A.G. Schneiderman Issues Charities Fundraising Report That Finds Bulk Of Donations Go To Pockets Of For-profit Telemarketers

Investigation Launched As Telemarketing Companies Are Paid Nearly 62% Of Donations They Raised On Behalf Of Charities

A.G. Schneiderman: Donors Expect Their Hard-Earned Dollars Will Go To Help Those In Need

NEW YORK – Attorney General Eric T. Schneiderman released his office's annual fundraising report today showing that for-profit telemarketers receive the lion's share of donations they raised on behalf of charities.

Pennies for Charity, Where Your Money Goes: Telemarketing by Professional Fundraisers reports that, in 2011, fundraisers were paid an average of 61.5 cents of every charitable dollar they raised, with just 38.5 cents of the funds going to charity. The Attorney General also announced that he has commenced an investigation to determine if New York's charities and fundraising laws have been violated. The investigation focuses on fundraising campaigns that repeatedly result in little or no money going to charitable programs or services. Over a dozen subpoenas have been issued with more anticipated.

“New Yorkers expect that their hard-earned dollars will make a difference and not line the pockets of for-profit fundraisers at the expense of charity,” Attorney General Schneiderman said. “During this season of giving when so many are still struggling to recover from Sandy, the generosity of donors must be protected. With this report, New Yorkers will be equipped with important information to help them decide which charities to support and to help ensure their contributions further charitable programs and services.”

Pennies for Charityaggregates information from fundraising reports filed with the Attorney General’s Charities Bureau for telemarketing campaigns conducted in 2011. Some of the significant findings regarding the 602 fundraising campaigns covered in the Attorney General’s report include:

  • In 467 of the 602 campaigns, the charities kept less than 50 percent of the funds raised.
  • In 207 of the 602 campaigns, the charities retained less than 30 percent of the funds raised.
  • In 76 of the 602 campaigns, charities actually lost money.
  • In only 49 of the 602 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.

The Attorney General’s interactive website allows potential donors to easily search the report by the name of the charity or by region in New York State. A link to the search tool can be found on the Attorney General’s charities website at www.charitiesnys.com. Users can see how much money was raised by professional fund raisers and how much money actually went to each charitable organization.

Attorney General Schneiderman has made transparency in charitable fundraising a priority for his office. Immediately after Hurricane Sandy, the Attorney General began gathering information from charities collecting donations from the public. That information - including amounts raised and spent, services provided and planned and how any surplus funds will be used - is being compiled and will be available to the public on the internet shortly.

Additionally, during Breast Cancer Awareness Month this year, the Attorney General issued best practices for "cause marketing," a growing billion-dollar-a-year industry in which companies advertise that purchase of a product will trigger a charitable contribution. The "cause marketing" best practices, which are available at www.charitiesnys.com, have been adopted by some of the country's leading charities.

Attorney General Schneiderman urges New Yorkers to heed the following tips when making donations to charity during this holiday season:

Resist Pressure To Give On The Spot.If you receive a call from a telemarketer, do not feel pressured to give over the phone. You can just say no. If you choose not to hang up, you should ask the caller what programs are conducted by the charity, how much of your donation will be used for charitable programs, how much the telemarketer is being paid and how much the charity is guaranteed.

Look Up Charities. Review information about the charity before you give. Check the Attorney General’s website – www.charitiesnys.com – for a charity’s financial report or ask the group directly for this information. Confirm that the charity is eligible to receive tax-deductible donations by searching the IRS website at www.irs.gov. Some additional websites with helpful information include:

Give to Established Charities. Donate to organizations you are familiar with or ones with a verifiable record of success meeting their charitable missions. Closely examine charities with names similar to more established organizations.

Ask How Your Donation Will Be Used. Ask specifically how the charity plans to use your donation, including the services and organizations your donation will support. Avoid charities that make emotional appeals and are vague in answering your questions. Be wary if an organization will not provide written information about its charitable programs and finances upon request. Any legitimate organization will be glad to send you this information.

Avoid Unsolicited Emails.These messages do not usually come from legitimate charities and responding to them may make you vulnerable to identity theft and fraud. Check the Department of Homeland Security’s tips, such as Avoiding Social Engineering and Phishing Attacks that are posted at: www.us-cert.gov/cas/tips/ST04-014.html.

Use Caution When Donating via Text and Social Media. Be careful about unsolicited requests for donations received through text messages or social media sites. Although charities are increasingly using social media and texting for donations, unsolicited requests may not be associated with legitimate charities. Confirm through the charity’s website or a representative of the charity that it has authorized contributions to be made via these formats.

Never Give Cash. It's best to give your contribution by check made payable directly to the charity. This is safer than giving by credit or debit card. Be careful about disclosing personal or financial information; never give out such information to an organization or individual you don't know.

Report Suspicious Organizations. If you believe an organization is misrepresenting its work, or that a scam is taking place, please contact the Attorney General’s Charities Bureau at charities.bureau@ag.ny.gov or (212) 416-8402.

Pennies for Charitywas compiled by the staff of the Attorney General’s Charities Bureau with the assistance of the Legal Technology Bureau. The investigation is being handled by Charities Bureau Enforcement Section Chief David Nachman, Assistant Attorneys General Yael Fuchs and Karin Kunstler Goldman and Policy Analyst Liam Arbetman, under the supervision of Jason Lilien, Charities Bureau Chief, and Janet Sabel, Executive Deputy Attorney General for Social Justice.

A copy of today’s report can be accessed here: www.ag.ny.gov/pdfs/2012%20Pennies%20Final%20Review.pdf