Tenth Annual Report Shows How Fundraisers Profit From Charitable Giving

Attorney General Spitzer today released Pennies for Charity, Where Your Money Goes: Telemarketing by Professional Fund Raisers, his annual report that highlights the costs incurred by non-profit organizations that engage telemarketers to solicit charitable contributions from New Yorkers. It shows that, on average, only about a third of the money raised by telemarketing campaigns goes to charity while the balance is used to pay fees and expenses associated with the fundraising.

The report, provides a summary of information filed with the Attorney General's Charities Bureau by professional telemarketers who conducted fundraising campaigns in New York State in 2003.

A total of $187.4 million was raised by 592 fundraising campaigns conducted in 2003. However, only $63 million, or 33.7 percent of the funds, actually was retained by charitable organizations. The remainder was paid to the telemarketers as fees and other costs of the campaigns.

"This annual report is a reminder of the need to make informed decisions before contributing hard-earned dollars to charity." Spitzer said. "In addition, people who serve on charitable boards must be actively engaged in their organizations' fundraising decisions. They have an obligation to ensure that their organization's income for charitable purposes is maximized."

The Attorney General has proposed legislation to improve oversight of professional fund raisers and ensure that New Yorkers receive the information they need in deciding whether to contribute to a charity. In particular, the legislation would strengthen the anti-fraud statutes prohibiting charities from misleading the public; and require professional fundraisers and professional solicitors to disclose to potential donors accurate information concerning the proportion of funds the charity has received in past campaigns. Unfortunately, these proposals have not yet been enacted into law.

The report identifies the following professional fundraisers whose campaigns, on average, yielded the least amount for charity - 12% or less of the funds raised:

Telesystems Marketing Inc - 12.00%
S & E Marketing Ltd - 11.47%
American Trade and Convention Publications Inc - 11.24%
Theodore Productions Inc - 10.26%
Nationwide Fundraisers Inc - 10.00%
Titan Marketing Inc - 10.00%
LAS LLC - 8.57%
EARTHtel Inc - minus 243.63%

Attorney General Spitzer said, "I urge charitable organizations to seek bids from several professional fundraisers to ensure that they get the best deal for their organizations so that their fundraising campaigns yield the most money possible for charitable programs."

Among the other significant findings of the Attorney General's report are:

  • In only 42 of the 592 fundraising campaigns did the charity retain at least 65 percent of the money raised, the amount deemed acceptable under the Better Business Bureau's standards for charitable organizations.
  • In 480 of 592 campaigns, the charities kept less than half of the funds raised; and
  • Eighteen charities actually lost money under their fundraising contracts.

The registrations of 31 organizations included in the Attorney General's report have been canceled for failure to file a financial report for 2002 or before. These organizations are no longer authorized to solicit contributions from New Yorkers. This year's Pennies for Charity report adds a new table listing the name of each professional fundraiser, the total amount raised by each, and the total amount that was retained by the client charities of each.

The Attorney General's web site, http://www.charitiesnys.com, contains an electronic copy of the report. The information contained in the Attorney General's report pertains solely to telemarketing campaigns conducted by charitable organizations registered to solicit contributions in New York State.

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