NY AG Issues Warning, Report About Charitable Giving

On #GivingTuesday, New York Attorney General Eric T. Schneiderman released his annual “Pennies for Charity: Where Your Money Goes; Fundraising by Professional Fundraisers” report. It found that more than one-third of charitable donations ended up in the pockets of the professional fundraisers last year.

New York has a robust charitable sector, supported by generous giving by residents, Schneiderman said in announcing the release of the report.

“New Yorkers, who always give generously to charity, should know how their charitable dollars are being spent,” 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.”

The Office of the Attorney General actively investigates suspect fundraising practices. The ongoing effort is called Operation Bottomfeeder.

In 2015, Schneiderman secured a $100,000 penalty against the founder of the National Vietnam Veterans Foundation and barred him from ever again serving as a director, officer, or trustee of any non-profit or charitable organization after finding that nearly 90 percent of revenue was spent on fundraisers and supporting his lavish lifestyle. The AG's Office shut down another fraudulent veterans "charity" this year.

The Attorney General, 49 other states, and the Federal Trade Commission secured a $75 million settlement ($3 million of which came to New York) against two affiliated sham cancer charities, and forced the dissolution of two other affiliates, which allocated only 3 percent of proceeds for their purported charitable purposes. The president was banned from profiting from any charity fundraising in the future.

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, according to the AG's Office.

According to the report, 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.

The report and the searchable Pennies for Charity database containing the data underlying it are posted at www.CharitiesNYS.com.

The AG's researchers found that of the more than $1.2 billion raised through campaigns conducted by professional fundraisers, charities netted over $822 million, or 67 percent of the proceeds, while professional fundraisers’ fees and expenses totaled $403 million, or 33 percent.

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

• In 374 campaigns, or approximately 37 percent of those covered in the report, fundraisers retained more than 50 percent of the funds raised, with 49 percent 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 percent, fundraising expenses exceeded revenue by more than $9 million.

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 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.
  
  

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.

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 percent of funds raised for charities via telemarketing.

What's the methodology? "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, Schneiderman said. 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.

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

SEE ALSO:

• New York's Attorney General Calls 4 Cancer Charities Phony
• Beware Fake Charities About Hurricane Harvey
• Another Deceptive Veterans' Charity Dissolved: NY AG

Image: “Pennies for Charity: Where Your Money Goes; Fundraising by Professional Fundraisers” report/ NY AG's Office