Telemarketing pays off in the long run? Time for some evidence, part 1.

One of the reasons cited for charities to make heavy use of telemarketing in spite of the high cost is that with a sustained campaign a charity will grow substantially more than it would otherwise. By incurring heavy costs up front, the charity will have far more money for mission in a few years.

As a concept, I agree.

However, it is time for more than one or five anecdotes.

One anonymous example supporting the concept

Jeff Schreifels offers an illustration of the concept at Chronicle of Philanthropy in his article,  About High Fundraising Costs: It’s ComplicatedHe tells of a charity that grew from $7M revenue to $60M in 13 years. Doing so took a $10M fundraising campaign over four years that only raised $5M.

Was that a good use of donor dollars? I think so.

The downside of his illustration is that it is one charity and the organization is anonymous, so neither I nor anyone else can look at their financials and information tax returns.

Does it illustrate the concept can actually happen in a real organization? Yes.

Three counter examples not supporting the concept

Brian Mittendorf looks at three charities in his post, Does Charity Telemarketing Pay in the Long Run at his blog Counting on Charity.

His criteria are a large telemarketing campaign, charity uses multiple fundraising efforts, and national level charities that are highly respected.

The results?

Telemarketing efficiency, measured by percent of funds going to the charity, gets slightly better over a 6 year time frame but not by much.

Fundraising efficiency actually declines over the same 6 year horizon, as measured by average cost to raise one dollar.

The shortcomings in the analysis?

First, as pointed out by the professor, it is only three charities. Second, the criteria mean that we won’t see a charity that is the prime illustration of what telemarketing is argued to accomplish.

The advantages?

It offers a methodology to use. Also, to a minor degree it asks us to look at the primary argument that telemarketing pays off because if it worked for small charities that accelerated to large ones, it seems to me that we should see some indication of similar results here.

His conclusion:

What are we to take from this data?  Not much.  Being only three nonprofits who themselves self-selected into hiring telemarketers, this is far from definitive evidence of anything.  But, it does suggest that the claims of those defending the use of for-profit telemarketers are not self-evident.  This skeptic needs more evidence in order to give them the benefit of the doubt.

I’ll rephrase the conclusion:  we need a large group of examples showing that a major telemarketing campaign accomplishes what is claimed.

Next post: 3 counter-examples from the list of American’s Worst Charities.

One Response to Telemarketing pays off in the long run? Time for some evidence, part 1.

  1. NewToSeattle says:

    All the 50 charities on the Tampa Bay Times list of America’s Worst Charities have been around for at least 10 years. The reason they made the list mainly is that their fundraising costs were through the roof. Had the charities gotten significantly more efficient over time through the creation of goodwill, these charities would not be on that list. The fact that they haven’t cast considerable doubt on their charitable intent. That’s why so many of them engage in accounting ploys with gift-in-kind and other maneuvers (like laundering fundraising costs through other nonprofits they control) to hide the fact that very little of the cash collected goes to the stated mission of the charity.

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