Lots of discussion about excessive premiums in charity direct mail

PremiumThere have been lots of discussions about “excessive” premiums in charity direct mail lately. The conversation was raised in various circles, including at the Fundraising Institute Australia (FIA) conference, as well as during the development of the new FIA Code. Card packs, pens, shopping bags, and other items are sent to various prospective donors to entice them to give a first time gift to a charitable organisation.

The fact is premiums work for some charitable organisations and premiums have proven to be a strong method to get people to give. On a recent visit to my parent’s in the United States, I found dozens of packs of address labels and other items sent to them from various veteran, healthcare, and other types of non-profit organisations. They have enough address labels to wallpaper a small bedroom.

The “debate” and discussion around premiums raises several questions:

  • Who decides what is excessive?
  • Should the cost of the premium item for a direct mail donation be deducted from the value of the donation for tax purposes?
    • The US follows a similar rule.
  • How do charity lotteries fit into this discussion – i.e. the luxury automobiles, $1 million+ homes, boats, and lavish holidays that are given away by hospitals, medical research, and other types of non-profits?
  • Does the ratio of those luxury prizes to the cost of the ticket mean they are excessive?

In interest of full disclosure, I am a big fan of charities using premium packages for their direct mail and they cause me, as a private donor, to respond. I have seen some fairly create premium packs used by some key direct mail suppliers in the Australian marketplace. That said, the debate is worth having and this discussion is worth the calories. I purchase many lottery tickets from the likes of the Mater Foundation, MS Queensland, RSPCA NSW, and others. Also, in interest of accuracy, FIA chose to remove clauses related to excessive premiums from their Code.