In previous post, I said we need more examples to illustrate that charities can accelerate their revenue through a major, sustained telemarketing campaign beyond what they would have done otherwise.
I mentioned one anonymous illustration supporting the idea and three weak counter illustrations.
Three more counter-examples
I’ve looked at the American’s Worst Charities data quite a few times. Each time I get the impression that these long-running telemarketing campaigns are not doing what such efforts are supposed to be doing, specifically, generating a lot of new money over a long-term horizon.
After thinking about the previous two articles together, I decided to do a little analysis.
My small sample confirmed my previous observation – the campaigns are generating small amounts of new funds.
I picked a haphazard starting point, #10 on the list, and pulled data for the next three charities.
Here’s what I see.
To make the data readable, I compressed the names of the columns. Here’s the meaning:
- Rev – total revenue from the 990
- GIK – amount of GIK from the 990
- Cash – revenue excluding GIK, which approximates cash income
- By T/M – revenue generated by the telemarketing campaigns, as reported by the Tampa Bay Times.
- Spread – difference between the approximate cash basis revenue and the amount raised by the telemarketing organizations – If the campaigns are successful in generating long-term growth, this amount should increase a lot.
- Pd T/M – amount paid to the telemarketing organizations, as reported by the Tampa Bay Times
- All amounts in thousands of dollars.
Data
Here’s the 7 year data for organization #10:
| #10 | all in 000s | |||||
| year | rev | GIK | cash | by T/M | spread | Pd T/M |
| 2005 | 2,109 | 913 | 1,196 | 1,194 | 2 | 809 |
| 2006 | 5,211 | 882 | 4,329 | 4,324 | 5 | 2,931 |
| 2007 | 7,684 | 2,218 | 5,466 | 5,466 | – | 3,627 |
| 2008 | 8,881 | 3,104 | 5,778 | 5,750 | 28 | 4,763 |
| 2009 | 13,938 | 7,890 | 6,048 | 6,026 | 22 | 5,031 |
| 2010 | 15,827 | 6,707 | 9,121 | 8,409 | 712 | 6,815 |
| 2011 | 14,795 | 8,091 | 6,704 | 6,380 | 324 | 5,173 |
| —- | —- | —- | —- | —- | —- | |
| 7 year | 68,446 | 29,805 | 38,641 | 37,549 | 1,092 | 29,150 |
Of $38.6M cash revenue, $1.1M was not generated by the telemarketers. I don’t see a long-term surge in giving which was generated by the telemarketing campaign. The campaigns cost $29.2M and generated $8.4M over costs.
There is a decade of data for #11:
| #11 | all in 000s | |||||
| year | rev | GIK | cash | by T/M | spread | Pd T/M |
| 2002 | 3,506 | 594 | 2,911 | 2,892 | 19 | 2,798 |
| 2003 | 6,257 | 898 | 5,359 | 5,340 | 19 | 4,265 |
| 2004 | 6,653 | 1,387 | 5,266 | 5,211 | 55 | 4,699 |
| 2005 | 24,900 | 20,491 | 4,408 | 4,398 | 10 | 3,181 |
| 2006 | 9,008 | 5,398 | 3,611 | 3,506 | 105 | 2,724 |
| 2007 | 21,534 | 18,359 | 3,176 | 2,819 | 357 | 2,318 |
| 2008 | 10,160 | 7,670 | 2,489 | 2,000 | 489 | 1,632 |
| 2009 | 4,780 | 2,249 | 2,532 | 1,967 | 565 | 1,629 |
| 2010 | 9,296 | 6,487 | 2,809 | 2,142 | 667 | 1,538 |
| 2011 | 11,881 | 7,250 | 4,631 | 4,383 | 248 | 2,822 |
| —– | —– | —– | —– | —– | —– | |
| 10 yr | 107,975 | 70,783 | 37,192 | 34,658 | 2,534 | 27,605 |
For this NPO, $27.6M spent for campaigns over a decade generated $7.1M over the costs. The long-term increase in giving appears to be around half a million per year making the assumption that the long telemarketing campaign is the cause of every additional dollar generated.
Doesn’t seem to me that charity’s results are a particularly strong case for the effectiveness of telemarketing: a $27.6M campaign generates about $0.5M increase in annual revenue.
There’s a bit of mud in the water for #12.
Amongst the decade of data, in 2010 the fundraising consultants were given credit on Schedule G for $480K more than the cash income. That means the 990 is asserting they generated some of the GIK contributions. That obviously is not correct.
I backed that out on the assumption that their data is overstated by exactly $480K. If you want to change my assumption, the table below allows you to recalculate as you wish.
| #12 | all in 000s | |||||
| year | rev | GIK | cash | by T/M | spread | Pd T/M |
| 2002 | 4,618 | – | 4,618 | 4,618 | (0) | 3,818 |
| 2003 | 4,080 | – | 4,080 | 4,080 | – | 3,362 |
| 2004 | 3,228 | – | 3,228 | 3,163 | 66 | 2,626 |
| 2005 | 3,362 | – | 3,362 | 3,387 | (25) | 3,030 |
| 2006 | 3,091 | – | 3,091 | 3,061 | 30 | 2,817 |
| 2007 | 1,942 | – | 1,942 | 1,942 | – | 1,670 |
| 2008 | 1,581 | – | 1,581 | 1,581 | – | 1,271 |
| 2009 | 4,223 | 1,848 | 2,375 | 2,184 | 192 | 1,627 |
| 2010 | 4,731 | 2,074 | 2,657 | 3,138 | (481) | 2,215 |
| gik | (480) | 480 | – | |||
| 2011 | 4,727 | 2,191 | 2,535 | 2,526 | 10 | 2,055 |
| —– | —– | —– | —– | —– | —– | |
| 10 yr | 35,583 | 6,113 | 29,470 | 29,199 | 271 | 24,491 |
So for #12, a decade of telemarketing cost $24.5M and raised $4.7M over the cost of the campaigns. I don’t see an indication of generating long-term donor income outside of the campaigns.
Conclusion
In the above examples, I don’t see growth generated by anything other than the telemarketers making more phone calls and gathering GIK. See my extended discussion of GIK on this blog. Chronicle of Philanthropy has quite a bit of discussion as well. Did I miss something? Did I goof up the data?
These three are a sharp contrast to the one anonymous example provided by Mr. Schreifels.
This is only 3 data points. If someone wishes to extend the data or point to a charity on the list that paints a dramatically different picture, please do.
The items were selected from a population that already has a reputation for, shall we say, misbehaving. Thus the results are not anywhere near representative for the charity community.
That however, illustrates my point. Can someone provide a robust set of examples where a long-term telemarketing campaign paid off big time?
What do you think? Did I miss something? Not pull enough examples? Miss an article on the ‘net that already answers my question?