Report: Charities See Only 35 Cents For Each Dollar Raised
LANSING (WWJ) – A new report from the State Attorney General’s Office says the middleman that charities use to solicit donations is actually getting more money than the charities themselves.
The state’s first annual Professional Fundraising Charitable Solicitation Report found that charities collect an average of only thirty-five cents for every dollar raised by professional fundraisers soliciting donations in Michigan.
“What happens is a charity hires a professional fundraiser, and the fundraiser raises them $100. The fee for that service is, on average, 65 of those dollars go back to the fundraiser and only $35 goes to the charity,” said Attorney General spokeswoman Joy Yearout.
Under Michigan law, a professional fundraiser is defined as a person or organization that solicits contributions on behalf of a charity in exchange for compensation. This is different from a charity that hires its own staff member for development and other fundraising activities.
Michigan law requires professional fundraisers to submit the results of their campaigns to the Attorney General. The data includes the type of appeal conducted (mail, telephone, etc.), gross receipts raised, the amount paid to the fundraiser, and the final amount and percentage that went to the charity.
Any charity fundraising in Michigan is required to report these results, so the Professional Fundraising Charitable Solicitation Report includes data from charities across the country. The report includes the results of fundraising campaigns reported to the Attorney General during the 2012 calendar year.
Although hiring professional fundraisers and fundraising council may benefit certain charities, some professional fundraisers leave little of the donations for the intended charity.
“Michigan citizens have generous hearts and deserve to know how much of their donation actually makes it to their intended charity, especially in these times when every dollar makes a difference,” Attorney General Bill Schuette said in a statement.
According to the Better Business Bureau’s Standards for Charity Accountability, charities should “spend no more than 35 percent of related contributions on fundraising. Related contributions include donations, legacies, and other gifts received as a result of fundraising efforts.”
Schuette noted that states are limited in their ability to pass laws to regulate professional fundraisers’ solicited contributions. States are also limited to passing laws that prohibit fraudulent fundraising practices and require reporting from charities and their professional fundraisers. Michigan law addresses both aspects.
Schuette added that examples of fraudulent fundraising practices prohibited by Michigan law include: (1) falsely telling a donor that he or she gave six months ago and it’s time to give again, or (2) falsely telling a donors that 90 percent of their donations go to the charity, when that is in fact not true.
Yearout said before Michigan residents donate to a charity, they should do some research first.
“You can also avoid this by donating directly to the charity instead of responding to an unsolicited phone call or a mailer. If you contact the charity directly and find out how to donate to them without using a middleman, it’s more likely that 100 percent of your donation will go toward the charitable cause,” she said.
For more on which charities are being hurt most by this practice, visit www.michigan.gov/AGCharitySearch.