Fund-Raising Companies Keep the Majority of Donations, Say Three New Studies

Professional solicitors hired to raise money on behalf of charities keep a hefty portion of the donations for themselves, according to three new reports from officials in California, Massachusetts, and New York.

In two of the states, the average share kept by the fund-raising companies to cover their own fees and expenses grew from 2006 to 2007 — from 56 percent to 65 percent in Massachusetts, and in New York, from nearly 59 percent to 61 percent.

In California, where data were collected for 2005, and then again for 2007, the average share kept by the solicitors had dropped from 64 percent in 2005 to 56 percent two years later.

Regulators Concerned

The latest reports are among the annual accounts published by a number of states based on financial data filed by professional solicitors registered to raise money in those states. The solicitors run fund-raising campaigns or collect contributions on behalf of charities and receive a portion of the donations or a flat fee for their services.

State charity regulators have long expressed concerns about such arrangements, particularly where for-profit businesses promise to help charities raise money, but, after their own expenses and fees are covered, the nonprofit groups end up keeping very little of the money raised.

The numbers in the state reports are averages, and don’t necessarily reflect the experience of every fund-raising company and charity.

Of the 621 solicitation campaigns reported for 2007 in Massachusetts, 18 percent, or 109 campaigns, resulted in the charity’s receiving less than 10 percent of the gross revenue. At the same time, though, in about the same number of cases — 113 — the campaigns resulted in the charity’s receiving 50 percent or more of the gross revenue.

In California, where, on average, less than 44 percent of the $370-million in total donations collected in 2007 made it to charity, the state report included examples of more lucrative campaigns for some nonprofit groups.

A commercial company raised $15.9-million for the March of Dimes Foundation, which received $11-million, or 70 percent of the money. In another case, the Alzheimer’s Association received nearly $874,000, or 72 percent, of a $1.2-million campaign.

California’s full report on charitable solicitations by professional fund-raising companies is available online.

The Massachusetts report can be viewed here. And New York’s “Pennies for Charities: Where Your Money Goes. Telemarketing by Professional Fund Raisers” can be found here.