Offer Amount vs. Ask Amount

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Today’s post shares an email exchange with the Executive Director of an organization on the East Coast.

I’m sharing this with you because the ED had a very common fear: if he highlighted a low dollar amount in his appeals and e-appeals he would cause his donors to send in lower gifts than usual.

This fear often happens to organizations who are using a strong fundraising offer for the first time.

The email exchange below helped the ED set aside his fear enough to try what we were recommending. And our conversation helped him understand two helpful ideas:

  1. The “offer amount” is different than the “ask amounts.”
  2. Having a lower “offer amount” will not result in high-value donors giving lower amounts of money.

I’ve placed the emails in the order they were sent. I’ve edited them lightly for clarity and to anonymize the organization.

  • Hi Frank,

    Great meeting today. At the end of our time together it was suggested that we have the offer for our first appeal be based on the cost for one of your team members to learn Spanish.

    I would not focus the offer on this. Given the list of powerful activities you guys are doing this summer (working in hospitals, caring for the poor, volunteering in food banks, etc.) I think that learning Spanish is not the most impactful thing in the list that’s included in the letter.

    In our experience, the best place to focus the offer is on an outcome or action that your donors will immediately see and feel the value of.

    So I’d be working to find the cost to serve in a hospital for a day. Or to serve the poor.

    I think those things would be more likely to result in a gift.

    Steven


Note: I know from experience that it’s important (and even vital) for members of their team to learn Spanish. However, most donors would be more likely to value the acts of service performed than they would value learning the language that allows for the act of service.

What I’m trying to do is focus the fundraising on the outcome (the act of service) as opposed to focus the fundraising on the process (learning Spanish in order to provide the act of service).

  • Hi Steven,

    I totally get that point. However, the reality is that we don’t pay much of anything for a team member to serve in a hospital or a soup kitchen. All we pay are the travel costs to and from our HQ for the summer assignment. The real costs are the language study which involve sending a team member abroad to learn the language in the actual culture.

    This year, we are spending $20,000 for the team members to do language studies. But since the language study is not the real motivator to donors, could we perhaps say something generic like “The average cost of supporting a team member in a summer of service to others is $400.” ($20,000 divided by 50 team members)

    What do you think?

    Frank

My Reply to Frank . . .

  • Hey Frank,

    Totally get it.

    I like how you broke down the cost per team member to arrive at the $400 number. (It’s always a great service to your mass donors to help them see impact.). However, I wouldn’t recommend using the $400 amount because it’s too high. To have the most success, the amount we use needs to be low enough (usually below $50) so that any donor can afford it.

    Here’s what I’d do; divide the travel costs for the team members who serve at hospitals/soup kitchens by the number of days served. That gives you the “cost per day of service” for a team member in those places.

    Two reasons:

    1. As mentioned earlier, the type of service offered in hospitals and soup kitchens is far more interesting to donors (in my experience) so it would be crazy not to focus a donor’s attention there.
    2. Because all your organizations pays for is the travel, the “cost per day” is going to be really low. That will feel like a great deal to donors – which is always a good thing. I would even say something like, “Their food and lodging costs are covered, all we need to pay for is their travel and they’ll serve people for the entire summer! And if we write the letter correctly the funds will be undesignated and can be used for all of the team members this summer and anything else your organization needs the money for.

    That’s my reasoning. Does it hold water with you?

Frank replied…

  • Okay. The approximate travel costs for all of the team members is $15,000. If we divide this by 35 (the number of team members doing the service work), and then divide that by 40 (number of work days), that comes to a little over $10 per day, per team member. Since the $15k above include some other things besides travel from HQ to the different cities, e.g. lunch money, commuting expenses to the work sites, etc., I think we could simply say it costs $10 per day to support a team member in their service.

    I understand the pitch you want to make. My concern is that we’ll get lots of $10 gifts, but very few larger gifts that will make the mailing profitable.

    Can you help ease my concern here?

My reply…

  • Your concern is reasonable, and I think can ease it.

    First, let me call out the difference between the “offer” and the “ask amounts.” The offer is “$10 provides one day of service.” The offer shows donors a) what their gift will accomplish and b) how much it costs to make a meaningful difference.

    The gift ask amounts — how much we ask for — will be higher than the offer amount. For example, the suggested gift ask amounts on the reply card will be something like “$30 to provide 3 days of service” and “$70 to provide a week of service” and “$300 to provide an entire month of service.”

    When you have a low offer amount and higher gift ask amounts, a couple things happen:

    • More people give because the barrier of entry is so low. If we’d gone with the “$400 supports a team member for a summer” offer – that’s a high barrier of entry and fewer people would have given.
        • At risk of repeating myself but to make a point: if we provide a low offer amount then almost all donors will see that they can make a meaningful difference with even a small gift. This will increase the number of people who respond.
    • We have tons of experience seeing that the majority of donors will give about the same amount that they gave last time — or higher. (Will you get a couple $10 gifts? Sure. But the overall revenue is consistently higher.)

    I hope that helps. We wouldn’t recommend this technique if we didn’t have a LOT of experience with it working.

    Finally, to make this technique work even better, we will customize the gift ask amounts that each donor receives based on the size of their most recent gift. This is done by taking each donor’s last gift, then calculating the appropriate-sized gift ask amounts for that donor, then printing those amounts on each donor’s reply card.

    Does this help? Does it prompt any questions?

Frank was still slightly worried that focusing the letter on a low offer amount ($10 provides a day of service) would result in lower-than-normal gifts. However, he was willing to try it once.

And thankfully the appeal was a great success. It raised more money than it ever had before, completely funded the program for the year, and even raised additional undesignated funds.

After a string of successes, the organization now looks for low offer amounts for every appeal they send.

I realize that focusing on a low dollar amount is counterintuitive. But organizations who switch to this approach with their mass donors reliably raise more money than they previously did.

If you’re interested in trying this out for your organization, get in touch!

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