A.G. Schneiderman Report On Charity Telemarketers Finds Majority Of Funds Solicited Go Into Pockets Of Fundraisers, Not To Charitable Causes

A.G. Offers Key Tips For Those Who Donate Via Phone Solicitations

"Pennies for Charity" Report Finds That For-Profit Fundraisers Kept An Average Of 52 Cents Of Every Charitable Dollar

Schneiderman: New Yorkers Deserve To Know How Their Hard-Earned Donations Are Spent

NEW YORK – Attorney General Eric T. Schneiderman today released his annual “Pennies for Charity” fundraising report showing that for-profit telemarketers operating in New York in 2013 retained the majority of the funds they raised on behalf of charities – more than $156 million that was intended to support charitable causes.

Telemarketers registered in New York reported raising more than $302 million for charity in 2013, a 20% increase over the previous year and the most ever reported in the history of the New York Attorney General’s annual Pennies for Charity report. Of those funds, $146.5 million went to organizations’ charitable missions, about 48% of the total money raised. In 75% of the fundraising campaigns run by telemarketers, the charities retained less than 50% of the funds raised.

“New Yorkers who are generous enough to donate their hard-earned money to charity deserve to know how that money is really spent, including how much is used to pay for-profit telemarketers,” Attorney General Schneiderman said. “Our Pennies for Charity report is an important tool for transparency because it informs the donating public what portion of their charitable contributions made through telemarketers went to the outside fundraisers’, and how much was left to support charitable programs.”

At 48%, the share of funds raised by for-profit telemarketers that went to charity in 2013 increased significantly in comparison to 2012, when only 37% of the funds raised went to the charitable missions donors intended to support. The Pennies for Charity report has been published annually for the last 12 years, drawing attention to this issue.

The "Pennies for Charity" report aggregates information from fundraising reports filed with the Attorney General’s Charities Bureau for telemarketing campaigns conducted in the previous year.

Other significant findings from analyzing the 573 fundraising campaigns covered in the Attorney General’s report include:

  • In 75%, or 435 of the 573, the charities retained less than 50 percent of the funds raised.
  • In 49.2%, or 282 of the 573 campaigns, the charities retained less than 30% of the funds raised or expenses exceeded contributions.
  • Of the 573 campaigns, 316 were conducted on behalf of organizations located outside of New York.

Statewide, the rate of return was lowest for donations solicited in the Central New York area, specifically Broome, Cayuga, Chenango, Cortland, Herkimer, Jefferson, Lewis, Madison, Oneida, Onondaga, Oswego, Otsego, St. Lawrence, Tioga and Tompkins counties.

Based upon the address contained in documents filed with the Charities Bureau, each charitable organization listed in this report has been assigned to a particular geographic area. The following is a list of these geographic areas, the counties included in each area, total gross dollars raised on behalf of charities located in each area and the net amount received by these charitable organizations:

Geographical Area

Counties

Gross Receipts

Net to Charity

Retained by Charity

1 – New York City

Bronx, King, New York, Queens, Richmond

$39,451,348.76

$21,505,637.39 

54.5%

2 – Long Island

Nassau, Suffolk

$8,901,262.08

$2,437,476.21 

27.4%

3 – Lower Hudson Valley

Delaware, Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster, Westchester

$75,754,186.73

$64,762,271.85 

85.5%

4 – Capital District and Eastern Adirondacks

Albany, Clinton, Columbia, Essex, Franklin, Fulton, Greene, Hamilton, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie, Warren, Washington

$4,952,785.37

$1,483,934.89 

30.0%

5 – Central NY and Western Adirondacks

Broome, Cayuga, Chenango, Cortland, Herkimer, Jefferson, Lewis, Madison, Oneida, Onondaga, Oswego, Otsego, St. Lawrence, Tioga, Tompkins

$853,312.56

$91,807.55 

10.8%

6 – Rochester and Surrounding Area

Chemung, Livingston, Monroe, Ontario, Schuyler, Seneca, Steuben, Wayne, Yates

$1,492,643.82

$834,017.48 

55.9%

7 – Western NY

Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans, Wyoming

$1,800,429.87

$719,953.74 

40.0%

8 – All Others

Locations outside New York State

$169,382,350.80

$54,625,720.68 

32.2%

Despite improvements in the share of funds going to charitable purposes, telemarketing remains an expensive and intrusive method of raising funds for charity, and suffers from significant limitations compared to other forms of fundraising:

  • it encourages “me-too” charities which sound like respected and effective charities, but are much less effective; for example, the me-too charity “Kids Wish Network” – which sounds like an affiliate of the well-known “Make-a-Wish Foundations” – pays out more than 2/3 of its telemarketing revenue to fundraisers;
  • the largely anonymous interaction between telemarketer staff, located at a remote call center, and the call recipient is difficult to detail after the fact, making policing or proof of misrepresentation difficult;
  • many charities fail to actively monitor the fundraisers they engage and hold them accountable. The Attorney General has found a number of fundraisers with significant histories of violations who continue to secure fundraising contracts, seemingly with little board oversight or involvement. For example, InfoCision, Inc., which has voluntary assurance agreements with multiple states arising out of their improper conduct, and recently settled a class action misrepresentation suit, had 41 contracts filed with the Office of the Attorney General, and kept 66% of the proceeds of its fundraising activity.

To assist charities in addressing this issue, Tips for Charities are included in the report. In an effort to help people who give to charity to ensure that their donations support the causes they intend, Attorney General Schneiderman issued the following tips when making donations via phone solicitation:

  • 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 ask to receive information about the cause and a solicitation by mail.
  • Ask The Telemarketer.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 of your donation the charity is guaranteed.
  • 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.
  • Look Up Charities.Review information about the charity before you give. The Attorney General’s interactive website allows potential donors to easily search the "Pennies for Charity" 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 also see how much money was raised by a professional fundraiser and how much money actually went to each charitable organization. Also confirm that the charity is eligible to receive tax-deductible donations by searching the IRS website at www.irs.gov.
  • Give To Established Charities.Donate to organizations you are familiar with or ones with a verifiable record of success in meeting their charitable missions. Closely examine charities with names similar to more established organizations.
  • 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 and far safer than sending cash. 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) 416-8401.

A copy of today’s report can be accessed here.