Telemarketing’s Black Hole

The Office of New York State Attorney Genaral Andrew Cuomo just released a report, Pennies for Charity, Where Your Money Goes: Telemarketing by Professional Fund Raisers – and the bad news is on average only 39 cents of every dollar raised by professional telemarketing companies goes to the charity client.

In 2007, telemarketers raised a total of $178.7 million on behalf of 442 charities and $108.2 million (60.6%) was paid to the telemarketers. The highlights:

  • In 78.8 percent, or 436 of the 553 campaigns, the charities kept less than 50 percent of the funds raised.
  • In nearly half, or 271 of the 553 campaigns, charities received less than 30 percent of the funds raised.
  • In 51 of the 553 campaigns reflected in the report, charities actually lost money.
  • In only 45 of the 553 campaigns (about 8 percent) did the charity retain at least 65 percent of the money raised, the amount deemed acceptable under the Better Business Bureau’s standards for charitable organizations.

One of the lucky 45 is the Syracuse Jewish Federation. While only receiving $10,244 from the telemarketer, this represented a huge 82.4% of monies donated through the campaign.

According to EVP, Richard Friedman, the Federation paid an hourly rate to its telemarketing firm – the now defunct IDT in Jerusalem – to make fundraising phone calls during the Spring of 2007. With two full-time and four full-time equivalent employees, IDT helped supplement the Federation’s activities.

Friedman feels the telemarketing campaign succeeded for several reasons:

  • Federation made certain IDT was in compliance with state regulations
  • IDT was provided a list of contacts (including possible donors and people who have donated in the past) and information on what to say when making the calls
  • Friedman persoanlly monitored the progress on a daily basis.

The complete report is available on the Attorney General’s Website.

Back in July, California released an extensive report on their findings of campaigns conducted by commercial companies. You can read about it here along with the data on many of the Jewish organizations fundraising in California, Pretty Expensive Overhead.