Outsourced Telemarketing for Charities: Fundraising that Compromises Public Generosity

Not many of us answer calls from unfamiliar numbers these days, but if we do, there’s a good chance a telemarketer is on the other end. Though most of these folks are peddling products, some are actually soliciting donations for legitimate charities or not-for-profit organizations. And especially after 9-11, Americans are willing to donate to organizations that seem heroic, like police and firefighter groups. But there’s often a dark side to these requests for support – they’re typically handled by an outsourced telemarketing firm. Xentel, Inc. is one such greedy company.

Outsourced fundraising companies like Xentel evince a gigantic flaw in the world of charity. Because most people tend to give money only when asked (rather than proactively making donations), an immense amount of public generosity is wasted on marketing. Or in this case, telemarketing.

Of the millions of dollars that outsourced telemarketing companies like Xentel collect from average Americans who give money when called upon, only a fraction of those funds actually go to the organizations people think they’re supporting. Sadly, many charities agree to let telemarketing companies handle their campaigns because these outsource firms will still earn them more than they could have earned on their own.

Why? Because these firms have the infrastructure to make lots of fundraising calls. And they’ve pared outsourced telemarketing for charities down to an eerie science. That’s something state and local charities could not do with their own limited resources.

Imagine these two hypothetical (but realistic) scenarios:

Scenario #1 (in-house fundraising):
Police Officer Charity of State XYZ asks its active members and volunteer to place phone calls soliciting donations – an in-house operation. The charity has to worry about not only staffing a room of telephones but acquiring lists of people to call, handling all the incoming money, and operating the facility. Because the charity is not a telemarketing company, they have to pull off a grassroots phone bank campaign and hope for the best. Let’s imagine that they are able to place 50,000 phone calls to households all over the state and that they receive a total of $100,000 in contributions. They’ve made $100,000 using a lot of strung-together resources. Not too bad for a presumably worthy cause.

But then along comes LottaCalls.

Scenario #2 (outsourced telemarketing for charities):
Police Officer Charity of State XYZ decides to allow LottaCalls (a fictional outsourced firm) to handle their fundraising campaign this year. LottaCalls maintains several outbound call centers, some of which many not even be located in State XYZ. The people who work at said call centers almost never have any direct affiliation to the charity. But because LottaCalls is a large company with lots of practice fundraising for other organizations, it’s already got phones and computers and numbers and rooms full of people ready to ask for money. Because they’re so efficient, LottaCalls is able to place 250,000 calls – five times what the charity could’ve done on its own. In fact, the total amount of money contributed by the public is, let’s say, $500,000. Now LottaCalls has to pay its employees, cover its operating expenses, and line the pockets of its owners or shareholders. After all, they’ve contracted with Police Officer Charity because it will earn them a profit. So they take $350,000 out of that $500,000. That leaves Police Officer Charity with $150,000 – a whole $50,000 more than they would’ve made on their own in scenario #1. And, sadly, that’s why Police Officer Charity of State XYZ resigns themselves to outsourced telemarketing for charities.

By using outsourced telemarketing, the organizations do get more money in absolute dollars. But it comes at an immense relative cost to members of the public, who think their generosity is benefiting the charity at 100% – when the real rate may be more like 30%. Yikes!

So, how can people avoid this problem? Well, the first and most obvious answer is to avoid telemarketers and “telefun associates” entirely. Screen your calls! And if you do speak to someone representing a charitable organization and you think the group is worthy of your donation, ask the person for whom they actually work. Find out whether callers are indeed volunteers and employees of the charitable organization or whether they work for an outsourced operation.

If the latter is true, politely inform the caller that you think it’s a great cause but will contact the organization directly to make a donation. Don’t give them any additional information or allow them to put you down for a pledge. Be resolute in your stand against outsourced telemarketing for charities. Any honest charity will have their own websiteÃ?¯Ã?¿Ã?½and their own direct mailing address where you can send donations. Just Google them on your own.

By making your donation directly instead of having it funneled through outsourced telemarketing for charities, you ensure that these greedy middle men aren’t skimming most of your goodwill away.