Commercial Fundraisers Keep the Lion's Share, 2 States Reveal

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Charities using commercial fundraisers often receive only a small portion of funds solicited on their behalf, two recent state studies found.


A report issued jointly by Washington Secretary of State Ralph Munro and state Attorney General Christine Gregoire showed that in many cases less that half or even a third of money solicited by commercial fundraisers actually gets to the charity.


In New York, reports filed with state Attorney General Eliot Spitzer revealed that less than 30 percent of funds raised by commercial telemarketers went to the charities they represented.


Commercial fundraisers soliciting in Washington state reported raising more than $223 million in charitable donations during the most recent fiscal year. Of that amount, more than $112 million went for fundraising expenses and profit. The remaining $111 million, or 49.9 percent, was retained by client charities.


More than a quarter of the 90 fundraisers listed in the report provided their charity clients with 20 percent or less of the contributions they collected. Of those, six provided their clients with 10 percent or less, including one whose charity client received less than 3 percent of the funds raised.


The New York report showed that during 1999, $194.1 million was raised as a result of 581 telemarketing campaigns, of which $55.3 million, or 28.5 percent, went to the client charities. In 147 campaigns, less than 20 percent of the money raised was turned over to the client charities. In 27 campaigns, 70 percent or more was passed on to the charities.


The New York attorney general's office cautioned that there are many factors to consider when evaluating the percentage of funds turned over to client charities. Commercial fundraisers may spend more time and money identifying new donors or representing new charities or programs. They may test-market a campaign without any certainty that it will prove efficient. Fundraising campaigns also may achieve other goals such as public education or volunteer recruitment.


Munro, the Washington secretary of state, noted that it is not illegal for fundraisers to keep the majority or a large percentage of the money donated.
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