General rule of thumb number 2: You never want Mike Wallace to show up at your door with a camera crew. Yes, I know he’s retired but just because someone is changing – or hoping to change – his employment status does not change the rule. Which leads me to general rule of thumb number 1: You never want to receive a letter, call or visit from Eliot Spitzer that indicates that there may be a problem with your policies and procedures. One of the Attorney General’s pet peeves is non-profits that don’t have ethical standards when it comes to their fundraising.
Just look at his website – http://www.oag.ny.us – and click on “Charities” under “Ensuring the Integrity of Public Institutions.” It’s first on the list. And the list is not in alphabetical order. “Charities” comes before “Broker-Dealers, Advisers, Investors and Securities,” “Franchise and Business Opportunities,” “Lawyer’s Page,” “Opinions of the Attorney General,” “Real Estate,” and “Telecommunications & Energy.” The man takes charities seriously. And you should take him seriously as well.
If you have not reviewed the website, review it! Scroll down and before you spend money on fundraisers, spend time reading the reports under “Pennies for Charities.” Here’s how it works:
You are a charity. You have thousands of donors. For sake of argument, 5% have not made a donation this year. The campaign is coming to an end. You do not want to lose them so you hire a fundraising telemarketing firm to solicit them. They have 500 donors to contact. They do an excellent job and reach 400, obtaining contributions from 350. Well done. Congratulations! Problem is that you are paying them either a flat fee per call, or a flat fee per donation received, or a flat fee per hour and mathematically that means that since these are probably relatively small gifts, the telemarketer keeps the lion’s share. Here’s what the AG reported in 2005:
“A total of $170.6 million was raised on behalf of 440 charities in 2004 by the 555 telemarketing campaigns covered in this report. The $170.6 million includes funds raised in New York and other states during telemarketing campaigns on behalf of charitable organizations registered to solicit contributions in New York. Charities retained $63.5 million, or 37.24 percent, of the funds raised by telemarketers registered to solicit contributions in New York in 2004. While some charities received more, many received less that 37.24 percent, and some received nothing at all. The remainder – $107.1 million – was paid to fundraisers for fees and/or used to cover the costs of conducting the campaigns.”
From the perspective of the charity the situation is like this. We raise millions. The telemarketing campaign is only a small percentage of funds received. We don’t want to lose these donors. So while we may actually only be bringing in a few pennies on the dollar, as part of the overall campaign, this is insignificant. Our overall fundraising costs are still well below the 35% that the Better Business Bureau says is the maximum that a charity should spend on its fundraising efforts. In fact, this is not really fundraising; it’s more like PR.
As far as it goes, the charity is correct. So how do you make certain there is no issue with the AG. Have the telemarketer say the following: Good evening Mrs. Smith. I’m calling on behalf of the XYZ Fund. We want to thank you for your past support. Last year you were kind enough to donate $15.00. Can we put you down for an $18.00 donation this year, with $15.00 going to pay my expenses as a telemarketer and $3.00 going to the Fund?
Full disclosure is what is required. Read the report. The African Wildlife Foundation received –40.20% of the money it raised from one of its campaigns. (In other words, it cost them $1.40 to raise $1.00!) On the other hand, the Association of Graduates of the US Military Academy received 93.70% of their telemarketing efforts. (They paid six cents for every dollar raised!) If your campaign is closer to Africa than West Point, don’t do it. After all, is it really worth it if donors find out what you actually did with their money?
This does not mean that you should not engage professional fundraising services if you cannot afford to have your own development office, or if you need to supplement their activities. Just make certain that whomever you hire is properly registered with the Charities Bureau of the Attorney General’s office. There are four types of professional fundraisers:
A “Professional Fund Raiser” (PFR) is someone who is contracted to plan or run a fundraising campaign, solicit potential donors, or advertise goods or services for the benefit of a charity. A “Professional Solicitor” (PS) is employed by a PFR to solicit donations. A “Fund Raising Counsel” (FRC) is contracted to plan or run a fundraising campaign but does not solicit funds and does not have any access to funds received. Finally, there is the “Commercial Co-Venturer” (CCV) which is defined as, “Any person who for profit is regularly and primarily engaged in trade or commerce other than in connection with the raising of funds or any other thing of value for a charitable organization and who advertises that the purchase or use of goods, services, entertainment, or any other thing of value will benefit a charitable organization.” While a PS, FRC and CCV must be registered with the Charities Bureau, a PFR must also be bonded. It is the responsibility of the charity to make certain that any professional fundraiser hired is registered, and the responsibility of the professional fundraiser to file copies of any contracts/reports with the Bureau.
The exact requirements can be found in form CHAR009 (www.oag.state.ny.us/charities/ forms/char009.pdf). Simply stated, a charity that requires someone to advise them on its fundraising activities, write grants, plan special events, etc., only requires a Fund Raising Counsel. If, however, the charity needs someone to actually ask for donations, collect monies and issue receipts, it would then have to hire a Professional Fund Raiser.
Paid staff, volunteers and board members are not required to be registered or bonded if involved with fundraising activities. The best telemarketers are in fact those same volunteers and board members because they are motivated by passion, while some telemarketers are apparently only motivated by profit.