notably, the American Cancer Society Relay For Life during its explosive growth, and other smaller clients.

By 2007, I realized that most marketing directors didn’t really consider promotional products in the same way that they considered, for example, print media. They didn’t assign value to them, and didn’t carefully consider their spend on promotional products in the same way as other media were evaluated. It frustrated me.

The worst was, by 2007, I began to realize that I might be doing more harm than good to the nonprofit industry I had come to love. The expenditures I saw on promotional products—without careful use, planning and ROI evaluation—were massive.

Around 2007, I began to work closely with a client who felt the same way. We happened to be working on what, at the time, we called an incentive program, using promotional products as incentives for higher fundraising by peer-to-peer volunteers.

She and I both lamented that we really were running a big thank-you gift program because the participants often didn’t even know there was an incentive to be had. We began to experiment with letting people know that there was an incentive program with what then was a bold new idea—income-triggered email campaigns. That began my next 10,000-hour journey.

From that experiment, Turnkey began to deliver income-triggered messaging even before the functionality was built into fundraising platforms. That idea, that messaging people about an incentive would impact their fundraising behaviors, turned into something else altogether.

Once we began to deliver messaging, we also began to deliver redemption opportunities instead of actual gifts. Now fundraisers had to say they wanted gifts, instead of gifts just showing up.

We had created business intelligence that wasn’t there before. And it was good.

That business intelligence led us down another, unexpected, 17,000-hour path to this: “Incentives are bad for nonprofits.” Before all my promotional products friends and partners freak, let me explain.

I give myself a little leeway for missing the 10,000-hour mark since the whole email messaging thing had to be conquered first, and then database design, and then social science too. I cheated on the social science by marrying a psychologist. It was a shortcut I feel good about, though; I’m getting older, he’s darned cute, and I have but so many 10,000 hours in me.

Incentives are, indeed, bad for your nonprofit. And by that, I mean bad in every way–for fundraisers, for employees, for donors, for your outsourced janitorial staff, for your children’s reading efforts, for your board and more. You name it. Incentives are, indeed, bad for your nonprofit, but promotional products are not.

Let’s explore.

Per Otis, “People look at the behavior of others and infer beliefs and attitudes from their actions. There’s nothing surprising about that. What is surprising is that when a person’s own attitudes are weak or ambiguous, they similarly discern their own attitudes from the things they themselves say and do. And what this means is that managing attitudes is an important—and tricky—endeavor.”

So how does this work for—and against—nonprofits? If I am given an incentive for something I do, I may conclude that my behavior was done in order to obtain the incentive, rather than because the nonprofit’s mission was something I believed in. In his book, “Why We Work,” Swarthmore University psychologist Barry Schwartz, documents the way attitudes change for the worse when incentives are introduced in all kinds of scenarios, including employment. He gives examples of the way employees are demotivated once they are given a financial incentive for performing desired behaviors at work. When an employer added a financial incentive to the equation, an employee’s motivation for doing a good job for the satisfaction it provided changed to doing a good job only when an incentive was provided. If a financial incentive can make an employee less inclined to perform well because the employee thinks he or she is doing a good job only for the incentive, imagine what incentives can do to the attitude of a nonprofit constituent.

To nutshell it, if your constituent is working for the goodie, for the sake of the goodie, you have a problem.

But here is what is not bad for nonprofits—recognition. Recognition, instead of incentives, works to solidify and reinforce people’s ideas of why they are doing whatever we are asking them to do.

Historically, nonprofit executives have used promotional products in what they call “incentive programs,” typically in the peer-to-peer space. The idea held by most of us, including myself during my first 10,000 hours of work, was that the person would work hard for the incentive. That’s what made it an incentive program. Now, we have a better understanding of what motivates people. If we want to reinforce a behavior and instill the attitude, “I want and like to do this,” then we can’t use a carrot like an incentive. In fact, we can’t use anything that might have enough value to suggest they are doing it for something external. They have to be in it for the satisfaction that they get from participating.

And that is exactly what makes promotional products perfect for recognition.

A promotional product, when carefully selected, does not jeopardize a person’s view of why he or she is involved with a nonprofit, because it cannot be construed as payment in any form. The product provides what psychologists call “insufficient justification” for the volunteer’s behavior. The product is instead a reinforcement of the person’s self-label—e.g., “I am a cancer evangelist. I do this work because it’s who I am.” Here are the best practices to make sure that a promotional product works as recognition instead of as an incentive:

The value of the item is too low to be sufficient justification, in and of itself, for the behavior. The product reinforces the person’s self-label by being visible to the user and others over time. The recipient cannot assign a price to the product. The product can’t be available through other means, nor is the price published.

All forms of recognition work in this way. For example, giving a fundraiser a ski trip for raising $10,000 would raise the question—either consciously, or unconsciously—why had he or she raised $10,000? Was it for the trip, or the cause? That questioning undermines his or her self-label as being a supporter of the organization. On the other hand, being recognized with a shoutout from someone on stage at an event is immensely rewarding, but it is darned near impossible to deliver that experience with any consistency, nor measure its effectiveness.

And that, too, is exactly what makes promotional products perfect for recognition.

You can store promotional products easily and deliver them efficiently. You can measure who wants them and who doesn’t, and calculate an ROI for their use. You can create business intelligence through their uses that help you make decisions and create accurate revenue forecasts, which we do at Turnkey every day.

Promotional products are certainly only part of the recognition picture, but they are the most easily applied and measured part. That’s why most organizations usually start and stop using recognition with the use of promotional products. The delivery of the other recognition opportunities, like public acknowledgment, is really difficult to achieve with consistency and is difficult to measure. It’s tough to create a budget for phone calls and personal relationship management. That’s why we as an industry don’t invest more in that type of recognition. Instead, nonprofit self-labels across America are fed primarily by promotional products—the unexpected hero.