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Telemarketers still take big cut of donations

Telemarketers used as professional fund-raisers are still taking a big share of the donations, state officials say.
/ Source: The Associated Press

Diana Mey remembers the telemarketing call for a charity that pushed her "over the edge."

"I remember getting a hard sell," said the mother of three from Wheeling, W.Va. "A telemarketer told me, `C'mon, can't you spare $20? How about $10? These people are really counting on you.'"

So was the telemarketer's professional fund-raising company, which would have netted $16 of a $20 donation.

In the competition for Americans' disposable income, charities including police benevolent associations, veterans' groups and those combatting diseases often find it best to hire professional fund-raisers. Despite years of negative reports, media stories detailing the fraction of funds that actually go to a charity and national warnings from consumer advocates, little has changed in the decade since the practice became more widespread, state officials said.

In New York last year, 592 charity campaigns used professional fund-raisers to raise $187 million, of which one-third — $63 million — was kept by the nonprofit groups, according to the annual "Pennies for Charity" report released by New York Attorney General Eliot Spitzer.

"We don't expect 100 percent to go to the charity, but we would hope that over time it would be more than the 33 percent we're seeing," Spitzer said.

In New York, All-Pro Telemarketing Associates Corp., a professional fund-raiser based in New Jersey, raised $4.1 million in 2003 for 15 charities to help disabled children, disabled police officers, children with leukemia and a program that helps find missing children. Thirteen percent — $533,000 — went to the charities, Spitzer's report said.

In California, the average charity using professional fund-raisers kept less than 40 percent of the donations and a quarter of the groups ended up with 15 percent or less, Attorney General Bill Lockyer reported last year.

The good and bad
Michelle Destino-Moran knows both sides. She is president of The National SAFE Home Foundation, a New York-based charity that provides smoke alarms to families with newborns, school children, the disabled and senior citizens in 43 states.

It was the $1,000 a week in donations from telemarketers that turned her idea into a nationwide program. But the telemarketers — who returned 13 percent of what they raised — were investigated by law enforcement agencies for their tactics and SAFE dropped them in 2000. That almost sank the charity.

"I had people call my office complaining, that they just gave and these people were bugging them," she said. "I also had complaints of them not telling the truth on the phone."

But the charity hasn't matched what it took in with telemarketers, Destino-Moran said.

Mark Gelvan of All-Pro Telemarketing Associates, the New Jersey fund-raiser that gave up its New York license to settle a Spitzer investigation in 2003, said there are reasons for the big cuts: When a telemarketer collects 80 percent of the donation, "a good 70-plus percent could be expenses" including rent, the phone bill and mailing materials to donors.

Spitzer sued Gelvan's firm in 2002 after it raised $5.8 million for the Fraternal Order of New York State Troopers over several years, and kept $4.93 million of it.

Setting standards
If donors ask, fund-raisers must confirm they are commercial solicitors and divulge their cut.

The Better Business Bureau's Wise Giving Alliance sets ethical standards for charities including a limit of 35 percent of donations going to professional fund-raisers. Most of the national charities it monitors meet that.

Regional charities can be a different story: The cut kept by professional fund-raisers in New York in 2003 is unchanged from 1994.

So New York, California and other states are increasingly asking charities to no longer accept the promise of quick, easy cash. In California, a law effective Jan. 1 requires nonprofit groups to provide more consumer protections when hiring fund-raisers.

Simple, strict limits on fund-raisers' share would likely be struck down by courts because fund-raising is protected by the constitution as free speech, Spitzer said.