The Value of Redemption In Peer-to-Peer Fundraising

Recently a client contacted Turnkey concerned about the cost of the recognition items that had been sent to participants in their walk program. It seemed that twice as many people had redeemed for the items than Turnkey’s initial projections had allowed for. When reviewing the final revenue for the program, the client revealed that twice as much money had been raised — $2M, as opposed to the $1M goal. The client had overlooked two things: that the costs of redeemed recognition items are variable, and that the act of redemption had a direct impact on the success of the program.

This situation isn’t unusual. There is a common lack of understanding of the value of redemption in driving fundraising. As opposed to being a  “thank you for your participation” item, the data shows that the act of redeeming for appropriately selected items* results in higher levels of revenue on the part of volunteer fundraisers and donors alike.

What the Numbers Tell Us

In 2016, Turnkey published a study looking at the role of recognition in fundraising. Our findings reflect in-depth research of 83 programs from 33 different organizations in the United States from January 2012, to November 2015. The data is drawn from a variety of platforms our clients use. The organizations’ events included walks, noncompetitive runs, and do-it-yourself (DIY) efforts.

Collectively, these organizations raise more than $100 million in online event fundraising per year in individual fundraiser income (which excludes event registration fees, sponsorship funds, and funds donated to the event at-large instead of to the individual). The data represent more than 1.5 million individual fundraisers and 198,000 recognition earners (redeemers).

For walk and DIY events, we found the following:

  • The overall redemption rate was 51% among all those who were offered a recognition item
  • Average fundraising was $1,097 for redeemers versus $865 for those who declined
  • Median fundraising was $585 for redeemers versus $465 for decliners
  • Redeemers raised more than those who did not in 98% of the programs
  • In all but two programs (3.38%), median fundraising by redeemers is higher than that of those who declined

The data shows that overwhelmingly, people who redeem for recognition items fundraise at higher levels than those who do not.  And if that is the case, what should we expect from people who redeem in the future?

Are People Who Redeem More Mission Aligned?

If people who redeem are more mission aligned, we should expect that volunteer fundraisers who redeem will show higher fundraising and retention the following year. For example, if Mary earned a recognition gift through fundraising, whether she redeems for the gift will tell you a lot about her future behavior. If she wants that gift, she is more likely to return and fundraise, and when she does, she’ll fundraise at a higher level. If she doesn’t redeem for the gift she earned, she is likely to fundraise at lower amounts in the future, if she returns at all.

And that is exactly what we found. We took one large client that held fundraising walks for a deeper dive into Year 2 behavior. This program represented more than 200,000 participants per year. We looked at how redeemers (recognition seekers) versus decliners performed in Year 2.

  • 51% of the time the redeemer returned in Year 2, a much higher rate than the overall retention rate of 16% and much better than the industry standard of 30%.
  • 41% of the time recognition decliners returned in Year 2, also better than overall and industry averages.
  • Redeemers raise more money in Year 2 than Year 1 35% of the time, compared to the 29% for recognition decliners.
  • Redeemers were 26% less likely to be a zero-dollar fundraiser in Year 2 and 20% more likely to earn recognition in Year 2, compared to recognition decliners.

What does that tell us? Clearly, people who redeem for recognition items are more mission aligned than those who do not. Seeing this behavior in the large sample that was examined in the case study above, and having seen it in other analyses, we are confident equating “mission alignment” and “redeemers.”

But Exactly How Are Redemption and Fundraising Related?

The data tells us that redeeming for a recognition item and fundraising are strongly related. But what is the relationship, exactly? It could be that people who redeem are going to be the highest fundraisers, anyway. Maybe the act of redeeming for a recognition item is only correlated to higher fundraising. How do we know that getting someone to redeem for a recognition item causes them to fundraise at higher levels?

Enter the Zeroes

To answer this question, Turnkey looked at two national walk programs that had “zero dollar fundraisers,” people who had registered, but even after being prompted, had failed to fundraise online. Between the two programs, there were more than 43,000 “Zeroes.” We sent them a simple message recognizing them for their registration to fundraise, along with an offer to redeem for a decal with the organization’s logo and the name of the program. 12% of the Zeroes redeemed for the decal. And the results were dramatic.

People who redeemed for the sticker went on to raise $2.5M for the organizations. More importantly, redeemers raised 245% more than those who did not redeem, $294 vs. $120.

Redemption Leads to Higher Levels of Fundraising

In conclusion, while the act of redemption is a marker for high alignment, the act of redemption is also an act of alignment, actually causing higher fundraising and retention in the future.

 


*The programs described here are all Turnkey clients who subscribe to our best practices, which include:

  • The recognition program is reinforced with behaviorally triggered e-communications.
  • The recognition program is promoted on fundraising platform online.
  • The recognition program does not provide opt-out to participants except through nonredemption.
  • No gift is available through a retail entity or through the nonprofit except through fundraising.
  • No gift is easily “priced” in one’s mind.
  • All gifts bear the nonprofit brand.
  • Gifts are selected for the program using the principle of “insufficient justification” meaning that the value of the gift could in no way, in and of themselves, inspire fundraising.
  • Gifts are selected based on a budget of 5% to 7% of the income level. The percentage declines as the income level being rewarded increases.
  • Actual gift expense for programs regarding gifts varies with the size of the organization, but ranges from 1.6% of fundraising for large programs, to 5% of fundraising for very small programs.