Originally published on Forbes.com June 18th, 2013
I know it is generally thought to be annoying to have a telephone solicitation come while you are eating dinner, but I was really pleased when Tiffany called on behalf of Tea Party Patriots, Inc. (I call it Inc. to distinguish it from the overall Tea Party movement). Inc. has put out a call for people to show up on the West Lawn of the Capitol on June 19th to Audit The IRS. I listened in on the conference call Thursday night to get people pumped up to come to the rally. The other goal of the call was to raise $27,000. At some point we were told that there were still 7,000 people on the call who had not pressed “7” to talk to an operator.
I finally broke down, but there must have been many others because I never got to an operator. That must be why Tiffany called tonight. Better late than never. If you would like a sense of what the phone call was like you can listen to this. I think Tiffany was even nicer than Brenda, whom you heard if you listened to that link. I was probably even a more difficult prospect than Larry, whom you heard, who finally after some polite badgering from Brenda agreed to cough up fifteen bucks. What I did was ask Tiffany exactly how much of my money would go to Inc., if I made a donation. She told me that 100% would go to Inc., although she did say that Inc. does have to pay for the call. I think she was telling the honest truth, based on this contract I found on file with the state of Colorado. Based on the deal described, Inc. blew $1.50 or so by calling me and the calling company would only get another fifty cents if I used a credit card. Of course, the current deal might be different.
Campaign HQ
Tiffany works for Campaign HQ. I got the sample phone call between Brenda and Larry from their website which describes Campaign HQ’s telephone fundraising service:
With a powerful person-to-person connection, telephone fundraising is proven effective to recruit new donors, renew lapsed donors and turn activists into contributors. A call from one of our Campaign Representatives feels like a real conversation, not a litany of talking points.
Our campaign representatives are passionate about the causes we represent. We believe buy-in, training, and monitoring makes a difference, and the proof is in our results. In fact, we are so proud of the work our campaign representatives do, we welcome you to listen in at any time! For calls to donors of $1000 or more, we have a special Elite Calling Team comprised of our most experienced, most successful representatives. They speak the language of today’s major donors.
Our all-inclusive, no-nonsense pricing includes all of the services involved in your telephone fundraising campaign from start to finish … including writing your script, making the phone calls, daily progress reports, and fulfillment mail.
“Turning activists into contributors” somehow does not strike me as a primary goal to the Tea Party Movement, but what do I know ?
Back To Form 990
In a previous post I went into quite a bit of detail on Inc.’s Form 990. Most organizations have their Form 990 up on guidestar.org. Inc. does not. If you ask them for it, they will send you a copy. I would like to share two more things about the 990. The first is how Campaign HQ, Tiffany’s employer, did for them in the year ended May 31, 2012. During that fiscal year Campaign HQ telemarketing raised $699,656 at a cost of $539,838 netting Inc. $159,818. That is actually better than some of the other telemarketers MDS Communications raised $1,199,816 and netted Inc. $33,044. If the telemarketers are working on some sort of flat cost per call rather than a percentage, it does seem that the vast bulk of the money that is given to Inc. over the phone is used to call other people who don’t make donations.
The other thing that I noticed this time through the 990 was a particular expense category. On Page 10 of the 990 you find Part IX Statement of Functional Expenses. There are 25 rows showing particular types of expense like compensation of officers and four columns to show the total for each expense type and its breakdown among program service, management and fundraising. The $17,660,824 total expenses break down $5,903,210 to program – $3,149,975 to management – $8,607,639 to fundraising. The really puzzling thing is in the expense categories. Occupancy at $11,977 seems rather low. Compensation to officers at $407,687 does not see very high, although in relation to other salaries and wages of $464,208 might be thought a bit high. The real puzzler is “office expense”, the largest expense, which is $6,932,241.
$6,932,241 In Office Expenses ?
In all my years in public accounting, I cannot remember ever seeing office expenses sticking out like that. In the brief time, early in my career when I worked for a travel agency more or less as a controller it was kind of a catch-all for stuff like the water cooler. Every once in a while there would be a sharp question from the owner about what was in there with perhaps a shake of the head. According to the instructions to Form 990 what belongs there is:
Enter amounts for supplies (office, classroom, or other supplies); telephone (cell phones and landlines) and facsimile; postage (overnight delivery, parcel delivery, trucking, and other delivery expenses) and mailing expenses; shipping materials; equipment rental; bank fees and other similar costs. Also include printing costs of a general nature. Printing costs that relate to conferences or conventions must be reported on line 19.
The Form 990 does provide fewer lines than the typical chart of accounts, so it is understandable that “office expenses” ends up being “a number”, as we say. Still a small sampling of 990s on guidestar.org did not yield any substantial organization in which “office expenses” made up over a third of its expenses. I guess it is all those phone calls.
Is This A Problem ?
The usual concern about money in politics is large donations giving the wealthy a disproportionate influence. With the Tea Party Patriots Inc., we see lots of small donations. The manner in which those small donations are raised does not have a real grassroots feel to it. The calls are scripted with a view to impelling what is, in effect, an impulse purchase, which requires establishing a sense of immediate urgency to implement a quick solution to problems that have taken a long time developing. Brenda and Tiffany are not calling people up and encouraging them to read the Federalist Papers and think about how those principles might help us in our current situation. That has all been figured out. You need to send a check so that the organization can continue to pay Brenda and Tiffany to call other people, who unlike you are cheapskates.
I’m really disappointed that I won’t be able to make it to the Audit the IRS rally, but I will let you know the next time Tiffany calls.
You can follow me on twitter @peterreillycpa.
Afternote on the Brenda and Larry Call
The link to Campaign HQ’s website no longer gives you audio. Here is my transcription of the lead-in
Hi. This is Brenda calling with an action alert from the Tea Party Patriots. Well Larry, I know you are busy so I will get right to the point. This election is our last chance to stop Obamacare and stop our country from becoming a cradle-to-grave welfare state. Right now we are just $50,000 short of the amount we need to finish our door-to-door voter outreach and carry out our plan to stop left-wing voter fraud.
Brenda asks Larry for a hundred bucks and politely badgers him till he agrees to cough up fifteen.