Report: Your Charitable Donation Is Going to Telemarketers, Not Charity
Nonprofits hire telemarketers to do their fundraising, and the telemarketers keep a lot of the money.
'Tis the season to give to charity. But a new report from New York Attorney General Eric Schneiderman finds that many of the donations New Yorkers are giving to charity are mostly going to line the pockets of telemarketing firms. The report found that more than 60 cents of every dollar raised by a professional telemarketing firm for charity goes to the firm itself. Out of 602 fundraising efforts examined, only 49 returned more than 65 percent of the money raised to the nonprofit. More than a third of the fundraising attempts returned less than 30 percent of the donor money to the charity, and in 76 of the campaigns, charities actually lost money hiring the telemarketers. Schneiderman has issued subpoenas to some of the entities in the report in an investigation into whether repeat offenders are breaking New York fundraising laws with their money-losing telemarketing schemes.
Consumer advocates have been saying for years that a lot of charitable fundraising doesn't go to the needy. But the New York AG's report comes at an interesting time, when Congress and the president have been discussing whether limiting the $50 billion in annual tax deductions Americans claim for charitable donations is a good way to shore up the nation's finances. Nonprofit groups have risen up en mass to oppose the idea, but the AG's report shows that despite claims by conservatives, the private sector is not especially efficient when it comes to serving the less fortunate. And since many of the beneficiaries of charitable donations (the telemarketers) are not even nonprofits, it's not clear why such donations are tax-deductible in the first place.
Among the worst offenders on the AG's list are some familiar organizations, many of which are politically involved. Among them is Tea Party Patriots, a group that has long had unusually high administrative and fundraising costs. Schneiderman found that in 2011, Tea Party Patriots, one of the largest grassroots tea party organizations to have come out of the movement, collected nearly $2 million in donations through telemarketers. Just $54,000 of that—less than 5 percent—went back to the organization. The telemarketers kept the rest. Also, it seems that tea partiers are good at promising telemarketers they'll donate, but not so good about actually paying up. The report shows that Tea Party Patriots had $850,000 in pledges that went uncollected. For an organization that promotes fiscal responsibility, it's not setting an especially good example.
(Note to conservative activists: If you're looking to give to a tea party group over the phone, you're probably best off giving to FreedomWorks, which was until recently run by a professional lobbyist and former member of Congress. FreedomWorks was one of the few groups examined by New York that got 65 percent of the money it raised through telemarketers. Of course, what it did with that money is another issue.)
The Family Research Council Action, Americans United for Life (an anti-abortion group), Ralph Reed's Faith and Freedom Coalition, and the Concerned Women of America Legislative Action Committee, which ended up nearly $175,000 in the hole from one of its fundraising efforts, all had pretty bad records. But more liberal groups weren't that much better. NARAL, the ACLU, and People for the American Way all ended up at the bottom of the report: their telemarketing efforts ended up costing them more than they made. It's all just one more reason to hang up on telemarketers and send your donations through the mail.