Professional solicitors not always best choice for nonprofits
The American Society for the Prevention of Cruelty to Animals lost $1.9 million on a fundraiser, enough money to feed 68,078 abandoned cats or dogs for three weeks, officials say.
Getting little cash or even losing money on a fund drive is not unusual for charities. Professional solicitors — telemarketers and firms that take donated cars or run mail campaigns — returned an average of just 45 cents of every $1 raised to charities that hired them, according to the Pennsylvania Department of State’s 2011 annual report.
The Harrisburg-based Pennsylvania Association of Nonprofit Organizations recommends that fundraising costs not exceed one-third of total dollars raised over five years.
“The best things a donor can do is hang up the phone and not give to the middleman,” said Sandra Miniutti, spokeswoman for Charity Navigator, a nonprofit watchdog group in Glen Rock, N.J. “It’s important to check the charity out and then give directly if it is a charity you want to support.”
Consumers should ask telemarketers how much money actually goes to the charity. The telemarketer is required to disclose that information, she said. Some charities negotiate contracts with telemarketers that give them literally pennies on the dollar, she said.
Sometimes they get even less.
A Tribune-Review analysis of 587 campaigns professional fundraisers conducted between Sept. 11, 2010, and Sept. 10, 2011, found that 78 lost money and 24 broke even. The figures in the state report include money fund drives raised for charities nationally, not just in Pennsylvania, but don’t include money raised by nonprofits’ staffs and volunteers.
By state law, charities that solicit contributions must register with the Department of State, as must firms that raise money for them. The state requires solicitors to file financial reports for each campaign conducted in Pennsylvania.
Charitable organizations and soliciting agencies caution that those figures may not tell the whole story. Some campaigns are an investment that yield long term results.
The ASPCA fundraiser that Boston-based Grassroots Campaigns Inc. conducted lost more money than any campaign mentioned in the 2011 report, which the department’s Bureau of Charitable Organizations compiles.
Wes Jones, national canvass director for Grassroots Campaigns, stated in an e-mail that the ASPCA outreach campaign brought the organization “a huge amount of visibility” and new supporters “and their contributions over the next few years will substantially exceed the cost of the effort. The state report fails to recognize the benefits that are captured over time.”
ASPCA spokeswoman Alison Jimenez criticizedthe state report in an email, contending it gives an “inaccurate perception to the casual reader.”
She said Grassroots Campaigns’ work involved meetings with potential donors. The animal rescue group spent $3,486,263 on a project that collected $1,580,078. That’s a loss of $1,906,185.
“The ASPCA’s financial return is significantly better than what is portrayed in the report, because the organization measures its success over a long time span than just the calendar year snapshot provided by the Pennsylvania (Department of State),” she wrote.
Department spokesman Matthew Keeler said the report must be done each year and may contain information about ongoing contracts.
“It could require a number of reports put together to get the full picture of a charity’s gains and losses,” he said.
The state report provides useful information for consumers, but people should consider other factors, said Helene Conway-Long, a board member of the Association of Fundraising Professionals, Western Pennsylvania. Other factors include a charity’s total fundraising, not just projects the report cites, and a group’s mission, programs and impact.
The Bureau of Charitable Organizations reviews contracts between charities and firms that solicit money but does not mandate that solicitors give charities a certain amount.
“They enter into these contracts with professional fundraisers all on their own, knowing they get a promise of how much they get,” said Michael Patterson, director of the state bureau. “Personally, I think it’s a crime that they charge that much,” though he said it is not a crime under the law.
“It’s a very high amount,” Patterson said. “Most of these charities that contract with them do not have the ability or resources to run a telemarketing operation. They hire people, get scripts and call and manage a whole campaign. It’s expensive to do.”
Among causes that tended to get the lowest returns were those for firefighters, police and the military or veterans.
The Pennsylvania Professional Firefighters Association, a Harrisburg-based group that represents more than 10,000 firefighters in the state, hires Xentel to raise money. The Fort Lauderdale, Fla.-based company collected $560,884, and forwarded $85,741 to the firefighters group — nearly 16 cents on the dollar.
“Everybody would like to see more money. My understanding is that’s the industry standard,” said Art Martynuska, president of the firefighters group. The money provides disaster relief for firefighters, a summer camp for burned children and scholarships for children of fallen firefighters.
Patterson noted that many of Pennsylvania’s 2,400 fire departments cover small, rural areas.
“The potential there is not very high,” he said.
Amnesty International of the USA lost an average of 4 cents for every dollar that seven companies raised last fiscal year. Grassroots Campaigns ran the organization’s biggest money loser, in which its expenses exceeded gifts by $286,682.
“All our fundraising strategies yield revenue in the short- or long-term,” said Amnesty International spokeswoman Gwen Fitzgerald. “They also raise visibility of the organization and educate current and potential supporters about our human rights initiatives and advancements.”
The American Civil Liberties Union fared better, receiving an average of 22 cents on the dollar from six campaigns. A Grassroots Campaigns fund drive lost $259,630.
Mark Wier, chief development officer for the ACLU, called the campaigns a “worthwhile investment” because they educate people about its programs.
“Many of these people go on to become long-time donors, so how much we actually receive cannot be measured in one calendar year,” he said.
Tea Party Patriots, the national group that wants to restore fiscal responsibility in Washington, received $27,856 from an MDS Communications campaign that raised $896,500. That’s 3 cents for every dollar donated.
Richard Norman of Leesburg, Va., the national finance director for the Tea Party Patriots, said the campaign was an acquisition program to find potential donors who never contributed before. They went into the organization’s donor base and generated more than a million dollars in net revenue for the Tea Party Patriots, he said.
“Normally, these programs generate no net income at all,” Norman said. “This program not only covered all its costs but generated revenue.”
Local track records
Nonprofits in Western Pennsylvania tended to get more from campaigns, averaging 67 cents on the dollar.
The charity that got the biggest bang for its buck was Greater Canonsburg Library Association. Stabile Communications, based in Canonsburg, raised nearly $4.3 million, giving 96 percent toward a library.
Ila Stabile, president of the firm and a Canonsburg resident, said she charged about half her hourly rate for the cause and capped the hours she charged at 20 a week even if she worked 30 or 40.
She used a committee with strong ties to potential donors and offered plenty of naming opportunities. Frank Sarris, owner of Sarris Candies, gave $2.5 million toward the Frank Sarris Public Library that opened in June.
Pittsburgh Downtown Partnership spent $132,400 to supplement money that IGH Associates raised for Light Up Night. Jeremy Waldrup, president and CEO of the Partnership, said his group traditionally hires a firm to get corporate sponsorships for the event and covers the difference.
“We don’t see it as fundraiser for the Partnership,” he said. “We basically see this as a half-million-dollar marketing campaign for Downtown Pittsburgh.”
Iowa-based RuffaloCODY raised $1,496,331 for The Foundation for Indiana University of Pennsylvania and gave the foundation $523,055, or 35 cents on the dollar.
Bill Speidel, the foundation’s associate vice president of development, said the return satisfied him because the campaign targeted alumni. Most had not contributed to the university and may have attended IUP in the 1960s when it received 70 percent of its money from the state, he said. Now the school gets about 30 percent from the state.
“We’re having to teach them the importance of a private gift to public institutions because we have to overcome the misconception of the commonwealth providing all the support we need,” Speidel said.