Report: Charities net 41 percent of funds raised by commercial fundraisers

AP on Bakersfield Californian ^ | 7/21/05 | Jennifer Coleman - AP

[NormsRevenge]

SACRAMENTO (AP) - Charities who hire commercial fund-raisers in 2003 received back an average of 41 percent of the revenue raised in their names, according to a report released Thursday.

That figure represents a slight increase over last year's average return of 38 percent. But one-quarter of commercial fund-raising campaigns turned over 15 percent or less to the nonprofits, California Attorney General Bill Lockyer's report on charitable solicitations found.

"Charities need to carefully assess whether employing commercial fund-raisers is the wisest, best way to raise money for valuable programs that serve our communities," he said in a statement.

Most of the 91,000 charities registered with the attorney general's office solicit funds directly and do not use commercial fund-raisers. The report examined 605 campaigns conducted by the private companies for nonprofits.

The campaigns raised $233 million in 2003, an increase over the previous year's total of $211 million, the report found.

Of the 605 fund-raising campaigns, 223 gave more than half of the funds to charities - a similar rate as the previous year.

The Better Business Bureau recommends that charities collect 65 percent of the funds raised by commercial operations.

The attorney general found that vehicle donation campaigns raised more than $45.5 million for charity - of which 45 percent went to charities.

For-profit thrift stores reported revenue of $74 million - a significant jump of 184 percent over the previous year. However, the average amount paid to charities dropped from nearly 16 percent in 2002, to just under 14 percent.

Thirty charities reported that they didn't received any of the money raised by the commercial fund-raiser. Citizens Against Government Waste paid Facter Direct, Ltd., a Los Angeles-based commercial fund-raiser, nearly $13,000 for a telemarketing campaign and reported a loss of $10,600.

Citizens Against Government Waste president Tom Schatz said those numbers reflect only a small piece of the group's fund-raising strategy, which includes campaigns in several states that produced a net benefit to the group.

"We'd certainly prefer to make money," he said. "It makes more sense to look at the overall effort. We had a positive operating income last year."

Facter Direct CEO Tom Seigel said the attorney general's report is incomplete because it reports results before all revenue has been collected. He also said telemarketing campaigns are used by charities to reach out to lapsed donors.

"The goal is to bring that donor back, even it costs them money because the long-term value of the donor is significant," he said. "Most charities invest in donors like a private business invests in new customers."

Facter Direct, Ltd, raised $96,500 for Community Television of Southern California - 80 percent went to the charity.

Twenty charities in the report received all the money their commercial fund-raisers raised.

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On the Net:

For more information, visit the attorney general's Web site: http://www.ag.gov/charities

[dila813]

41% is pretty good.

[Patriotic1]

I don't think 41% is good, but if they aren't waiting for revenue to actually show up before publishing the results, it's misleading.

However, the way the study is designed may be the best way to collect information for the most charities... Tough call.