Wednesday, May 25, 2005

Telemarketeers' profit..

Today's Home section had an interesting front cover. The focus was on some telemarketing groups that have been running donation drives for some charities. Basically, they cold call households and convince them to pay $10 for lunch packets consisting for curry puffs or nasi briyani or other similar foods, and told that this is for charity. The food is bought from various food stores in the Geylang area. Apparently there's a hullabaloo because the donaters are suprised that only 25% or less of the money goes to the charity. The rest goes to the food itself, or the rental and phone bills, and of course the telemarketer's cut. One company was surveyed which collects about $1000 daily, and about $300 goes to the charity, while the company takes about $100 profit.

Of course, there are also complaints about bad food, and also pushiness of the telemarketers. And some of these complaints caused charities to stop engaging the fund-raisers. But I think the article was not worded well, or if it was, then Singaporeans are focused wrongly. I think it's inevitable that only a certain percentage of any donation reaches charities. When I was at Stanford, Glen Davis, my pastor there, once advised a friend who was about to set off on a cross-US cycle trip and wanted to raise money for charity. His advice was to set and disclose targets for amount raised and percentage that would go to charity ( as opposed to his food for the trip, for instance). Ideally, he could get one organisation to sponsor his expenses on the trip so that he could present to other sponsors a 100% donation rate -- Every cent of each dollar would go to charity. Glen also mentioned that most donations only have a 10% donation rate -- the rest goes to various administration costs. I'm not entirely surprised.. When NUSSU Volunteer Action Committee (NVAC) did a donation drive in conjunction with Duracell (Gillette), we sold batteries in 5-battery packs for $5, and we had to pay Gillette a small amount for each battery sold. They covered the cost of packaging, and took back every unsold battery, and office and van rental costs were covered by NUSSU itself, and if not for that the donation rate would have been much lower than the 70% or so we had. And of course we were non-profit and volunteers ( so no pay issues) but I think 10 cents on each dollar went to NVAC itself, which went to wards maintaining our own volunteer operations with MINDS, Boys' Town and other groups, so the donation rate was a bit lower even than that.

And when you consider that full-time operations, even non-profits, have to pay their staff and pay rental and all kinds of costs all the time, then the donation rate is bound to drop to even lower levels. One of the biggest complaints against NKF is that their top level staff get paid so much, and how their top executives fly business class and so forth, but if accountants would just get at their books and everybody else's and show us their donation % rates, then it would all become clearer. I for one would not mind paying those executives to take business class if they really are able to administer NKF so much better that their donation % rate is significantly higehr than average.

No, I think the real issue is that the telemarketeers are taking a good cut, and not overtly telling the canvassees about it. If they're not asked about the donation rate, they won't tell -- they said as much in the article. And Singaporeans still associate philanthophy, donation, non-profit and so forth, that the concept of someone professionally raising funds for charity in order to make a living for self is a weird concept. We pretty much assume that if someone is raising funds for charity, that they're not getting a cut. For instance, organisations doing flag days could conceivably take a 50% cut for themselves and still be legal in the eyes of the police. But nobody ever thinks that. And anyone who is making a profit on these things inevitably attracts suspicion. I myself feel these companies are not doing right, in some emotional way. Yet, even if Singaporeans are naive in this way, can we really expect these companies to call people and say "Yes, we're asking for your donation, oh, and of each $10 you donate, 10% goes to us as profit, 60% covers costs, and 30% goes to the charity" ? On the one hand, this is disclosure, but on the other..
1) Charities don't do this, even though they should.. The numbers may be in a prospectus but they certainly don't tell you this when they're asking for donations..
2) We don't expect car salesmen to tell us every last thing also.. Buyer beware right? If these companies are out for profit they should not be handicapped by a mandatory conscience either.

Personally I think Singaporeans need to grow up, be less naive. If we can be so cynical towards religious and governmental institutions and MLMs, why not towards these? And we should with our own behavior reward responsible institutions the way we reward those that don't do animal testing or are environmentally friendly...

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