A return policy for donations?

The money-back guarantee isn’t special any more. We expect it with almost everything we buy. There’s a reason for that, and it’s explored at the Neuromarketing blog at What’s A Return Policy Worth?. Turns out return policies cause customers to mentally add value to the thing they’re buying:

… there’s a specific value that customers apply to returns, or, more accurately, the OPTION of returning a product…. how much more the consumer will pay for a strong return policy.

That value varies. The higher the risk of the purchase not being right, the more value the customer places on a return policy. Men’s shirts — which you can generally count on working out — are seen as worth $3.19 when they can be returned. Women’s Shoes — a high-risk buy with lots of ways to go wrong — get an additional $15.81 in perceived value when there’s a return policy.

That’s why retailers offer and brag about their return policies. It’s like lowering their price without getting less from the sale.

So why not apply this to nonprofits? There is “risk” to charitable giving, as far as donors are concerned: Maybe it’s an unethical organization that won’t use their giving for the cause. Maybe the organization is inefficient, and little of their gift will make it to the cause. Maybe the charity is a scam. These aren’t unreasonable fears; these things happen all the time.

New donors especially don’t know you; that first gift is often a leap of faith — a leap many are unwilling to take in the first place.

You could lower these barriers to response by showing donors it’s possible to return a gift if it doesn’t “fit.”

You probably already have an unwritten and unproclaimed return policy. If a donor calls and says she didn’t want to give after all, you’re probably going to refund what she gave, right?

Why not get some value for the courtesy?

The not-so-dirty little secret in retail is that hardly anyone ever returns stuff. This is why we see “double your money back” guarantees. It’s not as daring as it looks.

An open return policy or guarantee on giving just might be the thing that frees nervous, fence-sitting donors to join your cause.

Update 3 May, 2011

Thanks to alert commenter Jonathon Grapsas who pointed out an article on SOFII about how Habitat for Humanity Great Britain tested a money-back guarantee in direct mail.

There was no impact on response, but the guarantee generated an astounding 50% higher average gift. The long-term value of upgrading new donors that much is huge. You’d be crazy not to try it. Unless you’re in Canada, where it seems you aren’t allowed to do it.


Comments

12 responses to “A return policy for donations?”

  1. Lisa Estrin-Allison Avatar
    Lisa Estrin-Allison

    Glass pockets, transparency, accountability. All terms very much at the forefront of conversation these days. Donor cultivation has always been an art as much as science. People give to people ( friendraising ). They give to causes, in large part ,that are fundamentally in alignment with their personal belief system. Donors like to know how much of their dollar goes to “doing good work”, but I am hesitant about the doesn’t fit approach. Is this akin to a cancer patient who undergoes chemotherapy yet is not cured? Would there be no bill as treatment failed? Organizations should most certainly provide the giving public with a readily available assessment of their performance as well as evaluations and the knowledge that was gained from them.

  2. Lisa Estrin-Allison Avatar
    Lisa Estrin-Allison

    Glass pockets, transparency, accountability. All terms very much at the forefront of conversation these days. Donor cultivation has always been an art as much as science. People give to people ( friendraising ). They give to causes, in large part ,that are fundamentally in alignment with their personal belief system. Donors like to know how much of their dollar goes to “doing good work”, but I am hesitant about the doesn’t fit approach. Is this akin to a cancer patient who undergoes chemotherapy yet is not cured? Would there be no bill as treatment failed? Organizations should most certainly provide the giving public with a readily available assessment of their performance as well as evaluations and the knowledge that was gained from them.

  3. Good article. I think this is the right thing to do, at least with large to mid-size donations.
    We have, on several occasions, offered to return a donation when we could not use it in the way in which we had originally stated that we would. That sometimes happens because circumstances and situations can change quickly on the ground where we do our work.
    We had this happen just last week. We have been raising funds to purchase the lot next door to our boarding school in Yangon so that we could expand. A couple who had never donated to us before made a large donation (large for us, $2,500). Soon after we received their funds, though, we learned that the lot had became unavailable.
    We contacted them right away and asked if they wanted their donation returned. They said “no,” and told us to use the funds as we saw fit. We are still using the funds for our school, just not for a land purchase.
    In all the times that we have offered, never yet has a donor “asked for their money back.” They always say thanks for letting them know, but then they go on to tell us to use the funds where ever the greatest need is at the time.
    I think people appreciate being asked, though.

  4. Good article. I think this is the right thing to do, at least with large to mid-size donations.
    We have, on several occasions, offered to return a donation when we could not use it in the way in which we had originally stated that we would. That sometimes happens because circumstances and situations can change quickly on the ground where we do our work.
    We had this happen just last week. We have been raising funds to purchase the lot next door to our boarding school in Yangon so that we could expand. A couple who had never donated to us before made a large donation (large for us, $2,500). Soon after we received their funds, though, we learned that the lot had became unavailable.
    We contacted them right away and asked if they wanted their donation returned. They said “no,” and told us to use the funds as we saw fit. We are still using the funds for our school, just not for a land purchase.
    In all the times that we have offered, never yet has a donor “asked for their money back.” They always say thanks for letting them know, but then they go on to tell us to use the funds where ever the greatest need is at the time.
    I think people appreciate being asked, though.

  5. Jeff, have you seen this article on SOFII? Been done a few times in the UK.
    I’ve tried, unsuccessfully so far, to have clients test this also.
    Cheers
    Jonathon

  6. Jeff, have you seen this article on SOFII? Been done a few times in the UK.
    I’ve tried, unsuccessfully so far, to have clients test this also.
    Cheers
    Jonathon

  7. Linda Floyd Avatar
    Linda Floyd

    The reference to “Unless you’re in Canada, where it seems you aren’t allowed to do it.”, is this a fact? Or tongue in cheek? I think the idea has merit and considering how an appropriate spin could be incorporated into fundraising for Hospice – but I don’t need to be swimming against the current if there is a good reason why we should drop it.

  8. Linda Floyd Avatar
    Linda Floyd

    The reference to “Unless you’re in Canada, where it seems you aren’t allowed to do it.”, is this a fact? Or tongue in cheek? I think the idea has merit and considering how an appropriate spin could be incorporated into fundraising for Hospice – but I don’t need to be swimming against the current if there is a good reason why we should drop it.

  9. Linda, a Canadian fundraiser told me refunding gifts is illegal in Canada. But look into it to make sure it’s indeed a fact.

  10. Linda, a Canadian fundraiser told me refunding gifts is illegal in Canada. But look into it to make sure it’s indeed a fact.

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The future of fundraising is not about social media, online video, or SEM. It’s not about any technology, medium, or technique. It’s about donors. If you need to raise funds from donors, you need to study them, respect them, and build everything you do around them. And the future? It’s already here. More.

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Jeff Brooks has been serving the nonprofit community for more than 30 years and blogging about it since 2005. He considers fundraising the most noble of pursuits and hopes you’ll join him in that opinion. You can reach him at jeff [at] jeff-brooks [dot] com.

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