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NY AG Takes on For-Profit Telemarketers

Friday, December 21, 2012

Telephone buttons Telephone buttons (melloveschallah/flickr/CC-BY-2.0)

For-profit telemarketers are the real winners when people donate money to charities over the phone, according to the New York Attorney General's annual report on fundraising published Friday.

Professional fundraisers registered in the state made 61.5 cents for every charitable dollar they helped to raise in 2011, leaving the charities with less than 40 percent of the money.

For-profit fundraisers helped charities raise $240.6 million last year, but the charities took home only about $92.7 million, according to the report "Pennies for Charity, Where Your Money Goes: Telemarketing by Professional Fundraisers." The rest went to campaign costs. 

The Cancer Fund of America, for example, raised $119,179 with the help of McLean, Virginia-based "telesales company" Bee L.C., one of 602 fundraising entities examined in the Attorney General's report. 

The charity kept only $45,750 — or 38.35 percent — of that money, according to a closing statement filed by the fundraiser. Seven other charities that worked with Bee L.C. took home even lower percentages of donations in 2011. 

Reached by phone Friday, Bee L.C. managing director Reggie Gwira declined to comment on his company's fee structure.

At Brooklyn-based teleservices company DCM, Inc., the fees depend on the client, according to Vice President of Operations Matt Svigals. Some customers pay by the caller hour, whereas others will pay a premium for special services, like a blast of calls at the end of the year. 

On average, its clients — including the New York Philharmonic, Brooklyn Museum and Carnegie Hall — end up paying 15 to 30 percent of the charitable contributions to DCM, Svigals said.

A one-year snapshot like the attorney general's report could be deceiving, Svigals added, since longtime clients may pay as little as 5 percent one year, while paying much more the following year, depending on what services they purchased.

While the attorney general's report takes a hard line on unscrupulous for-profit fundraisers, it also calls on charities to make smarter decisions when hiring help and encourages New Yorkers to think twice before donating money over the phone. 

"During this season of giving when so many are still struggling to recover from Sandy, the generosity of donors must be protected," Schneiderman said in a statement. "With this report, New Yorkers will be equipped with important information to help them decide which charities to support and to help ensure their contributions further charitable programs and services."

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