What are the key advantages and disadvantages of hiring a telemarketing firm versus using volunteers?

Summary:

The key advantage is that you may not have to lift a finger! The key disadvantage is that many firms take a percentage of each donation.

I want to hire a telemarketing firm. My Board members are concerned
about how much money the firm will take. What do I do?

Ina Frank comments:

Don't hire one -- for exactly that reason. Your hard-earned dollars
should not be unnecessarily diminished.

Volunteers are just fine, if properly trained. And, there's virtually no
cost except advance mailing and a nice gift for the hosting business.
OK, maybe some bagels or doughnuts & coffee.

A small price to pay for marvelous good will and, most important, the
opportunity to connect current devoted volunteers with future ones plus
maybe unearth a potential major ($10,000) supporter or two. Most
potential givers at that level really respect an organization that uses
volunteers wisely.

Some organizations hire telemarketing firms and love it because they hardly had to lift a finger. Ina Frank comments:
1) How much more might they have made with just a little
effort? Instead of a small fraction of the total pledges, they could
have had almost the whole amount.

2) I would not advise an organization to pay a telemarketer, when those within the organization are so very credible.

Even though most of us work, almost every household -- even in the inner
cities -- can provide one body for 2 hours on a weekend morning or
weekday evening to help secure the longterm benefits of this sort of
connection.

But an employee of a telemarketing firm (Paul Giuliana of Lester Telemarketing) counters:
Your suggestion is to use volunteers and not a telemarketing firm because the
firm would take too much money. I suggest that this is narrow thinking. I
have been an Account Executive in the Fund Raising Division with a
Telemarketing Firm for nearly ten years. I have found that all too often
people view this as an "either/or" question. Most of my clients use
volunteers. They use our services too because the number of volunteer
calling hours available is far too few to reach a significant portion of
their constituency. Our calling is far more effective when viewed in terms
of net dollars than a "sorry we missed you" mailing. We do not charge a
percentage. We charge by the hour. We charge for the work we do. We are
proud to provide great people who are interested to learn about the
organizations they represent.

Finally, James M. Greenfield weighs in on this very subject in Chapter 6 of his book Fundraising Fundamentals.