Friday, July 11, 2008

Commercial Fund-Raises May Keep More Than Half the Money They Collect Ostensibly for Health-Related Charities

An article in the Los Angeles Times analyzed how much money a variety of charities, including some well-known health related charities, spend on commercial fund raising. In summary,

A Times investigation found hundreds of other examples of charities that pocketed just a sliver of what commercial fundraisers collected in their names. Some didn't get a dime or even lost money.

According to a comprehensive review of state records filed over a decade, the problem of paltry returns extends well beyond what has been reported in recent years among benevolent societies for police, firefighters and veterans. It affects charities large and small, well-known and obscure. It spans a range of causes, including child and animal welfare, health research and opposition to drunk driving.

In more than 5,800 campaigns on behalf of charities that were registered with the state attorney general from 1997 to 2006, the fundraisers reported taking in $2.6 billion. They kept nearly $1.4 billion -- about 54 cents of every dollar raised.

For-profit campaigns, which often employ telemarketing, mass mailings or one-time events, account for a small fraction of $223 billion in charitable giving each year in the United States. But they collect significant sums and help shape public perceptions of charities. Pairing computer-controlled dialing systems with low-wage workers, such firms can reach a large number of people in a short time.

The Times included a data-base which listed for each charity "all commercial fundraising campaigns reported to the state from 1997 through 2006, excluding those involving thrift store sales or vehicle donations. The data cover both California-specific efforts and national campaigns that included solicitations within California."

A few well-known national health care charities on the list received less than half the money their commercial fund-raising campaigns collected:

Note that many more received barely more than half. Many more obscure health related charities also received less, sometimes much less than half.

So, if you get annoyed by those telemarketers who call you to raise money for a health care charity (despite your listing on the national "do not call list"), you have reason to be. Donations to some health care not-for-profits mainly benefit the fund-raisers they hire, rather than the causes the ostensibly support.

Once again, this demonstrates that some health care organizations seem to do a better job enriching the well-connected than fulfilling their missions.


Anonymous said...

And it gets a lot worse. Big, well-established health organizations have their own "independent" charities to fundraise for them. They report proudly all kinds of cooked numbers on how little overhead (because unlike the LA Times articles the charities are not really at arms length) they have.

Except the health organizations that get the money from the charity hire the people that work at the charity ("no work" jobs on the hospital books but they work hard enough to bring home the money) so the charity can keep its admin low. All so well-meaning, sufficiently funded research can be even more sufficiently funded.

It seems to be very important in the US that charity does not go to people that actually need money.

Anonymous said...


Thanks for writing about this. I think as a nation, we are a generous people. How sad that not only are donors duped, but 'potential' beneficiaries are also short-changed . . . and no one seems to care.

I long ago withdrew my support for the American Diabetes Association. As you say, many such organizations are more concerned with enriching themselves than with fulfilling missions.


Anonymous said...

I have to wonder if this is just an extension of our academic system where we see money as a main driver over ethics. The July 10, WSJ highlights in As Textbooks Go "Custom," Students Pay. The jest of the article is many universities are now receiving royalties on books they have "customized," other wise generic texts, with the inclusion of staff writing or school history. These books often have "Do Not Resell" imprinted on the covers. Another apparent trick is to make a workbook a part of the text so as to make the book impossible to sell to a second student.

With undergraduates struggling with unbearable debt loads, and graduate school all but impossible, except for those who are willing to make a life long commitment to debt service, one has to wonder about the commitment of many institutions to educate. It is no wonder we see charities participating in these types of questionable fund raising activities when the students our universities graduate have already been through a gauntlet of questionable "fund raising" activities.

Steve Lucas