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State Charity Reports: How Much Donor Money is Wasted in Your State?

by Matt Viola, Charity Navigator

March 1, 2009

 
 

Among the roughly 5,500 charities rated by Charity Navigator there are many who spend your money wisely to carry out their valuable missions. Unfortunately, there are some who operate inefficiently and irresponsibly and absorb donations that could otherwise go to benefit their more effective peers. A common thread among charities on our site that report extremely high fundraising expenses is these charities' reliance on professional, for-profit fundraisers that often keep a large portion of each dollar you give them (see our list of 10 Charities Overpaying their For-Profit Fundraisers). 

Many state charity regulators are aware of the astoundingly high amounts of money commercial fundraisers keep for themselves and keep track of how much professional solicitors are raising in their states and what percentage of your donation actually reaches the charity to which it is intended. Compiled below are the results from ten states whose attorneys general are watching out on behalf of the charitable donors within their borders. You can see that the percentage of money returned to the charity varies from charity to charity and state to state, with some of these reports showing that charities actually lost money on the deal. In other words, none of the donors’ money actually went to the charity and on top of that, the charity had to pay the telemarketing firm a fee. Although there are also cases where a more substantial portion of the funds raised was returned to the charity, these reports illustrate the reality that telemarketing is often an inefficient way for charities to raise funds. 

STATES WITH AGGREGATE DATA

The six states below publish annual reports detailing the total amounts collected by commercial fundraisers on behalf of charity and how much of the money collected actually reached the intended recipients. Of the six states reporting aggregate data, none reported charities receiving more than 59% of the donations raised on their behalf, and five showed average returns to charity below 50%. Results of the attorney general reports are shown below:

California

California

"In 2007, commercial fundraisers collected a total of about $370.3 million in charitable contributions. The average distribution to charity from all campaigns conducted by commercial fundraisers in 2007 was 43.63 percent, an increase of 7.15% over the average reported in 2005."

For more information read: Attorney General's Guide for Charities

Colorado

Colorado

"Paid solicitors conducting charitable solicitation campaigns in Colorado collected over $187 million in donations on behalf of their clients in 2007, Of this total, $91 million reached the charitable organizations after expenses for the campaigns were deducted, which represents 48.7% of the total donations, down from 50.8% in 2006."

For more information read: Annual Report on Charitable Solicitations

Connecticut

Connecticut

"Telephone solicitors hired by Connecticut civic, charitable and public safety organizations raised $10.8 million in 2006.  Paid solicitors turned over $3.54 million, or 32% to the charitable groups that hired them."

For more information read: Telephone Charitable Solicitation Report

Massachusetts

Massassachusetts

“In 2007, professional solicitors registered in Massachusetts raised nearly $285 million. Of this amount only $101 million or 35% of the amount raised ended up with the charity. This means that on average, of every dollar that a professional solicitor raised for charity in 2007, only 35 cents went to the charity.”

For more information read: Report on Professional Solicitations for Charity in 2007

New York

New York

"A total of $178.7 million was raised on behalf of 442 charities in 2007 in the 553 telemarketing campaigns covered in this report...Charities retained 39.46 percent, or $70.5 million, of the total funds raised in the campaigns.”

For more information read: Pennies for Charity

North Carolina

North Carolina

From July 1, 2007 through June 30, 2008 commercial fundraisers raised approximately $239 million for charities. Of this $239 million, however, the charities themselves only received about $142.9 million or about 59%. This was an increase from 50% the year prior.

For more information read: 2007-2008 Charitable Solicitation Licensing Section Annual Report

OTHER STATES

The three states below do not have data available showing the total amount collected by professional fundraisers, but they do publish useful information about charitable solicitation within their state.

South Carolina

South Carolina Secretary of State Mark Hammond releases an annual list of "Scrooges and Angels" in order to show "those charities that represent some of the best and worst of charitable giving". Charities on the "Scrooges" list that are rated by Charity Navigator include:

For the full list visit: http://www.scsos.com/From_the_Secretarys_Desk/Media_and_News_Releases/id/85

Hawaii

The State of Hawaii Department of the Attorney General publishes "Charitable Solicitation Financial Reports" organized both by the name of the charity and of the solicitor. From this report you can see that, for example, Community Support, Inc. raised $115,831on behalf of Cancer Center for Detection and Prevention in Hawaii but the charity only received $11,583, a return of only 1%.

For more information visit: http://hawaii.gov/ag/charities/

Kentucky

The Kentucky Attorney General's office publishes “Charitable Campaign in Kentucky” reports that display the charity and the solicitor.  In the most recent report you will find that Facter Direct LTD. Raised $106,822 on behalf of Children’s Wish Foundation International but the charity only received $2,878, a return of 3%.

For more information visit: http://ag.ky.gov/civil/consumerprotection/charity/

Our Advice To Donors

After reading this article, it should be clear that donors are better off when they can avoid professional, for-profit fundraisers and give directly to charities. Remember to always research a charity's spending practices before supporting their efforts to ensure that you are not giving a large portion of your gift to these outside fundraisers. Consult our article, What To Do When A Charity Calls, for additional information on how best to handle calls from for-profit fundraisers.

 
 
   
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