March 19, 2015

NYAG Report Details How Money Given To Charities Is Allocated

By Marlene Koury

Last year, for‐profit telemarketers registered in New York reported raising more than $302 million for charity, a 20 percent increase over the previous year and the most ever reported in the history of the New York Attorney General’s annual report, Pennies for Charity.  This year’s report showed New York charities had an increase in how much money they kept from fundraising efforts compared to previous years.  But telemarketers who ran the campaigns still received the majority of the money — 52 percent of the hundreds of millions they helped raise for New York’s charitable groups.  The charities themselves received just 48 percent of that money.

The report shows telemarketing is an expensive method of raising funds for charity and suffers from significant limitations compared to other forms of fundraising.  The report highlighted various limitations, including:

  • Telemarketing encourages “me‐too” charities, which sound like respected and effective charities, but are much less effective.
  • The typically anonymous telephone interaction between telemarketer staff, often located at a remote call center, and the donor facilitates fraud and misrepresentation by a telemarketer.
  • Many charities need to monitor the fundraisers they engage and hold them accountable. There are a number of fundraisers with significant histories of violations that continue to secure fundraising contracts.

Despite its limitations, fundraising in New York is big business. New York’s nonprofit sector attracts tens of thousands of students and adults from around the nation and the world to work in the sector.  The report asserted that New York is the “Silicon Valley of not‐for‐profits—a source of job opportunities for New Yorkers, and innovation and positive social change worldwide.”   This bears out in the data:  as of 2010, over 18 percent of New York private sector employment was in not‐ for‐profits, employing more than 1.25 million people and paying more than $57 billion in wages.

Attorney General Eric Schneiderman’s office offered tips to avoid being scammed by telemarketers, such as researching groups before donating, giving to established charities, and avoiding giving cash.  Also important is transparency – knowing how your donated money is allocated.  Schneiderman said, for this reason alone, the annual report is important because “New Yorkers who are generous enough to donate their hard-earned money to charity deserve to know how that money is really spent, including how much is used to pay for-profit telemarketers.”

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