Phonecards Can Dial-Up Big Bucks
You know the lame fundraising apologies: I don’t eat candy. I don’t read magazines. Those excuses don’t cut the mustard when you’re talking about making telephone calls. Everyone does it. And, increasingly, consumers have found that prepaid phonecards offer the security and convenience long-distance callers want. Even the U.S. Postal Service is serving up a phonecard to the public. In addition, Ford Motor Company has offered phonecards to customers who test drive a Taurus at its dealerships.
But some nonprofits still have cold feet about jumping into the phonecard game. For instance, Arlington, Virginia-based Telecommunications Cooperative Network (TCN), a nonprofit organization whose job it is to advise nonprofits about their telecommunications options, has not seen a mad rush to sell the cards.
“We’ve had members express an interest in the cards, then we negotiated on their behalf,” said Mary Hastings Moore, TCN’s director of member relations. “We get them a rate and price, but no one has done anything about it. When they start to commit to minutes and card amounts, it’s intimidating.”
Janel Radke, formerly of the New York-based Center for Strategic Communications, which offers educational programs to help nonprofits with their marketing techniques, also wondered if the idea had caught on.
Fear not. Some pioneering nonprofits are opening their eyes to the possibilities.
Smaller nonprofits are entering the fray as the number of phonecards needed to place an order has decreased from the thousands to the low hundreds. Nonprofits also are being creative with their use of phonecards. Some are using them as fundraisers, whole others are using them to increase fulfillment.
Ruth Nelson, a former nonprofit executive who focuses her business on phonecards through Global Affinity, said the trend of prepaid phonecards has been great. “The carriers can’t keep up with being able produce PINs (personal identification numbers) fast enough,” she said from her Dallas office. “The card production office I use produces the proof of the cards faster that I can get the PINs.”
And the demand for the cards will only increase in popularity as other features, such as fax on demand and discounts for travel and other services are included on the card. “You don’t pay extra for these features,” Nelson explained, “you’re just using time off the card.”
The emerging trend of nonprofits using phonecards has generated so much interest that Intele-CardNews, a publication that covers the phonecard industry for the retail, fundraising and telecommunications industry, is now regularly covering the issue.
“I think it’s a great way for nonprofits to make money,” sail Kelli Meyer, managing editor of The Woodlands, Texas-based magazine, “because they get a percentage of the fee (donors pay for the phonecard).”
WHAT IS A PHONECARD?
For those who don’t frequent convenience stores -- or even large supermarkets -- phonecards are about the same size as credit cards and are cousins of debit cards. Each card is numbered, has a pre-determined dollar amount and carries a toll-free calling number. The user dials the toll-free number and enters his or her access code. A computer deducts the amount of credits used for each call.
While convenience is the biggest pull for customers, profitability should be the strongest draw for nonprofits. According to Nelson, the cards provide an excellent return with minimal up-front costs. “An organization can typically earn up to 60 percent from a prepaid phonecard on an initial sale. Nonprofits can earn even more money if the prepaid holders recharge their phonecards. Organizations also face low up-front costs to the cards. A nonprofit may pay as little as 20 to 30 cents a minute for the long-distance time,” Nelson said. “This total may also include the cost of the card. For a direct-mail, prepaid paper card, the only cost tot he nonprofit is a small activation fee for the PIN and the cost of minutes used at the end of the promotional period,” she explained.
For example, if the organization goes with a resale card, the rate per minute could range from 35 cents to $1 per minute, depending on the telecommunication company’s tariff, which is the rate at which it can resell the card. Nonprofits shouldn't, however, pay more that 50 cents a minute for their cards. They should, instead, sell the cards to donors for 50 cents a minute. A 20-minute card selling for $10 works well for many organizations.
When nonprofits put their personal stamp on their cards, such as a scene from a college campus or the group’s logo, it becomes a reminder of the organization for proud alumni or delinquent donors.
RESPONSE BOOSTER
At the Dallas-based Help Hospitalized Children Fund, for instance, 500 phonecards were used to remind those who had pledged money to the organization. “Those who didn’t fulfill their pledge after receiving their initial pledge letter and one reminder were sent a free phonecard with their next follow-up letter,” said Martin B. Cherna, the organization’s executive director.
“In our opinion, the program was a success,” Cherna said, “as it increased fulfillment 4 percent more that reminders sent without the free phonecard. The 4 percent increase more than covered the cost of the cards.”
In fact, Help Hospitalized Children was so pleased with the results, the fund, which provides toys, books, games, and therapeutic equipment to hospitalized children, has re-ordered 25,000 cards.
“But,” Cherna said, “nonprofits should weigh the pros and cons of an affinity program and how it will impact their other appeals to donors before calling for a phonecard.”
And that’s just the first step. After an organization determines that their donors would be open to the card idea, many questions then arise.
• How many cards should be ordered for the first phonecard endeavor?
• How should the nonprofit choose a phonecard vendor?
• How should the organization use the card...for direct fundraising, as a fulfillment incentive, or in a more creative way?
“The key question to ask refers to the reliability of the system the phonecard would be using,” said Jay Graham, director of sales for TeleNations Inc., a Morristown, New Jersey-based company that sets up phonecard programs for nonprofits.
Here’s where it gets complicated. In the end, all calls go through AT&T phone lines. Deregulation, however, forced Ma Bell to sell access to those lines to other companies, the largest of which are MCI and Sprint.
Graham’s company, for example, buys its long distance access from LDDS Communications, which in turn purchases it from MCI, who in the end goes through AT&T. Other prepaid phonecard providers purchase time from the large companies and sell them to smaller outfits. It’s tough for consumers to keep track of the financial health of such small companies.
In addition, some small phonecard providers rent switches from larger firms and may not be able to handle large volumes of calls.
“If they own a switch and go bankrupt tomorrow, your card goes dead,” Graham said. “It’s a tricky business.”
Nonprofits also should ask where the company is licensed to operate. If it does not operated in all 50 states, it may hamper phonecard sales for organizations that have a national donor base. “Some nonprofits have come to me saying certain companies can give them a cost of 16 cents per minute,” Nelson said. “I tell them to ask if the companies are tariffed and registered with the public utilities commission in each state and call me back when you find out they aren’t.”
Minimum order requirements also should be discussed up-front as should set up fees for different kinds of cards, Graham advised. Find out, for example, the difference between the price of a plain, one-color card and a fancy, four-color job.
Also remember that phonecards carry expiration dates. “You could get a card and find that it expired in a month,” Graham said. His company offers card holders a year to use their long-distance minutes.
How organizations use their cards is another important phonecard issue. Graham “strongly suggests” that nonprofits sell the cards at events, such as dinner parties or other functions. A church, for instance, could sell the phonecards to fund renovations or repairs.
The University of San Francisco (USF), a private college, decided to use prepaid phonecards on the advice of Scott Sheldon, who used to direct the fundraising drive at nearby Golden Gate University.
Sheldon offered phonecards only to those who sent in their donations within 20 days of their pledges. The result was a 92 percent fulfillment rate and a 25 percent increase in the number of donors during the fall 1995 campaign, Intele-CardNews reported.
But USF decided to take a different tack of offering the phonecards when it launched its program late last year. “The Bay-area university sent the 500 cards it ordered to encourage delinquent donors to pay up,” said Tim Patriarca, USF’s associate director of annual giving. Having just sent out 200 of the cards to date, it’s too soon to tell if USF will have Golden Gate’s success. Patriarca, however, is confident that phonecards could play a larger role in his donor programs. He also hasn’t ruled out selling them as fundraisers.
“I had never heard of nonprofits doing it,” Patriarca said. “I buy my Walgreen’s phonecard because I travel a little bit. I use them. I know other people use them.”
The Big Brothers/Big Sisters of Warren, New Jersey, sold 20-minute cards for $10 each to raise funds for its programs.
“We started with 80 and sold all of them,” said Elisa DeGregorio, public relations coordinator for the organization. “We’ve ordered 30 more for the holidays.”
In Fairfield, New Jersey, the New Jersey YMHA-YWHA raised money selling 500 cards to its own summer staff. Many of these workers come from far-away lands, such as Israel and England, and have a pressing need for convenient long-distance service.
“It worked very well,” said Wendy Kleiman, the group’s office manager. “The staff was happy with the card and the service they got.”
Justman, Sandy. "Phonecards Can Dial-Up Big Bucks." NonProfit Times, Direct Marketing Edition (April 1997): 6, 8, and 11
Phonecards Can Dial-Up Big Bucks
You know the lame fundraising apologies: I don’t eat candy. I don’t read magazines. Those excuses don’t cut the mustard when you’re talking about making telephone calls. Everyone does it. And, increasingly, consumers have found that prepaid phonecards offer the security and convenience long-distance callers want. Even the U.S. Postal Service is serving up a phonecard to the public. In addition, Ford Motor Company has offered phonecards to customers who test drive a Taurus at its dealerships.
But some nonprofits still have cold feet about jumping into the phonecard game. For instance, Arlington, Virginia-based Telecommunications Cooperative Network (TCN), a nonprofit organization whose job it is to advise nonprofits about their telecommunications options, has not seen a mad rush to sell the cards.
“We’ve had members express an interest in the cards, then we negotiated on their behalf,” said Mary Hastings Moore, TCN’s director of member relations. “We get them a rate and price, but no one has done anything about it. When they start to commit to minutes and card amounts, it’s intimidating.”
Janel Radke, formerly of the New York-based Center for Strategic Communications, which offers educational programs to help nonprofits with their marketing techniques, also wondered if the idea had caught on.
Fear not. Some pioneering nonprofits are opening their eyes to the possibilities.
Smaller nonprofits are entering the fray as the number of phonecards needed to place an order has decreased from the thousands to the low hundreds. Nonprofits also are being creative with their use of phonecards. Some are using them as fundraisers, whole others are using them to increase fulfillment.
Ruth Nelson, a former nonprofit executive who focuses her business on phonecards through Global Affinity, said the trend of prepaid phonecards has been great. “The carriers can’t keep up with being able produce PINs (personal identification numbers) fast enough,” she said from her Dallas office. “The card production office I use produces the proof of the cards faster that I can get the PINs.”
And the demand for the cards will only increase in popularity as other features, such as fax on demand and discounts for travel and other services are included on the card. “You don’t pay extra for these features,” Nelson explained, “you’re just using time off the card.”
The emerging trend of nonprofits using phonecards has generated so much interest that Intele-CardNews, a publication that covers the phonecard industry for the retail, fundraising and telecommunications industry, is now regularly covering the issue.
“I think it’s a great way for nonprofits to make money,” sail Kelli Meyer, managing editor of The Woodlands, Texas-based magazine, “because they get a percentage of the fee (donors pay for the phonecard).”
WHAT IS A PHONECARD?
For those who don’t frequent convenience stores -- or even large supermarkets -- phonecards are about the same size as credit cards and are cousins of debit cards. Each card is numbered, has a pre-determined dollar amount and carries a toll-free calling number. The user dials the toll-free number and enters his or her access code. A computer deducts the amount of credits used for each call.
While convenience is the biggest pull for customers, profitability should be the strongest draw for nonprofits. According to Nelson, the cards provide an excellent return with minimal up-front costs. “An organization can typically earn up to 60 percent from a prepaid phonecard on an initial sale. Nonprofits can earn even more money if the prepaid holders recharge their phonecards. Organizations also face low up-front costs to the cards. A nonprofit may pay as little as 20 to 30 cents a minute for the long-distance time,” Nelson said. “This total may also include the cost of the card. For a direct-mail, prepaid paper card, the only cost tot he nonprofit is a small activation fee for the PIN and the cost of minutes used at the end of the promotional period,” she explained.
For example, if the organization goes with a resale card, the rate per minute could range from 35 cents to $1 per minute, depending on the telecommunication company’s tariff, which is the rate at which it can resell the card. Nonprofits shouldn't, however, pay more that 50 cents a minute for their cards. They should, instead, sell the cards to donors for 50 cents a minute. A 20-minute card selling for $10 works well for many organizations.
When nonprofits put their personal stamp on their cards, such as a scene from a college campus or the group’s logo, it becomes a reminder of the organization for proud alumni or delinquent donors.
RESPONSE BOOSTER
At the Dallas-based Help Hospitalized Children Fund, for instance, 500 phonecards were used to remind those who had pledged money to the organization. “Those who didn’t fulfill their pledge after receiving their initial pledge letter and one reminder were sent a free phonecard with their next follow-up letter,” said Martin B. Cherna, the organization’s executive director.
“In our opinion, the program was a success,” Cherna said, “as it increased fulfillment 4 percent more that reminders sent without the free phonecard. The 4 percent increase more than covered the cost of the cards.”
In fact, Help Hospitalized Children was so pleased with the results, the fund, which provides toys, books, games, and therapeutic equipment to hospitalized children, has re-ordered 25,000 cards.
“But,” Cherna said, “nonprofits should weigh the pros and cons of an affinity program and how it will impact their other appeals to donors before calling for a phonecard.”
And that’s just the first step. After an organization determines that their donors would be open to the card idea, many questions then arise.
• How many cards should be ordered for the first phonecard endeavor?
• How should the nonprofit choose a phonecard vendor?
• How should the organization use the card...for direct fundraising, as a fulfillment incentive, or in a more creative way?
“The key question to ask refers to the reliability of the system the phonecard would be using,” said Jay Graham, director of sales for TeleNations Inc., a Morristown, New Jersey-based company that sets up phonecard programs for nonprofits.
Here’s where it gets complicated. In the end, all calls go through AT&T phone lines. Deregulation, however, forced Ma Bell to sell access to those lines to other companies, the largest of which are MCI and Sprint.
Graham’s company, for example, buys its long distance access from LDDS Communications, which in turn purchases it from MCI, who in the end goes through AT&T. Other prepaid phonecard providers purchase time from the large companies and sell them to smaller outfits. It’s tough for consumers to keep track of the financial health of such small companies.
In addition, some small phonecard providers rent switches from larger firms and may not be able to handle large volumes of calls.
“If they own a switch and go bankrupt tomorrow, your card goes dead,” Graham said. “It’s a tricky business.”
Nonprofits also should ask where the company is licensed to operate. If it does not operated in all 50 states, it may hamper phonecard sales for organizations that have a national donor base. “Some nonprofits have come to me saying certain companies can give them a cost of 16 cents per minute,” Nelson said. “I tell them to ask if the companies are tariffed and registered with the public utilities commission in each state and call me back when you find out they aren’t.”
Minimum order requirements also should be discussed up-front as should set up fees for different kinds of cards, Graham advised. Find out, for example, the difference between the price of a plain, one-color card and a fancy, four-color job.
Also remember that phonecards carry expiration dates. “You could get a card and find that it expired in a month,” Graham said. His company offers card holders a year to use their long-distance minutes.
How organizations use their cards is another important phonecard issue. Graham “strongly suggests” that nonprofits sell the cards at events, such as dinner parties or other functions. A church, for instance, could sell the phonecards to fund renovations or repairs.
The University of San Francisco (USF), a private college, decided to use prepaid phonecards on the advice of Scott Sheldon, who used to direct the fundraising drive at nearby Golden Gate University.
Sheldon offered phonecards only to those who sent in their donations within 20 days of their pledges. The result was a 92 percent fulfillment rate and a 25 percent increase in the number of donors during the fall 1995 campaign, Intele-CardNews reported.
But USF decided to take a different tack of offering the phonecards when it launched its program late last year. “The Bay-area university sent the 500 cards it ordered to encourage delinquent donors to pay up,” said Tim Patriarca, USF’s associate director of annual giving. Having just sent out 200 of the cards to date, it’s too soon to tell if USF will have Golden Gate’s success. Patriarca, however, is confident that phonecards could play a larger role in his donor programs. He also hasn’t ruled out selling them as fundraisers.
“I had never heard of nonprofits doing it,” Patriarca said. “I buy my Walgreen’s phonecard because I travel a little bit. I use them. I know other people use them.”
The Big Brothers/Big Sisters of Warren, New Jersey, sold 20-minute cards for $10 each to raise funds for its programs.
“We started with 80 and sold all of them,” said Elisa DeGregorio, public relations coordinator for the organization. “We’ve ordered 30 more for the holidays.”
In Fairfield, New Jersey, the New Jersey YMHA-YWHA raised money selling 500 cards to its own summer staff. Many of these workers come from far-away lands, such as Israel and England, and have a pressing need for convenient long-distance service.
“It worked very well,” said Wendy Kleiman, the group’s office manager. “The staff was happy with the card and the service they got.”
Justman, Sandy. "Phonecards Can Dial-Up Big Bucks." NonProfit Times, Direct Marketing Edition (April 1997): 6, 8, and 11
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©2001 brvc inc All rights reserved. Any use, reproduction, modification,
distribution, display or of this material without brvc inc prior written consent is prohibited.
use back button to return to previous page.
site design by: Thinking Different