How the Fund-Raising Companies Were Ranked

By HARVY LIPMAN

The Chronicle‘s analysis of the performance of commercial fund-raising companies

is based on financial reports the companies filed in nine states: California, Connecticut, Minnesota, New Hampshire, New York, North Carolina, Ohio, Pennsylvania, and Virginia.

Those states were the only ones able to provide computerized data on the fund raisers. The data provided by each state included, for each fund-raising campaign, the name of the commercial fund raiser, the name of the charity involved, the gross amount raised, the amount that the nonprofit organization received, and the percentage of the gross amount that was delivered to the charity.

The data show that the solicitation companies’ performance — defined as the percentage of the total amount of donations raised that went to the nonprofit group — was most affected by the size and type of their nonprofit clients.

Therefore, The Chronicle evaluated the commercial solicitors by assigning each campaign a standardized statistical “score” based on how it compared with other campaigns for similarly sized charities and for groups that engaged in similar types of activities.

The Chronicle then calculated the average of each fund raiser’s scores, resulting in the ranking. The list includes companies that conducted at least 10 campaigns and raised at least $2-million from 1995 to 1999. A score of 50 is average.

In the nine states, fund-raising companies that solicit the state’s residents for a charity campaign must include in their reports all money raised nationwide from that drive. As a result, solicitors sometimes file duplicate reports on national fund-raising campaigns with regulators in numerous states. The Chronicle removed those duplicate entries from the data. When conflicts arose between state data for the same fund-raising campaign, The Chronicle used the data that were most favorable to the fund-raising company.

For example, if a company reported to one state that a campaign had passed on 10 percent of the proceeds to charity, and told another state that that campaign had sent 15 percent to charity, The Chronicle used the 15 percent figure in its analysis.

The Chronicle used the annual revenue reported on a charity’s informational tax return to determine its size.

After discussions with several experts on fund raising, The Chronicle made other adjustments to the state-provided data. To account for the fact that many nonprofit groups run small campaigns to test the value of new lists of donors or send mailings that are mainly informational, and not designed to raise contributions, any campaign for a charity with annual revenue of more than $1-million that brought in less than $10,000 in donations was dropped from the analysis.

Similarly, all campaigns that resulted in no money going to the nonprofit group were also eliminated because many of these were campaigns designed to recapture donors who hadn’t given any money in four years or longer. In most cases, experts told The Chronicle, charities don’t expect to do more than break even on such campaigns.

The approach used in The Chronicle‘s statistical analysis was reviewed and approved by Mary L. Gautier, a senior research associate at Georgetown University’s Center for Applied Research in the Apostolate, in Washington.