Top state officials are warning kind-hearted Washingtonians this holiday season not to contribute to corporate greed by giving to fundraising organizations that take too big a cut.
About a quarter of commercial fundraisers returned less than 20 percent of money raised through telemarketing and direct mailing to the charities that hired them in the past year, according a report released by the offices of the secretary of state and attorney general.
“While most of these commercial fundraisers help keep many crucial charities afloat in Washington, some wind up using the bulk of donations to pay for administrative costs and expenses – or to make a hefty profit,” Secretary of State Sam Reed said.
The charities using paid fundraisers range from police, firefighter and veteran organizations to medical research, environmental and civil rights groups.
The commercial fundraiser typically takes a cut of the donations or charges a fee for services before sending the money on to the charity.
What causes the state officials concern is the wide variety of costs incurred by the nonprofit charities that hire for-profit fundraisers.
The report, “2010 Commercial Fundraiser Activity Report,” can be found on the secretary of state’s website. It lists the 653 charities that paid 107 corporations to raise more than $1.4 billion in Washington.
On average, 77 percent of contributions were passed along to charity clients. That’s a significant increase over historic rates of return.
The highest percent of return was 98 percent, and the lowest was minus-122 percent, meaning the charity lost money on the deal.
Among the fundraisers that give less than 20 percent of money raised to the client charity are numerous organizations claiming to represent veteran, firefighting or law enforcement causes.
Neither the Spokane Police Guild nor the Spokane County Deputy Sheriff’s Association is connected to those campaigns, union representatives said. The Washington State Council of Firefighters ceased fundraising activity in 2008.
While the report lists many reputable nonprofit organizations that use commercial fundraisers, it does not indicate what part of their total fundraising efforts can be attributed to this commercial fundraising.
For example, the report notes that Aria Communications Corp., a St. Cloud, Minn., telemarketer, forwarded 50 percent of the $552,000 it raised in Washington last year to its nonprofit clients.
But money raised by Aria was only a small fraction of the total donations received by two of those clients – the Washington State University Foundation and Friends of KSPS, the public television station run by Spokane Public Schools.
Friends of KSPS membership director Dawn Bayman said her organization only uses Aria to contact past donors who have not responded to direct-mail efforts. Funds raised by Aria represented about 3 percent of the nonprofit’s campaign last year.
“Telemarketing is the last-choice method,” Bayman said, adding that most Friends of KSPS contributions come through direct-mail or on-air pledge drives.
Aria’s efforts for WSU’s public radio and TV station amounted to just 0.04 percent of the WSU Foundation’s nearly $61 million campaign last year, said spokesman Trevor Durham.
The U.S. Supreme Court has ruled that states cannot require that a minimum percentage of money raised by commercial fundraisers go to the client charity.
“A high percentage to the fundraiser does not equate fraud,” said Rebecca Sherrell, charities program manager for the secretary of state’s office. “From the charities’ perspective, they may be happy to get 20 percent because it’s 20 percent they wouldn’t have.”
Attorney General Rob McKenna said last week that solicitors who skirt state charity regulations will be held accountable.
“But donors themselves wield one of the most powerful weapons: education,” McKenna said. “By checking out charities and fundraisers, every one of us can help assure our money is used how we intended.”
The secretary of state’s office offers the “commercial fundraiser activity report” as a guide for donors based on the fundraiser’s previous financial activity.
“It’s our way of saying beware and ask questions,” Sherrell said.