Telemarketing pays off in the long run? Time for some evidence, part 2

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?

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