How inefficient is it to give to telephone or door-to-door fundraisers?

[fivemack]

Someone phoned me 'from {name inaudible} on behalf of Christian Aid' this evening, and informed me that there were many orphans in Zambia as a result of the HIV epidemic, that the cost of sending one of them to school was £86 a year, and that it might be nice to give Christian Aid seven pounds a month to this aim.

My naive assumption is that the right answer is 'yes, that would be nice, I'll send Christian Aid a cheque for n*£86, n depending on how rich I'm feeling, at Christmas', on the grounds that a telephone fundraiser might well take a cut of any donations to cover their running costs; does anyone know how much of my seven pounds a month would actually get to Christian Aid?

(I have a fiver-a-month standing order on behalf of a charity working for blind people, which I made as a result of a door-to-door fund-raiser, and I fear there's a rather larger cut being taken out of that; I should probably kill the standing order and make one directly to the charity)

Comments

[vicarage.livejournal.com]

No idea about the fundraising overheads, but at least you should do these things through Gift Aid to get the extra tax money. You can also invoke Gift Aid for up to 6 years retrospectively on donations you have already given.

[stevegreen.livejournal.com]

If you donate to charity shops, it's worth signing one of their tax forms as well. I have a card from the PDSA which enables them to claim back the tax whenever I drop stuff at the local branch.

[huggyrei.livejournal.com]

I don't know - personally I don't give money when solicited over the phone because I feel that it's unfair to expect to give an answer immediately. My Mum is the rep for Christian Aid at my old church and I know she doesn't get paid, I could always ask her details of how to give a one-off donation or something?

[meirion.livejournal.com]

If you're seriously interested in giving money to AIDS orphans in Zambia, might I suggest teaming up with a few like-minded friends to donate to the Makeni Ecumenical Centre? They're actively looking for new sponsors of AIDS orphans right now (and reckon it's the best way to donate to help them) and we have personal contact with the Centre organiser, so are about as sure as we can be that the money's actually getting to help them rather than being wasted on administration costs/fat cats' trips/ whatever ...

[fjm.livejournal.com]

This might or might not be useful.

http://www.charityfacts.org/charity_facts/charity_costs/index.html

[vicarage.livejournal.com]

Interesting site. As I expected working on existing donors is much more efficient than recruiting new ones, but its interesting that initial recruitment is actually done at a loss.

It costs a charity £5 to have someone contacted by phone, and they might pay a £90 fee to a recruitment firm for doorstep contact, so it sounds like churn is the worst thing for charities, so its better to stick with one scheme than hop around.

[fivemack.livejournal.com]

I suppose I'm basically wanting to do the equivalent of the practice which is killing off well-informed high-street shops, namely trying out a camera at Jessops then buying it from Amazon.

It is vaguely useful to me to be informed of the existence of good causes of which I was previously unaware, but it's not anything like as much useful to me as it is expensive to the charity, so, provided that the canvassing is paid out of raised money, letting myself be canvassed and then donating directly does good things for the good cause (yay) and doesn't encourage the middlemen (also yay).

It may be that there's a 'current causes needing money' aggregator with properties more like the high-end trade press - so there's a bias but you know which direction the bias is in, and for something like the Economist you can assume high competence from the writers and editors - than like letters sent me by Dell suggesting that I might be interested in a new Dell laptop.

I guess to some extent this is UNESCO's job.

[vicarage.livejournal.com]

There is also the element that direct marketing, whether by post, telephone or doorstepping is intrusive. If you respond to such approaches the organisation will use the technique more. If you can feed in the money in another route, say a website donation, then their management will adopt a different approach.

Monitoring which cause is most urgent is hard work, and I'd rather give money to one of the big charities and let them worry about it. In some ways seting up bequests in your will is the ultimate transfer of responsibility, but I'm still tempted to fund park benches in every county, if only it were easy for my executors to organise.

[(Anonymous)]

Website donations have indeed begun to outstrip direct mail for some charites and I think it is going to be a welcome revolution all round. The bigger charities have the advantage that they can track their fundraising methods and consistantly review and improve.

[1ngi.livejournal.com]

sorry - that was me.

[ex-robhu.livejournal.com]

I don't know what the cut of the phone operators is (if any), but Christian Aid's income / outgoings page is here (http://www.christianaid.org.uk/aboutus/incomeandexpenditure/spend/index.aspx). It contains these two this pie charts for a year's spending:

[fivemack.livejournal.com]

Thanks, those are very interesting figures: both that the proportion spent on fundraising is so enormous, and that the total charitable spending of what I thought was quite a large charity is so small.

I wonder whether the right answer is something slightly non-obvious. Charitable giving is a matter of 'how much' and 'to whom'; 'to whom' is clearly a horribly difficult question, there's no reason to expect that I should be better than a professional at figuring out which causes are good than that I should be better than a professional at deciding which shares to buy, and I know the latter is not the case.

So this is an capital-allocation problem. Capital-allocation problems tend to have large economies of scale; it may require more administrative effort to distribute €100 million among the FTSE100 as it does €10 million, but not ten times more, and likewise it doesn't take ten times as much administrative effort to write one extra nought on the end of the cheque that's going to the people actually doing the good works. So I ought to take my charitable giving as a single lump sum and give it to the largest available trustworthy organisation.

When I think of capital allocation, I think of Warren Buffet.

So, aside from the trivial detail that they don't appear to accept donations, why isn't the Bill and Melinda Gates foundation the right answer?

[1ngi.livejournal.com]

C.A. work on similar principals to Oxfam - where I worked in fundraising for 3.5 years. Basically telephone, door to door and direct mail are the most economical methods of mass fundraising where essentially for every pound you spend, you can raise 9. The least economical is the charity shop model where Oxfam spend 50 million running their shop network to bring in an income of 75 million - however this is a much better profit margin than any other UK high street shop because they are mostly staffed by volunteers.

This doesn't mean that charity shops are a bad way of raising funds because having such a good high st visibility totally supports that charities brand and credibility and certainly (but hard to measure) supports other fundraising activities. If a charity is big enough then having a sound financial business model such as Oxfam or Christian Aid that spreads fundraising across a range of activities then you should expect them to spend roughly 17% of their income on generating future income. The charities commission start questioning if it goes over 25% and so should everyone.

Bill and Melinda Gates foundation gave Oxfam £10 million in 2006 specifically to support AIDS work - it was felt at the time as significant endorsement of the work Oxfam did and I know that the foundation continue support Oxfam.

Hope that helps.

[(Anonymous)]

interesting to see that Christian Aid spends more in real terms and as a percentage of income on grants to the developing world than any other UK NGO

[drsulak.livejournal.com]

Here in the happy US, it is 15% or so. That is, the boiler-room operators get 85% of what you donate. Really.

Always better to donate directly to the organization. Personally, I take a dim view of any organization who would choose to raise funds like this.

[diffrentcolours]

Why do you take a dim view? Shouldn't a charity raise as much money as it can? If paying a cut to chuggers / phonebanks etc. still makes them more money, it's clearly in their interest to do it. It means more money going to good causes.

[fivemack.livejournal.com]

Same sort of reason that I don't like PFIs; if you're going to do it that way, you should do it with your own personnel out of your own overheads, which are transparent to you, which you can manage and allocate, and which you have more reason to keep small, rather than by paying the phonebank or the chuggers' arbitrarily-determined opaque overheads.

It may well be that an excellent way for a charity to raise money is to pick the most susceptible oligarch in Romania and bribe him with hookers and cocaine to give them money. I'd take a dim view of that, too.

[pavanne.livejournal.com]

You would? I figure if it's actually a good cause, the hookers and cocaine are a very mild evil if they stop people dying of AIDs, etc.

But then, I give to chuggers if I'm in a good mood and they're attractive. I could say I'll give when I get home, but I know it's a lie; I'm not really a good person, despite feeling bad about people dying of malaria for want of a 50p mosquito net at the time. I figure there are other people like me, and so chuggers probably are diverting money which would otherwise be spent on beer and Eurostar tickets to helping the needy.

I don't do religious ones, but only because I hate religion.

[drsulak.livejournal.com]

Game theory says yes. $15 for my charity is better than $100 for someone else's charity.

However, let's assume the amount of money people are willing to donate is relatively fixed. That means the amount of dollars available for good works is drastically reduced - I'm taking an aggregate view here.

The counter-argument goes something like this:
"We get people to donate that normally wouldn't, and we get them to donate more"

This is perhaps true, but not on the order of 600%. Cold calling, even with a targeted list rarely exceeds 1% response. That's why the skimming percentage is so high.

Finally, most people do *not* realize how much is getting skimmed off. By law in the US, they are required to disclose the skim percentage. But you have to ask, and even if you do, they find clever ways to avoid a direct response.

[diffrentcolours]

The Charities Commission website should give you a reasonable breakdown of accounts.

[papersky.livejournal.com]

Christian Aid are way too "Christian" and not enough about the aid. They will give help and not just bibles, but I`d rather the help didn`t come with the bible at all. Action Aid are a British charity who help without enforcing specific Western religions, and I`d suggest looking at them too.

[(Anonymous)]

for the record, Christian Aid have never given a bible to anyone. Christian Aid works with people most in need irrespetive of their religion and never promotes Christianity. Indeed many of the third parties (or 'partners') they work through have Islamic staff in Islamic countries. The 'Christian' in Christian Aid is that it came out of the UK churches.

[aldabra]

I don't think you should give to them because they phoned you up and badgered you. Phoning people up and badgering them doesn't necessarily have any positive correlation with being a good cause.

I second the suggestion of looking at Action Aid (we've just sponsored a Vietnamese girl through them).

Don't do it!

[monkeyhands.livejournal.com]

I know this is duplicating what other people have said, but: ignore for the moment whether or not it's a good cause and think about whether or not it's a good method of raising/giving money.

My answer to that is: definitely not. If someone is "calling on behalf of" a charity that means they're not working directly for the charity. It means the charity is outsourcing its dirty work to save costs. And the dirty work in question involves cold-calling your home, which in my view is completely unacceptable anyway.

I have a massive problem with the argument that "charities need to make/save as much money as possible because they want as much money as possible to go to good causes". It's just a thinly disguised version of the capitalist argument that all "efficiencies" are good. What happens is that a charity thinking along those lines will outsource a lot of its fundraising to the cheapest/most effective company. And of course the cheapest/most effective company will treat its staff like absolute s***. And it will be as aggressive in its fundraising as it can legally be.It will have to, in order to be "efficient" enough to get the contract from the charity.

As for your question about the cut being taken, the experience of the people I know who've done this is that the fundraiser you spoke to won't get any cut of the money you donate. They usually get a flat rate per hour. It's certainly possible that management get incentives for harrying staff into raising more money, but I think it's unlikely that the telemarketer himself will see any relationship between the amount they raise for the charity and the amount they get paid.

So, as far as I'm concerned, this isn't about efficiency. This is about ethics. Do you want to encourage charities to outsource their work to call centres that treat staff like crap? Do you want to encourage more charities to cold-call you at home? Could you handle it if Christian Aid subsequently sold your details on to ten more charities and they all started phoning you at home as well?

When I get a telemarketing call, my strategy is always just to say "Perhaps in other circumstances I would buy/donate, but I don't want to do anything to encourage cold-calling, so I'm afraid the answer is no this time."

Re: Don't do it!

[1ngi.livejournal.com]

Charities are bound by the Freedom of information act just like anyone else and actually most reputable charities abide by the law. They are not allowed to pass details to anyone else without your consent. The law has changed in the last years so that everyone is automatically viewed as not giving consent and you have to be asked to 'opt in'.

I know Oxfam review 'chuggers' methods and after seeing that if actually resulted in a huge 'lapse' rate (people who leave too early) stopped using them for asking for donations in the street.

We switched to the 'I'm In' campaign on the street in 2006 where we asked people to 'choose they way they wanted to end poverty' and asked them if we could take their details and send them further info with a list of choices - of course that included the option of donating but it was a much softer ask.

I never agreed with using call centres while I was at Oxfam and I know they stopped cold calling for much the same reasons. They still did 'warm calling' to current donors. Can't speak for other charities of course.

Re: Don't do it!

[monkeyhands.livejournal.com]

It looks I'm out of date on the information laws. I was a fundraising/admin/tea-making volunteer for Oxfam in Wales about thirteen years ago and I remember then that Oxfam made a point of never selling details on but a lot of charities were notorious for making money out of selling lists. Then of course you had the FOI Act and the whole "If you do not wish to unsubscribe, please fail to neglect to untick this box" business.

I think "warm calling" is fine in principle, and I've done it myself, but I do have a big problem with outsourcing that kind of thing no matter how much money it saves the charity.

I'll do a post on my own blog about why I have a problem with chuggers rather than cluttering up fivemack's LJ.

P.S. Your post about digital poverty was really interesting. Thanks for sharing it.

Re: Don't do it!

[monkeyhands.livejournal.com]

Oops, forgot to close the inverted commas. I meant fivemack, of course.

Re: Don't do it!

[1ngi.livejournal.com]

"I'll do a post on my own blog about why I have a problem with chuggers rather than cluttering up"

Oo - shall read with interest. I'm a professional fundraiser and I don't actually agree with chuggers - I think it buggers up people's brands.

Your post about digital poverty was really interesting. Thanks for sharing it.

Thanks! If you ever come across anything that is happening in that field, i'd be very interested to know.

Re: Don't do it!

[monkeyhands.livejournal.com]

"I'll do a post on my own blog about why I have a problem with chuggers"

Have now done this here.

[1ngi.livejournal.com]

There is no shame in working out your personal principals for charitable actions and sticking to them in spite of whoever calls you up.

I have a small 'portfolio' of causes if you like and I give regularly to some and lobby and campaign for others. I have no hestitation in responding to whoever asks with 'I have my chosen causes and I will continue to support them.'

If you wondering how to choose a cause and the best way of supporting it then it depends if you consider yourself 'cash rich/time poor' or the other way around. It's all relative.

I think one of the most fabulous things that the Cambridge IT circle could do would actually be to use their amazing skills and knowledge to reduce digital poverty Africa. The mobile phone is proving to be one of the most brilliant agents for change at the moment. At the moment schools struggle for desks and blackboards and teachers. Most charities just don't thinks of plowing in digital infrastructure/knowledge sharing at the same time - because they just don't have the expertise and the vision to make it fly.

There are pockets of this happening, but I can't help feeling that for many Cambridge people this could so easily be a wonderful opportunity to make an amazing difference.

I've waffled on about this before: http://1ngi.livejournal.com/34660.html

Edited to add link.