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.