Telemarketer’s Charity Tactics Deceive Donors, Bloomberg Markets Alleges

Many big U.S. nonprofits have signed telemarketing contracts that condone deceptive fundraising language and often reap far more money for the company than for the charity, according to a report in the October issue of Bloomberg Markets. Both the American Cancer Society and the American Diabetes Association, for example, approved scripts with the telemarketing firm InfoCision Management that instruct paid solicitors to tell donors that at least 70 percent of the money raised will be used for charitable purposes. But InfoCision and other telemarketers often keep more than three-quarters of the money raised—and in some cases, the charity loses money.

In 2010, InfoCision pocketed all of the $5.3-million it raised as part of an agreement with the American Cancer Society, according to the charity’s filings with the Internal Revenue Service and the State of Maine. The charity also paid $113,006 in fees.

Greg Donaldson, a senior vice president at the cancer society, told Bloomberg Markets that charities consider telemarketing arrangements to be long-term investments. “It’s certainly not inconsistent for organizations like ours to invest in some loss-leader strategies, to engage people in long-term meaningful relationships,” he says.

The magazine also faults InfoCision and nonprofits for instructing paid solicitors to tell donors they are charity volunteers.

The Ohio Attorney General’s office, after hearing recordings of phone calls by InfoCision employees, negotiated a settlement this year with the company. InfoCision denies any wrongdoing, but it agreed to pay $75,000 to settle the case and promised not mislead future donors.

Go to: bloomberg.com/markets-magazine.