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As Giving Tuesday, and closer to home, ROC the Day, draw closer, New York Attorney General Letitia James has released a new report that shows that nearly one-third of charitable donations ended up in the pockets of professional fundraisers, rather than the charities they were intended for.
“Every year, New Yorkers give generously to charity. Unfortunately, not all the money they donate reaches the charities they intend to help,” James said. “Today’s report highlights the high percentage of charitable dollars that are pocketed by outside fundraisers rather than reaching the charity itself. My office will continue to combat charity fraud, and I encourage all New Yorkers to follow our tips to ensure that their money is going to a reputable source this holiday season.”
Some 2 million New York taxpayers reported $42.5 billion in charitable giving in 2017, the most recent year available. This amount is up dramatically from $37 billion the previous year, the report notes.
Many charities use professional, for-profit fundraisers as outside contractors to educate donors about their mission and increase returns. Fundraisers can play a critical role in furthering a charity’s mission, and many belong to professional associations that require them to commit to a code of ethics.
These fundraisers’ campaigns in New York are the focus of the Pennies for Charity report. In recent years, Pennies for Charity has documented a steady improvement in the percentage of funds charities receive from campaigns conducted by professional fundraisers.
New York has a robust charitable sector, supported by generous giving by its residents. In 2019, more than $1.2 billion was raised in New York state through 824 fundraising campaigns conducted by professional fundraisers on behalf of charities. These campaigns, which are the focus of the report, used a range of methods including special events, direct mail and telemarketing.
Though many fundraisers’ diligence and expertise help charities achieve their goals, some collect fees so large that charities receive only a small fraction of the total money donated. Some fundraisers also partner with sham charities to give potential donors misleading information.
This past year, Operation Bottomfeeder, an enforcement initiative of the Office of the New York State Attorney General, shut down several fraudulent fundraisers and the charities that hired them
Of the more than $1.2 billion raised in New York, charities netted more than $918 million, or 72 percent of the proceeds, while professional fundraisers’ fees and expenses totaled $364 million, or 28 percent. This is in line with an overall improvement in amounts retained by charities, which the report attributes to a variety of factors including enforcement and donor education efforts by the Charities Bureau.
The report also analyzed current fundraising trends, such as the rise in online giving. Telemarketing, while continuing to decline as a fundraising method, remained among the costliest mechanisms, with 196 telemarketing campaigns by fundraisers retaining more than 50 percent of funds raised for charities.
Other significant findings from analyzing the 824 fundraising campaigns covered by this report include:
• In 254 campaigns, or roughly 31 percent of the campaigns covered in the report, fundraisers retained more than 50 percent of the funds raised.
• In 144 campaigns, or 17 percent, fundraising expenses exceeded charitable revenue. In 2019, this loss to charities totaled more than $17 million.
• Of the $481.8 million raised by professional fundraisers through telemarketing, charities kept $189.6 million, while the fundraisers netted $242.2 million.
The attorney general’s office suggests that donors take time to research a charity before giving and to know where the money is going. Additionally, donors should be wary of deceptive tactics and emotional appeals and never to disclose personal information.
More information about the Attorney General’s Charities Bureau and organizations regulated by the Bureau may be found at www.charitiesnys.com/.
[email protected] / 585-653-4021
Follow Velvet Spicer on Twitter: @Velvet_Spicer
