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A.G. Schneiderman Report Finds Many Professional Fundraisers Keep Significant Portion of Charity Dollars They Raise

LongIsland.com

Attorney General Eric T. Schneiderman released his “Pennies for Charity: Where Your Money Goes; Fundraising by Professional Fundraisers” report.

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Schneiderman: Be careful with your charitable giving; not all fundraisers are created equal.

Photo by: John Hughes, via Free Images.

New York, NY - December 22, 2016 - Attorney General Eric T. Schneiderman today released his “Pennies for Charity: Where Your Money Goes; Fundraising by Professional Fundraisers” report, which found that fully one-third of charitable donations ended up in the pocket of the professional fundraisers. 

This year’s report expanded its focus beyond telemarketers to include a broader range of solicitation methods conducted by professional fundraisers, including direct mail, email, and internet fundraising campaigns.

New York has a robust charitable sector, supported by generous giving by New Yorkers.  In fact, New Yorkers gave a total of $17.2 billion in reported donations in 2015—the year covered by the report—the second highest giving level in the nation, after California.  Of this total, more than $1 billion was raised through 1,143 fundraising campaigns conducted by professional fundraisers on behalf of charities.  These campaigns are the focus of this report. The report and the searchable Pennies for Charity database that contains the data underlying it can be found at www.CharitiesNYS.com.

Of the nearly $1.1 billion raised through campaigns conducted by professional fundraisers, charities netted just over $718 million, or 65.5% of the proceeds, while professional fundraisers kept $379 million, or 34.5%.

“New Yorkers should know how their charitable dollars are being spent,” Attorney General Schneiderman said. “Our Pennies for Charity report shines a light on the portion of charitable dollars that is pocketed by outside fundraisers, and our Charities Bureau will hold unscrupulous or fraudulent fundraisers accountable.”

This year’s report included a much bigger data set than previous years’ reports, as it focused on various mechanisms for fundraising in addition to telemarketing, which was the sole focus of prior Pennies for Charities reports and which was found to be the costliest fundraising mechanism. This year’s report finds that professional fundraisers overall retain a high percentage of charitable dollars.

The "Pennies for Charity" report aggregates information from fundraising reports filed with the Attorney General’s Charities Bureau for campaigns conducted by professional fundraisers on behalf of charities in the previous year.  Professional fundraisers must register with the Office of the Attorney General and provide closing statements that break down the revenue raised and the expenses generated by the campaign. 

Other significant findings from analyzing the 1,143 fundraising campaigns covered by this report include:

  • In 239 campaigns, or approximately 20% of the campaigns covered in the report, the charities retained 70% or more of the funds raised, with 30% or less going to cover the costs of the professional fundraiser.
  • In 622 campaigns, or approximately 54% of the total, charities retained less than half of the funds raised.
  • In 192 campaigns, or nearly 17% of the total, fundraising expenses exceeded revenue, for a total loss of $16.7 million.

The Office of the Attorney General actively investigates suspect fundraising practices.  In 2015, Attorney General Schneiderman secured a $100,000 penalty against the founder of the National Vietnam Veterans Foundation and barred him from ever again serving as a director, officer, or trustee of any non-profit or charitable organization after finding that nearly 90% of revenue was spent on fundraisers and supporting his lavish lifestyle.  And in the largest multi-state charity fraud action to date, the Attorney General, 49 other states, and the Federal Trade Commission secured a $75 million settlement ($3 million of which came to New York) against two affiliated sham cancer charities, and forced the dissolution of two other affiliates, which allocated only 3% of proceeds for their intended charitable purposes. The president was banned from profiting from any charity fundraising in the future.

To assist charities in navigating the world of professional fundraisers, the report includes A Note to Charitable Organizations. 

The report also includes Tips for Donors, including specific guidance for responding to phone, direct mail, or online solicitations. Key tips include:

  • Research the Charity.
    • Check out the charity’s website.
    • Consult the Office of the Attorney General’s Charities Bureau website to review an organization’s tax returns and its financial report.
    • Consult the Office of the Attorney General’s Pennies for Charities database to see its fundraising costs and results.
  • Never Donate by Cash Or Wire Transfer. It's best to donate by credit card.
  • Donate Via Secure Web Addresses: When donating online, make sure the website is secure: the web address should begin with “https.”
  • 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 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.
  • 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 on email or (212) 416-8401.

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

Director of Registrations and Fundraising Sections Hanna Rubin wrote this report, with the support of Charities Bureau Fundraising supervisor Siobhan Blank. James Sheehan is the Charities Bureau Chief and Karin Kunstler Goldman is the Deputy Bureau Chief. Alvin Bragg is Executive Deputy Attorney General for Social Justice.

More information about the Attorney General’s Charities Bureau and organizations regulated by the Bureau may be found at www.charitiesnys.com.