# Working the math on pledge drives

It's pledge time at my local radio station, and after hearing the exhortations to dial 1-800-937-8850 (it's stuck in my memory, you see) I started to wonder about how things work out, in particular the challenge grants they're so fond of hawking. Here's how they work:
During a KQED on-air pledge drive, businesses promise a donation (e.g. \$1000) to KQED if it is matched by contributions from individual listeners or viewers.

KQED announces the challenge from company ABC and urges listeners or viewers to call in with their pledge.

So, how significant are the challenge grants? Pledge week runs roughly 2 weeks and they typically want to raise about 1.5 million, so that's roughly \$100K/day. Assume that there's one pledge break an hour, so roughly \$4K/day. The challenge grants are typically \$500-\$1000, so they represent maybe 1/8-1/4 of the total take on any given pledge break. Since this is a matching kind of situation, I'm not sure how much of a challenge it is in most situations. On the other hand, it seems like a pretty good deal for the granter. For \$500-\$1000, You get your name mentioned about a zillion times during the pledge break, which actually sounds like a pretty good deal.

The question is: how significant are they for getting listeners to pledge? I've never heard a challenge grant where they aren't saying, at the end of the hour: "we really need you to make our challenge!" Which, if your math is right, means they're lying almost every hour.

Also, we recently got a call asking us to make a challenge grant at the local station in DC. We're just regular people, not a business, so we're not interested in the cheap advertising. So I think they're counting on folks figuring that there's a good chance the challenge won't be met, and pledging more money than they otherwise would. Or perhaps being more generous because they figure it's getting doubled 'coz of the challenge, so it's worth more. Or something funny like that. And if it's about motivating the granters to donate more, you want grants to all be sums that are easily met.

Oh yeah, and a long time back, my folks offered a challenge grant, and got a call later, "your challenge wasn't met, but won't you give us that money anyway?" And it's a whole lot harder to say no when you're in that position.

Really, whichever way it works out, I think the challenge grant thing is mostly a PR gimmick to sell to the granters.

The "non-profit" business knows very well that challenge grants dramatically increase the likelihood of donations to match the challenge. This phenominon is so well established that one of the largest Ponzi schemes to date was based upon it.

Nathan Zook (or anyone), know of any academic studies of the effectiveness of challenge grants for fundraising or advertising? Searches on google (and google scholar) seem to return hits concerning challenge grant instances, not concerning challenge grants generally.

Nope. Somebody could probably get a decent grant to confirm the obvious.

Nathan

### October 2012

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