Gift Cards: So Much Wrong in One Little Card
Gift cards used as recognition are like wire grass in my fescue, like a dog’s butt on my favorite pillow, like white zinfandel being the only wine served.
There is so much wrong with using gift cards as recognition, and actually as gifts in any regard, that it’s hard to even know where to start chewing on the issue. I always have known it was wrong. Once, I watched a family member give an elder a $300 gift card to a local merchant. I saw that same elder give back to him, in the same sitting, a $300 gift card to the same merchant. The wrong was overwhelming. It was Christmas. How could that happen at Christmas? And why is this happening in the nonprofit space? Why are nonprofits giving fundraisers, donors, staff and volunteers gift cards? Gift cards are cash. They are cash. As in—money. Nonprofits are giving fundraisers, donors, staff and volunteers money. Why would they do that? There is a reason. It’s a bad one, but it’s a reason.
In 2011, the Incentive Research Foundation (IRF) published a study on the surge in incentive professionals' use of gift cards. According to IRF:
In our survey directed at incentive program planners, conducted for this research, the largest reason given for using prepaid cards was that they are easier to administer than most other rewards (37 percent). Many respondents also believe that people like receiving prepaid cards more than most other types of rewards (32 percent) and that prepaid cards are more flexible than most other types of rewards (20 percent). Eleven percent felt they were more customizable and personal than most other reward types.
It's hard to put so much wrong in one tiny article, but IRF managed. Just writing this makes me itch like there’s cat hair in my laundry.
Wrong No. 1: That the driving factor for selection of recognition should be ease of use on the giver’s part.
I fundraise/donate/volunteer/work for you. I give my time, my energy, my love and probably my money too. And you decide to give a gift based on what is easy for you to give? The whole idea of a gift is that the action is about me, not you. You made it about you if you gave me a gift card.
Duke behavioral economist Dan Ariely wrote in The Wall Street Journal about what different types of gifts communicate to the receiver. He talked about how the right gift can "create or strengthen a social connection. ... It's not about economic efficiency. It's a way to express our gratitude and to create a social bond.” In layman’s terms, it really is the thought that counts.
Wrong No. 2: That presuming someone would like to get cash as recognition, and that acting on that presumption is a good idea.
Why presume? You have data that reflects my behavior. Study it and react. And, good heavens, don’t bail and do a survey. Humans can’t predict their own future behavior. Don’t ask them to do so. It’s an exercise in collecting bad information. Stop it.
You need go no further than most major U.S. corporations to find the lesson that people make confident but false predictions about their future behavior. Remember New Coke? New Coke is but one of many massive market research failures. Despite thousands of sip tests and countless efforts to fine-tune the taste based on the customer feedback, New Coke was a huge disaster. In his book "Yes!: 50 Scientifically Proven Ways to Be Persuasive," legendary market researcher Robert Cialdini said, "people’s ability to understand the factors that affect their behavior is surprisingly poor."
Wrong No. 3: That using a cash equivalent is ever a good idea to drive behavior.
You’re presuming that giving me cash will get me to increase the behavior you are rewarding. You are wrong. Giving me cash makes me attribute my behavior to getting the cash, not to my wanting to cure cancer, or do a good job or foster my love of giving back. You undermine all that with cash.
In his recent book, "Why We Work," Swarthmore College economist Barry Schwartz described how the wrong type of gift—cash or a cash equivalent—can often have the opposite effect than was intended. “Adding financial incentives to situations in which people are motivated to work hard and well without them seems to undermine rather than enhance the motives people already have.”
In summary, a gift card is cash and an easy way out of the hard work of making someone feel special.
Otis Fulton, Ph.D., spent most of his career in the education industry, working at the psychometric research and development firm MetaMetrics Inc., Pearson Education and others. Since 2013, he has focused on the nonprofit sector, applying psychology to fundraising and donor behavior at Turnkey. He is the co-author of the 2017 book, ”Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising,” and the 2023 book, "Social Fundraising: Mining the New Peer-to-Peer Landscape," and is a frequent speaker at national nonprofit conferences. With Katrina VanHuss, he co-authors a blog at NonProfit PRO, “Peeling the Onion,” on the intersection of psychology and philanthropy.
Otis is a much sought-after copywriter for nonprofit fundraising messages. He has written campaigns for UNICEF, St. Jude’s Children’s Research Hospital, March of Dimes, Susan G. Komen, the USO and dozens of other organizations. He has a Ph.D. in social psychology from Virginia Commonwealth University and a Bachelor of Arts from the University of Virginia, where he also played on UVA’s first ACC champion basketball team.
Katrina VanHuss has helped national nonprofits raise funds and friends since 1989 when she founded Turnkey. Her client’s successes and her dedication to research have made her a sought-after speaker, presenting at national conferences for Blackbaud, Peer to Peer Professional Forum, Nonprofit PRO, The Need Help Foundation and her clients’ national meetings. The firm’s work is underpinned by the study and application of behavioral economics and social psychology. Turnkey provides project engagements, coaching, counsel and staffing to nonprofits seeking to improve revenue or create new revenue. Her work extends into organizational alignment efforts and executive coaching.
Katrina regularly shares her wit and business experiences on her and Otis Fulton's NonProfit PRO blog “Peeling the Onion.” She and Otis are also co-authors of the books, "Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising" and "Social Fundraising: Mining the New Peer-to-Peer Landscape." When not writing or researching, Katrina likes to make things — furniture from reclaimed wood, new gardens, food with no recipe. Katrina’s favorite Saturday is spent cleaning out the garage, mowing the grass, making something new, all while listening to loud music by now-deceased black women, throwing in a few sets on the weight bench off and on, then collapsing on the couch with her husband Otis to gang-watch new Netflix series whilst drinking sauvignon blanc.
Katrina grew up on a Virginia beef cattle and tobacco farm with her three brothers. She is accordingly skilled in hand to hand combat and witty repartee — skills gained at the expense of her brothers. Katrina’s claim to fame is having made it to the “American Gladiator” Richmond competition as a finalist in her late 20s, progressing in the competition until a strangely large blonde woman knocked her off a pedestal with an oversized pain-inducing Q-tip. Katrina’s mantra for life is “Be nice. Do good. Embrace embarrassment.” Clearly she’s got No. 3 down.