Paid Charitable Solicitors in 3 States Take 60% or More of Donations They Collect, Say New Reports

Telemarketers and other paid solicitation companies take more than 60 cents of every dollar they raise for charity in Vermont, Washington, and California, according to new studies.

* In Vermont, the Attorney General said that over the past five years charities received only 29.4 per cent of the $4.6-million raised in their name by commercial solicitors operating in the state; the solicitors kept the rest.

* In Washington, paid solicitors last year turned over to charities an average of 33 per cent of what they raised on their behalf, a study by the Secretary of State’s office found.

* In California, the Attorney General has found that charities generally receive only about one-third of the contributions that paid solicitors raise in their name.

Each of the states that issued the studies require commercial fund-raising companies to submit copies of their contracts with individual charities and disclose how much they raise in each charity campaign and how much of the proceeds are handed over to the charity client.

There are no state or federal minimums for how much professional solicitors must pass to charities. And federal court rulings have held that it is unconstitutional to require the companies to disclose to potential donors how much of their gift will actually go to charity.

As a result, donors are often unaware of how much of the gifts they make in response to telemarketing and other appeals is eaten up by solicitors’ fees. To combat that situation, regulators in numerous states have started to publicize how much of the money raised by professional solicitation companies actually goes to charity. Regulators hope the information will encourage consumers to maintain a healthy degree of skepticism when they are solicited and to learn to ask questions before giving.

Elliot Berg, Vermont’s assistant Attorney General, said that his office was drafting rules to require that paid solicitors disclose more information than they are now providing under current law. For example, he said, state officials are considering requiring that telemarketers and other paid solicitors stipulate in their reports how much money each one raises from Vermont residents. Currently, he noted, many of the reports lump calls to several states together in reporting fund-raising returns; that forces the Attorney General’s office to estimate how much paid solicitors actually raise from Vermonters.

In Vermont, where 448 individual campaigns were analyzed, professional solicitors kept from 61 to 80 per cent of the proceeds in more than a third of the campaigns. In another 132 campaigns, professional solicitors retained more than 80 per cent of the contributions that donors intended for use by a charitable organization.

In Washington, 70 solicitation companies raised more than $126-million last year, and $41-million was ultimately received by the companies’ charity clients. More than a third of the companies gave charitable organizations 20 per cent or less of the money raised on their behalf. Five of those companies gave charities 10 per cent or less.

In California, paid solicitors raised nearly $193-million for charities last year from California residents, and $84-million, or 43.7 per cent, went to charities. That percentage is higher than in previous years, when charities ended up with about 33 per cent of the donations, but researchers were quick to point out that last year’s results were probably skewed by a small number of cases in which organizations got a higher-than-average return.

For a free copy of the Vermont report, “Where Have All the Dollars Gone?,” contact the Consumer Division, Attorney General’s Office, 109 State Street, Montpelier, Vt. 05609-1001; (802) 828-3171; fax (802) 828-2154.

For a news release on the Washington report, go to the Secretary of State’s Web site: http://www.wa.gov/sec/news/frnr98.htm. The release contains a hypertext link to more detailed information on all of the solicitation companies assessed in the study. For more information on the report, contact the Office of the Secretary of State, Charities Program, 505 East Union Avenue, P.O. Box 40234, Olympia, Wash. 98504-0234; (360) 753-0863 or (800) 332-4483 for in-state callers; e-mail charities@secstate.wa.gov.

A copy of the California report, “Attorney General’s Summary of Results of Charitable Solicitation By Commercial Fundraisers,” is posted on the Web site of the California Department of Justice: http://www.caag.state.ca.us/piu/97chartrust.htm. Free copies may also be obtained by contacting the Attorney General’s Office, Public Inquiry Unit, 1300 I Street, Suite 125, P.O. Box 944277, Sacramento, Cal. 94244-2550; (916) 322-3360 or (800) 952-5225 for in-state callers.