Secretary of State report: Be wary when donating to charity

Commercial fundraisers hold onto much of it in some cases

By Scott Hewitt, Columbian social issues & neighborhoods reporter



Fundraising laws

By Washington State law, a fundraiser who calls you MUST:

State their name;

State the name of the charitable organization and its principal place of business;

State the name of the commercial fundraiser, if any, that employs the solicitor;

Disclose the true nature of the organization’s relationship to the government, if it is associated with or has a name similar to a government organization;

Upon request, state the toll free number of the secretary of state’s charities hotline: 1-800-332-4483.

... and must NOT:

Make false, deceptive or misleading representation;

State or imply that the contribution is tax-deductible unless the charity has filed with the secretary of state its letter from the Internal Revenue Service granting tax-deductible status;

Use the name “police,” “sheriff,” “firefighter” or similar names unless authorized;

Harass, intimidate or torment;

Claim the tickets to an event will be donated unless the fundraiser has obtained a letter from those persons stating they will accept the tickets and the number they will accept;

Call before 8 a.m. or after 9 p.m.

If you think you have been the victim of charity fraud, call the Attorney General Consumer Resource Center at 1-800-551-4636.

When a professional fundraiser calls you to plead for money for a good cause, how much of your charitable contribution really goes to that cause? And how much stays in the pocket of the intermediary who’s getting paid to beg?

A new report from the Washington Secretary of State underlines that most commercial fundraisers forward most of their revenues along to the charities they’re helping — but individual donors would be well-advised to double-check exactly who’s asking for those donations, and where the money goes.

Commercial fundraisers brought in a total of $773,204,935 in the last fiscal year, according to the report; of that amount, $433,824,519 went to charity. That’s 56 percent. It’s a sharp drop from 77 percent, the previous year’s average — but a little more than the historical average during the last decade.

The real percentages returned to charities by commercial fundraisers are all over the map — but it’s clear that many fundraisers keep a lot more than donors realize. There are 117 commercial fundraisers registered in Washington State; 46 of them kept more than 80 percent of what they raised. Only 10 commercial fundraisers passed along more than 80 percent of their earnings to their charity clients.

“It’s important for the public to remember that when someone asks you for a donation, there’s a chance it’s a third party getting paid to make that solicitation,” said Secretary of State Sam Reed. While most of those commercial fundraisers help crucial charities survive, he said, “some wind up using the bulk of donations to pay for administrative costs and expenses — or to make a hefty profit.”

“Commercial fundraisers make money by raising money,” said Attorney General Rob McKenna. “The best way to maximize your contributions is to contact charitable organizations in your community and ask how they spend donations. Don’t be afraid to ask how much of your donation will go to the charitable purpose.”

Reed and McKenna released the 2011 Commercial Fundraiser Activity Report on Thursday at a senior center in Seattle. The report is meant to be a tool that citizens can use to avoid greedy fundraising organizations as they consider making charitable gifts. Take a look at the report at Commercial Fundraiser Activity Report. You can also get up-to-date financial information about charities and commercial fundraisers by calling 1-800-332-4483.

There’s a Give, But Give Wisely brochure. It points out the legal obligations and restrictions any commercial fundraiser must obey — including always identifying themselves as commercial fundraisers.

“We want donors to know which commercial fundraising groups have a bad track record when it comes to passing on donated money to the intended charities,” said Reed.

According to the report, the struggling nonprofit Vancouver Symphony Orchestra did business with a company formally called American Donation Organization but better known as Action Donation Services.

Action Donation Services is in the growing used-car-donation business — collecting your old clunker, selling it for scrap and giving a percentage to the charity of your choice — but it gave just 34 percent of its takings to charity clients. Those included the Vancouver Symphony, the American Red Cross of Southwest Washington and Ronald McDonald House charities throughout the region.

Symphony board chairwoman Kathy McDonald said the arrangement, suggested by a volunteer, seemed like a great deal at first but turned out not to be particularly beneficial. The Symphony no longer does business with Action Donation Services, she said.

Beware nice names

According to the report, the commercial fundraising firm that returned the greatest percentage of its earnings to Washington State charities was Lewis Advertising Company, or Lewis Direct. Based in Baltimore, Md., Lewis raised money for Guide Dogs for the Blind, among others, and gave 99 percent of what it raised to its clients.

Coinstar, based in Bellevue, came in next at 93 percent. Coinstar makes machines that converts coins to cash; they are found in many grocery stores. Umanity Inc., based in Kirkland, gave 82 percent of its earnings to charities like the Museum of Glass, the University of Washington Foundation and Boys & Girls Clubs of King County.

Close to the middle of the pack is InfoCision Management Corporation, which raises money for dozens of well-known national groups — from the American Diabetes Association to the United States Fund for UNICEF — and gave 60 percent of what it raises to its charity clients. Aria Communications Corporation gave 57 percent to groups like the Washington State University Foundation and the Central Washington University Foundation. Telefund Inc., based in Boston, gave 52 percent to groups like the American Association of University Women.

Below 50 percent, there’s the Heritage Company of Sherwood, Arizona. The Heritage Company does business under as many as 10 different names, and it gave 48 percent of its earnings to charities including Special Olympics Washington.

If you gave to the United Gospel Mission of Yakima or the Tri-City Union Gospel Mission through a fundraiser called the Russ Reid Company, be aware that just 44 percent of Russ Reid’s earnings actually went to charity.

It’s wise to watch out for sympathetic-sounding fundraiser names, according to the state’s “Give, But Give Wisely” brochure. The report bears this out. Commercial outfits that gave 20 percent or less of what they took in to charity clients included Charity Funding, Inc., Donor Care Center Inc., Community Services of Washington and Preferred Community Services, Inc.

The Crystal Marketing Group of Portland gave just 20 percent of what it raised to its two clients, the Childhood Leukemia Foundation and the Defeat Diabetes Foundation.

Law enforcement

Clustered at the bottom of the list — the commercial fundraisers that kept the most and passed along the least of what they raised — are impressively named groups purporting to benefit military veterans, police and firefighters.

Corporations for Character supported the Fraternal Order of Police/Washington State Lodge and the Washington State Fraternal Order of Police Memorial Foundation, with just 33 percent of what it took in.

Safety Services LLC gave 16 percent of what it raised to the Washington State Law Enforcement Association and the Washington State Firefighters Training and Education Fund; Community Welfare Services gave 15 percent of what it took in to the Washington State Fraternal Order of Police Memorial Foundation; and Public Awareness, Inc., gave just 10 percent to the Firefighters Charitable Foundation and the International Union of Police Associations, AFL-CIO.