I'm helping out with a neighborhood holiday party, and was struck by this situation, which illustrated really nicely one of the quadrants in Milton Freedman's "Four Ways To Spend Money"
Here's the quadrants:
And here's the story. We're having a neighborhood Christmas dinner, and as a part of it, the organizers wanted to encourage gift card donation, to a choice of 4 local charities. I pushed back on the gift card thing, because...why on earth would you waste money on a gift card, when you could just write a check?
Here's the negatives
- A gift card can only be spent in one store, so it's not nearly as liquid as (even dirty fiat) money.
- If you donate a gift card to Home Depot but the big need is groceries, that's just too bad.
- It's highly likely that a big chunk of it will never be used - breakage, in industry terms.
Why did they want to do it? Because it's "cuter" than a check. It's more touchy/feely. It's easy to hang up on a gift tree.
They're definitely NOT seeking the highest value for the receivers of the charity (which would clearly be cash).