Funding the Fund-Raisers

Donor, beware. A big chunk of the money you contribute to a charity or other favored cause may never get to the intended recipient. It could be pocketed instead by a private fund-raising company. California Atty. Gen. Bill Lockyer, in an annual report, finds that charities that used commercial fund-raisers in 1998 received on average less than 44 cents out of every dollar raised in their behalf. In some extreme cases they got 15 cents or less. Commercial solicitors raised $196 million last year. They kept $110.2 million for expenses and profits.

Most of the 80,000 charities registered in California do not use private fund-raisers, and they disclose the percentage of collected money that goes for expenses. Some commercial fund-raising is done by mail, but most is by telephone. Lockyer suggests that potential donors ask two questions when solicited by phone: Is the caller a commercial fund-raiser? And what percentage of money raised actually reaches the charity?

The attorney general’s report is based on tax filings by the commercial solicitors to the Charitable Trust Division of the state Department of Justice. In some cases collections were so disproportionately disbursed as to nearly exclude the organizations being benefited. The fund-raiser hired by the California Organization of Police and Sheriffs in Burbank collected $1.73 million last year. The organization received a mere $38,562.

A lot of donors, once they give to a charity, tend to repeat in response to subsequent appeals. But trolling for new contributors can be costly. When it comes to telephone appeals, many are called but only a few give. What’s important is that donors know where their dollars are going. Most people can tell the difference between reasonable and exorbitant solicitation costs. When commercial fund-raisers on average keep 56% of the money they collect, that’s exorbitant.

To Take Action: For ratings of charities and advice on giving, the National Charities Information Bureau, www.give.org. The Better Business Bureau, www.bbb.org, also rates charities. The California attorney general’s report may be viewed at caag.state.ca.us/charities.