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A.G. Schneiderman Report Finds Professional Fundraisers Overall Retain More Than One-Third Of Charitable Campaign Donations; Some Retain More Than Half

This Year’s "Pennies for Charity" Report – Released On Giving Tuesday – Details Costs Of Fundraising Campaigns Conducted By Professional Fundraisers

A.G. Also Offers Key Tips For Donors

Schneiderman: Be Careful With Your Charitable Giving; Not All Fundraisers Are Created Equal

NEW YORK – Attorney General Eric T. Schneiderman released his annual “Pennies for Charity: Where Your Money Goes; Fundraising by Professional Fundraisers” report, which found that more than one-third of charitable donations ended up in the pockets of the professional fundraisers.

This year’s report looks at trends in fundraising as well as the percentage of funds raised that went to charities. The report found that online methods are rising, while traditional methods like direct mail are gradually declining.

New York has a robust charitable sector, supported by generous giving by New Yorkers. In 2016, more than $1.2 billion was raised in New York State through 987 fundraising campaigns conducted by professional fundraisers on behalf of charities that used a range of methods including special events, direct mail and telemarketing. These campaigns are the focus of this report. The report and the searchable Pennies for Charity database containing the data underlying it is posted at www.CharitiesNYS.com.

Of the more than $1.2 billion raised through campaigns conducted by professional fundraisers, charities netted over $822 million, or 67% of the proceeds, while professional fundraisers’ fees and expenses totaled $403 million, or 33%.

“New Yorkers, who always give generously to charity, should know how their charitable dollars are being spent,” Attorney General Schneiderman said. “Today’s report shines a light on the high percentage of charitable dollars that too often get pocketed by outside fundraisers. Our Charities Bureau will continue to hold unscrupulous or fraudulent fundraisers accountable.”

This year’s report also looked at recent trends and changes to fundraising methods deployed by NY charities. According to the report, traditional methods such as direct mail and telemarketing have begun gradual declines. The number of campaigns using direct mail dropped from 635 in 2014 to 511 in 2016. The number of campaigns using telemarketing declined from 734 in 2014 to 628 in 2016.

Telemarketing remained among the costliest fundraising mechanisms, with fundraisers retaining on average 82 % of funds raised for charities via telemarketing.

"Pennies for Charity" aggregates information from fundraising reports filed with the Attorney General’s Charities Bureau for campaigns conducted by professional fundraisers on behalf of charities in the previous year. Professional fundraisers must register with the Office of the Attorney General and provide financial reports that break down the revenue raised and the expenses generated by the campaign.

Other significant findings from analyzing the 987 fundraising campaigns covered by this report include:

  • In 374 campaigns, or approximately 37% of those covered in the report, fundraisers retained more than 50% of the funds raised, with 49% or less going to the charity.
  • Charities retained $822 million overall of the funds solicited from the campaigns; fundraisers retained $403 million.
  • In 131 campaigns, or 13%, fundraising expenses exceeded revenue by more than $9 million.

The Office of the Attorney General actively investigates suspect fundraising practices. In the past year, the Charities Bureau’s Operation Bottomfeeder shut down the Breast Cancer Survivors Foundation, which the Attorney General found spent only 3.5% percent of the millions it raised on helping cancer patients and those at risk of breast cancer. The charity’s nearly $350,000 in assets will be directed to legitimate breast cancer organizations. Operation Bottomfeeder also shut down other charities using the same predatory business model, including the Association for Disabled Children and the National Children’s Leukemia Foundation.

To assist charities in navigating the world of professional fundraisers, the report includes Tips for Charities Hiring Fundraisers.

The report also includes Tips for Donors, including specific guidance for responding to phone, direct mail, or online solicitations. Key tips include:

  • Research the Charity.
    • Check out the charity’s website.
    • Consult the Attorney General’s Charities Bureau website to review an organization’s tax returns and its financial report.
    • Consult the Pennies for Charities database to see its fundraising costs and results.
    • Search the charity’s name on the internet for reports of possible scams or law enforcement actions and check the charity’s rating on watchdog sites like Charity Navigator (www.charitynavigator.org).
  • Never Donate by Cash Or Wire Transfer. It's best to donate by check or credit card.
  • Donate Via Secure Web Addresses: When donating online, make sure the website is secure: the web address should begin with “https.”
  • Resist Pressure To Give On The Spot. Consider making a plan for your charitable giving so you are not vulnerable to sudden pressure. If you receive a call from a telemarketer, do not feel pressured to give over the phone. You can ask to receive information about the cause and a solicitation by mail.
  • Ask How Your Donation Will Be Used. Ask specifically how the charity plans to use your donation, including the services and organizations your donation will support. Avoid charities that make emotional appeals and are vague in answering your questions.
  • Report Suspicious Organizations. If you believe an organization is misrepresenting its work, or that a scam is taking place, please contact the Attorney General’s Charities Bureau at charities.bureau@ag.ny.gov or (212) 416-8401.

A copy of today’s report can be accessed here.

Director of Registrations and Fundraising Sections Hanna Rubin authored this report, with the support of Charities Bureau Fundraising supervisor Siobhan Blank and Enforcement Co-Section Chief Yael Fuchs. James Sheehan is the Charities Bureau Chief and Karin Kunstler Goldman is the Deputy Bureau Chief. The Charities Bureau is part of the Social Justice Division, led by Executive Deputy Attorney General for Social Justice Alvin Bragg.

More information about the Attorney General’s Charities Bureau and organizations regulated by the Bureau may be found at www.CharitiesNYS.com.