Stanford Hangs Up on Telemarketing — Will Others Follow?

Gregory Urquiaga, UC Davis

In a cheeky letter last month to alumni and supporters, Stanford University sent a startling message — and sparked debate among college fundraisers across the country.

The university, one of the biggest nonprofit fundraisers in the nation, announced it was going to end the time-honored practice of having its students make cold calls to ask for support. Stanford also jokingly apologized if the calls interrupted people’s date nights, binge watching, or Nobel acceptance speeches.

The letter continued, “We get excited about education and research! But we hear you: you would like us to give it a rest.”

The mailing explained that Stanford was terminating the calls because many supporters said they preferred to give “when they’re ready, not when the phone rings.”

Some praised Stanford’s decision, applauding the university for its bold stance and for taking its donors’ wishes into account. Others said only a university like Stanford could afford it, with its $22.4 billion endowment and the hundreds of millions of dollars it rakes in each year.

Still, some experts say Stanford’s move signals something deeper. Although it’s probably far too soon to start writing obituaries for phone-athons, Stanford’s decision highlights an open secret in the fundraising world: that many fundraising call centers simply don’t bring in as much revenue as they used to.

Costly Call Centers

In the 1980s and 1990s, calls generated healthy returns for universities, said Dan Allenby, founder of the Annual Giving Network and assistant vice president for annual giving at Boston University.

But today phone-athons are primarily seen by universities as a way to bring in new, mostly small donors, some of whom colleges hope will end up making larger gifts down the road — although calls are also often used to remind current supporters to give, regain lapsed donors, and gauge whether an alumnus might be willing leave a bequest.

Slimming revenues over the past decade have placed stress on programs at some colleges, Mr. Allenby said, and he expects that others may go the same route as Stanford. It doesn’t help that call centers are costly relative to what they bring in, as most are staffed by paid student employees who use specialized software.

“There’s a lot of pressure on those programs to say, ‘Well, if we can’t be profitable, then we should just shut the program down,’” Mr. Allenby said.

Many colleges report that they have seen fewer people answer their phones in recent years, as many people ditch landlines for cellphones, which make screening calls easy. Younger alumni also don’t seem to be as receptive to taking calls from their alma maters, some say.

Target Analytics, a division of the fundraising-software company Blackbaud, tracked revenue from phone-call transactions from roughly 140 colleges from 2012 to 2015. During that period, those colleges saw revenue from calls drop by about 17 percent. (The numbers tracked only people who gave by phone, not those who later gave online or through other means after receiving a call.)

There’s a silver lining in the Target Analytics data for proponents of call centers, however: Revenue from new donors increased 12 percent from 2012 to 2015 (although the number of new donors fell by 2 percent). That suggests that the phone calls are still largely working as an acquisition technique, said Rob Harris, director of analytics for Target Analytics, in an email. He added that the data shows that calls brought in nearly one-third of the participating colleges’ new donors.

Mr. Allenby said he doesn’t think many colleges will need to make a move as drastic as Stanford’s. However, a lot of universities will likely take a harder look at their programs in the coming years, he said, and might start using their call centers for purposes other than just fundraising — like to say thanks to supporters, donor surveys, or just to check in with alumni to remind them about events and ways to get involved on campus.

Nine-Month Decision

For their part, Stanford officials don’t think other universities should take any cues from them.

University officials made the decision to end their calls based on roughly nine months of analysis, said Martin Shell, vice president for development at Stanford. He said revenue from the calls was steadily declining, and supporters’ behavior suggested they were tiring of them.

Fewer alumni were answering the calls, he said, and for every three people who donated by phone last year, one requested to be dropped from the university’s call list; five years ago, that ratio was eight to one. “That’s a pretty profound shift,” Mr. Shell said.

Stanford’s fundraisers believe they can still acquire new donors using other means, said Amy Wilson, director of the university’s largest annual fund, who led the analysis of its fundraising calls. She noted that most people who gave to Stanford by phone also donated online or by mail, and it appeared digital appeals and mailings were just as effective as calls in attracting new supporters.

Mr. Shell said Stanford will explore improving its communications online, including through social media, and would continue to review its decision on ending its phone-athons.

Ignoring Donor Preferences

Lynne Wester, a donor-relations consultant, thinks it’s long overdue that universities start taking a harder look at their calling programs. She does a lot of donor surveys for universities and nonprofits and finds that supporters often complain about getting too many calls from fundraisers.

But organizations keep dialing, regardless of donors’ preferences, Ms. Wester said.

She said more universities need to start making investments in digital appeals, which she thinks many higher-education institutions are woefully behind on. Until they do, they won’t be able to determine whether phone-athons are a better at attracting new donors.

In a blog about Stanford’s decision, Ms. Wester suggested that colleges might redirect some of the money they spend on calls to video appeals, digital ads, and social-media posts.

Acquiring New Donors

Other fundraisers urged caution in following Stanford’s lead.

“I certainly hope this does not become an industrywide trend,” said Shaun Keister, vice chancellor for development and alumni relations at the University of California at Davis.

Mr. Keister, who has consulted with numerous colleges on their annual funds, including their phone-athon programs, said calls are still more effective than direct mail and digital appeals at obtaining new donors. He thinks colleges perform their best when they invest in all three types of appeals.

Call centers, he noted, can be used for more than just obtaining new donors; many universities also use them to solicit lapsed supporters, and to thank current ones and ask them to make larger gifts. To Mr. Keister, call centers also provide the best talent pool for new development officers, saying that students who are effective at raising money by phone can be groomed to work in advancement. That’s important for a profession that is “sorely desperate for talent,” he said.

Mr. Keister said he does not see any evidence suggesting colleges will ditch phone-athons in droves, although he notes that many face challenges as fewer people pick up the phone.

Call centers should be sure they are providing enough training for students making calls, he said; he recommends 12 to 15 hours, including role-playing exercises.

Better Call Centers

Some institutions, rather than ending their calling programs, have focused more heavily on them.

Colorado State University, for instance, uses advanced data analytics to identify alumni and supporters who might be more likely to give by phone — eliminating some of the concerns about cold-calling people who would prefer not to be reached that way.

Two years ago, the university also started training students on broad guidelines for the calls to make them feel natural, rather than relying on stilted scripts, said Meg Weber, executive director of annual giving at Colorado State. Callers are also taking note of what people say they are interested in on campus, for follow-up later with other fundraisers, she said. They’re also collecting updated profile information, like addresses and job information.

The updates are working, said Ms. Weber. About a third of all of the university’s 8,527 new donors gave by phone in the fiscal year ending June 30.

Revenue coming from the calls is minimal, accounting for less than 1 percent of total support. But Ms. Weber sees the appeals as worth it, given the number of new donors they find.

“If your goal is to raise a lot of money, you should be doing that with major gifts,” Ms. Weber said. “If your goal is more donors, phone-athon is a good tool for that.”

Colorado State has seen major growth in its overall fundraising in the past few years. The university raised $198 million in fiscal 2016, up 267 percent from seven years ago. Ms. Weber attributes that in part to her office’s efforts to bring in new donors, including by making calls.

Numbers Are Stubborn

Still, some colleges seem to struggle with their programs, even when they try to innovate.

The University of South Florida ended its calling programs this year after roughly a decade of using them to try to increase its donor base and raise additional money. The number of donors never increased, remaining at around 5,000, despite thousands of calls made each year. Revenue from calls was low, too, relative to the costs of the call center.

“Some years we weren’t even breaking even,” said Joel Momberg, senior vice president for advancement and alumni affairs and chief executive of the USF Foundation.

Mr. Momberg attributes the university’s struggles with its calling program in part to its relatively young alumni base, which he thinks might be less receptive to phone calls. Even though it contracted a company to do similar data analytics to what Colorado State does today, the numbers remained stubborn, he said.

A silver lining: Since ending its calling program, the university plans to redirect some of the money it was spending on it. That will include adding staff to support annual-giving and new crowdfunding efforts, among other things.

“We’re really exploring some pretty exciting areas that we might not have because of the expenditures on the telefund,” Mr. Momberg said.

Questions Raised

Rob Henry, vice president for education at the Council for Advancement and Support of Education, said annual-giving officers often face questions about phone-athons from university leaders who don’t like telemarketing. What those leaders need to know is that calls are often key to meeting fundraising goals and increasing alumni participation with the university over all, he said.

Universities also need to understand that if revenue is falling it doesn’t necessarily mean the sky is falling. Calls are still a good tool for donor acquisition and can serve many other purposes — even if revenue is down at some colleges, said Mr. Keister, of UC Davis.

Mr. Keister noted that direct-mail returns are down, too, but most colleges and charities still ship a lot of appeals annually. In his view, the debates should center on how to keep improving call centers, rather than scrapping them.

Mr. Momberg, of the University of South Florida, said he’s not recommending that colleges do anything but review what’s best for them.

“I’m not a trendsetter,” he said. “Every university should really look at what’s working and what’s not and should do what we did: Modify those things that don’t work if they have the ability to, and try some new things. Because things change.”