Telemarketing Just Smells Bad for Nonprofits

| October 1, 2012

Nonprofits sometimes use telemarketers in “Loss Leader” campaigns that primarily benefit the telemarketing company, not the cause.

There is mounting criticism being directed at nonprofits that use telemarketing companies and “loss leader” schemes that return little to none of the money that the telemarketing company receives from donors. Tens of millions of dollars are being raised each year, donated by a trusting public who want to contribute to a cause and are completely unaware that most, if not all, of their donation will line the pockets of a telemarketing firm and never be used to help a cause.

It’s about a relationship of trust, something that charities still have with the public despite the scandals and sometimes idiotic decisions made by nonprofits here and there. It’s just this sort of deceptive practice, skirting on the edge of the dark and unseemly, that will drive the public perception of trust down.

In this expose by Bloomberg and this report by NPR, we learn just how deceptive some telemarketing practices, used by some of the largest charities, are.

The American Cancer Society actually paid $113,000 on top of the $5.4 million raised by the telemarketing company InfoCision. I wonder how many of the donors knew that absolutely none of the money they donated to the Cancer Society went to research, support, or programs?

I think it’s a double whammy; we hate telemarketers and what we have intuited, that telemarketers are increasingly violating the do-not-call law, is correct. Complaints to the FCC have grown from 65,000 in October of 2011, to more than 212,000 this year. Compliance, as judged by the number of telemarketers checking the list, has fallen by nearly half.

I’m not a “loss leader”. If I donate to the American Cancer Society, I intend that money be used for the good I’m sure they implied in the solicitation. I’m sure I’m not alone in feeling that sometimes nonprofits can look more like a ponzi scheme than an advocate for a cause.

I wonder if nonprofits are acting in their own best interests by chasing the dollars by using what might seem to the donor to be a ponzi scheme; paying a portion, or all, of collected monies to a telemarketing company in the hope that a donor will remain on board and donate money in the future.

It’s interesting that every nonprofit governance and ethics class seems to have a scenario related to just this type of difficult decision. Usually, the scenario involves a struggling nonprofit being offered a generous donation by a donor who is antithetical to the cause, like a major ocean polluter giving money to a ocean environmental group. The donor, the pollution offender in this case, gets an image boost and the nonprofit gets needed revenue, but the nonprofit has to look to its mission and values and think about potential donor loss for making, what may seem to be, this deal with the devil.

I’m sympathetic to the need to market, but I think that nonprofits need to steer clear of this smelly practice before the public gets downwind.

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Category: News & Advocacy

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