Attorney General James Report Finds That Professional Fundraisers Retain Nearly One-Third of Charitable Campaign Donations. Some Retain More Than Half.

New “Pennies for Charity” Report – Released Ahead of Giving Tuesday – Details Costs
of Fundraising Campaigns Conducted by Professional Fundraisers; In 2019,
Professional Fundraisers Pocketed Nearly $365 Million
 

Report Also Offers Key Tips for Donors: Be Careful with Charitable Giving;
Not All Fundraisers Are Created Equal

NEW YORK – In preparation for Giving Tuesday and the holiday season, Attorney General Letitia James today released the annual “Pennies for Charity: Fundraising by Professional Fundraisers” report, which found that nearly one-third of charitable donations ended up in the pockets of professional fundraisers. This year’s report looks at trends in fundraising, such as the rise of online giving, as well as the percentage of funds raised that went to charities.

“Every year, New Yorkers give generously to charity. Unfortunately, not all the money they donate reaches the charities they intend to help,” said Attorney General James. “Today’s report highlights the high percentage of charitable dollars that are pocketed by outside fundraisers rather than reaching the charity itself. My office will continue to combat charity fraud, and I encourage all New Yorkers to follow our tips to ensure that their money is going to a reputable source this holiday season.”

New York has a robust charitable sector, supported by generous giving by New Yorkers. In 2019, more than $1.2 billion was raised in New York state through 824 fundraising campaigns conducted by professional fundraisers on behalf of charities. These campaigns, which are the focus of the report, used a range of methods including special events, direct mail, and telemarketing. The report and the searchable Pennies for Charity database containing the underlying data is posted at www.CharitiesNYS.com

Of the more than $1.2 billion raised through campaigns conducted by professional fundraisers, charities netted more than $918 million, or 72 percent of the proceeds, while professional fundraisers’ fees and expenses totaled $364 million, or 28 percent. This is in line with an overall improvement in amounts retained by charities, which the report attributes to a variety of factors including enforcement and donor education efforts by the Charities Bureau. 

This year’s report also analyzed current fundraising trends, such as the rise in online giving. Telemarketing, while continuing to decline as a fundraising method, remained among the costliest mechanisms, with 196 telemarketing campaigns by fundraisers retaining more than 50 percent of funds raised for charities.  

“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. Professional fundraisers must register with the Office of the Attorney General (OAG) and provide financial reports that break down the revenue raised and the expenses generated by the campaign.   

Other significant findings from analyzing the 824 fundraising campaigns covered by this report include: 

  • In 254 campaigns, or approximately 31 percent of the campaigns covered in the report, fundraisers retained more than 50 percent of the funds raised.  
  • Charities retained $918 million overall of the funds solicited from the campaigns; fundraisers retained $364 million.  
  • In 144 campaigns (17 percent), fundraising expenses exceeded charitable revenue. In 2019, this loss to charities totaled more than $17 million.  

The OAG actively investigates suspect fundraising practices. 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: 

  • Take time to research the organization. Make sure you are familiar with the organization, its mission, and its effectiveness before giving. Always ask for information in writing — and be wary if an organization will not provide information about its charitable programs and finances upon request. Any legitimate organization will be happy to send you information.   
  • Consult charitiesnys.com to make sure that the organization is registered and to learn more about its mission and finances.  
  • Online platforms that host groups and individuals soliciting for causes do not vet those who use their service. Donors should find out whether a charity has authorized the campaign and if their contribution is tax deductible.  
  • 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 (charitynavigator.org).
  • Know where your money will go. Find out how the charity plans to use your donation, including the services and programs your donation will support. Avoid charities that make emotional appeals but are vague in answering your questions. If you have been contacted by a telemarketer, review the Pennies for Charity database to see how much is spent on fundraising costs and how much is kept by the charity. 
  • Don’t be pressured by telemarketers. If you receive a telephone call from someone asking you to contribute to a charity, you have the right to hang up. Often the caller is a professional fundraiser who is being paid to call you.  
  • If you choose to consider the caller’s request, ask how much of your donation will go to charity and if the telemarketer is being paid. Many telemarketing companies receive most of the money they raise. Be wary of claims such as “all proceeds will go to charity.” Telemarketers are required to identify themselves and their employer and tell you they are being paid to call you. They also must respond truthfully to your questions. Don’t fall for pressure tactics, such as repeated phone calls or threats. These are signs that the organization may not be legitimate. Always remember you have the right to say no to any charitable request.  
  • You can ask to receive information about the cause and a solicitation by mail.  
  • Consider making a plan for your charitable giving so you are not vulnerable to sudden pressure.  
  • Ask to be put on a “do not call” list. You have the right to request to be placed on the telemarketer’s “Do Not Call” list. It is not illegal for telemarketers for charities to call telephone numbers on the FTC’s Do Not Call Registry, but consumers can stop such calls by telling telemarketers not to call them on behalf of specific charities. Telemarketers are required to honor such requests. You may also ask a charity to take you off its solicitation list.
  • Be wary of deceptive tactics and emotional appeals. Watch out for charities with names that resemble those of prominent or established organizations — especially on days designated to charitable giving. Some charities do this in order to confuse donors. Be wary of emotional appeals that talk about problems, but are vague on how donations will be spent.  
  • Don’t disclose personal information. Never give your social security number or other personal information in response to a charitable solicitation. Never give out credit card information over the phone or to an organization you are not familiar with.  
  • If donating online or via text, donate securely. Always make sure that you are using secure methods of payment. When donating online, make sure the website is secure and includes “https://” in the web address. Before hitting send on a text donation, check the charity’s website or call the charity to make sure contributions by text message are authorized. Some text solicitations are scams. Also, remember that donating by text means the organization may not receive the funds until after your phone bill is paid; contributions made directly to a charity can reach them faster.  
  • Never give cash. Give your contribution by check made payable to the charity.   
  • To help in a disaster, give to organizations you know or that have experience in this work. Ask if the charity has already worked in the affected area or has relationships with local relief organizations.  
  • 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 bureau@ag.ny.gov or (212) 416-8401. 

Hanna Rubin, Director of Registrations and Fundraising Sections for the Attorney General’s Charities Bureau, authored this report, with the assistance of Charities Bureau Fundraising supervisor Siobhan Blank and Legal Department Document Specialist Rebecca Groves. Data analysis was provided by Deputy Research Director Megan Thorsfeldt and Data Analyst Anushua Choudhury. James Sheehan is the Charities Bureau Chief and Karin Kunstler Goldman is the Deputy Bureau Chief. The Charities Bureau is part of the Social Justice Division, led by Executive Deputy Attorney General for Social Justice Meghan Faux. 

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

Giving Tuesday Tips

#GivingTuesday refers to the Tuesday after Thanksgiving in the United States. It is a global generosity movement which seeks to unleash the power of people and organizations to transform their communities and the world.

NASCO encourages everyone to exercise caution when giving this #GivingTuesday because when charitable monies go to a scam artist, great organizations doing real good in the world miss out on those dollars. Once those dollars are lost to the scam artists the opportunity to help real people and causes are gone.

Please see the attached flyers from some of our State partners with some great tips for charitable giving.

https://www.nasconet.org/wp-content/uploads/2020/12/Consumer-Alert-Giving-Tuesday.pdf

West Virginia Attorney General Patrick Morrisey urged consumers to use caution in giving to charities in the wake of Hurricane Laura.

West Virginia Attorney General Patrick Morrisey urged consumers to use caution in giving to charities in the wake of Hurricane Laura.

“The damage brought by Hurricane Laura to the Gulf Coast is heartbreaking,” Attorney General Morrisey said. “West Virginians are generous people. I encourage those who wish to contribute to disaster relief to do so, but give wisely so that your generosity helps those in need.”

Because criminals will fraudulently solicit charitable donations, those who want to give to a charity or organization should confirm it is registered with the proper state government office. People can access that information through the West Virginia Secretary of State’s Office or by contacting state officials in Louisiana and Texas. 

Consumers also can research charities online via www.charitynavigator.org or www.guidestar.org.

Additional tips to keep in mind when giving to disaster relief organizations: 

  • Never feel pressured to donate immediately.
  • Be suspicious of charities that ask for donations in cash, gift cards or via wire transfer.
  • Consider paying by credit card, which is the safest option for security and tax purposes.
  • Ask how much of an individual donation directly supports hurricane relief.
  • If the charity is unfamiliar, gather as much information as possible about the organization.
  • Never rely on a group’s sympathetic sounding name or its similarity to a well-known, reputable entity.
  • Be wary of unsolicited calls that thank you for donations that you do not recall making.
  • Verify any local chapter is authorized to solicit funds on behalf of its parent organization.
  • Go directly to a charity or organization’s website instead of clicking on a link to the desired group.
  • Any online contribution website should start with https://. The “s” verifies a secure connection, making it less likely for personal information to be stolen.
  • Be wary of any charity refusing to detail its mission, use of donations or proof of tax deductibility.
  • Keep records, including a letter confirming the charitable status of the organization, for contributions in excess of $250.

Any West Virginian solicited to donate to a charity they think may be fraudulent can contact the Attorney General’s Consumer Protection Division at 1-800-368-8808, the Eastern Panhandle Consumer Protection Office in Martinsburg at 304-267-0239 or visit the office online at www.wvago.gov.

District of Columbia AG files lawsuit against the NRA Foundation and the NRA for misuse of charitable funds

District of Columbia Attorney General Karl A. Racine filed a lawsuit against the NRA Foundation and the National Rifle Association (NRA) for misusing charitable funds to support wasteful spending by the NRA and its executives. The lawsuit alleges that the NRA Foundation violated District laws by allowing charitable funds to be used for noncharitable purposes, failing to operate independently, and placing the NRA’s interests ahead of its own charitable purposes. OAG also alleges that the Foundation’s Board of Directors was controlled by the NRA and allowed the NRA to exploit it through risky multi-million-dollar loans—including a $5 million loan that the NRA has never repaid. Additionally, the Foundation allegedly agreed to pay the NRA millions of dollars in fees without documentation of the work the NRA was performing or how it supported the Foundation’s charitable purposes. With this lawsuit, OAG is seeking to return the charitable funds improperly wasted on the NRA to the Foundation and a court order imposing changes to the Foundation to ensure it is operated independently and fulfills its charitable purposes.

Minnesota Attorney General’s Office releases publication on charitable giving for those individuals who may be new to raising money for a cause they believe in.

What Individuals Need to Know When Raising Money for a Charitable Cause

https:///Consumer/Publications/RaisingMoney.asp

You Might Be a “Charity”—Yes, You!

Minnesotans are generous people during the best of times.  When faced with hardships like natural disasters, pandemics, or other emergencies, many step up that generosity even more by raising money to help people in need through giving platforms like GoFundMe, on social media, or through fundraising events.  You should know that raising money to help people comes with specific duties under the law that apply to everyone—not just nonprofits and charities.  They may even apply to you.

Some generous people raise money to help specific people facing hardships.  Raising money to benefit a specific individual, business, or family is not “charitable” under the law.  On the other hand, if you fundraise money or collect goods for a general charitable purpose to help the greater good—such as protective equipment for healthcare workers, food for families in need, or money to help communities rebuild and repair—that conduct comes with important duties and responsibilities under the law.

It is important to be aware of the important responsibilities that you have when others trust you with their charitable donations.  “Charitable” donations can be for a wide variety of causes, including social services, education, the public interest, or the arts.  You don’t need to be a 501(c)(3), a nonprofit, or other organization to be subject to charitable giving laws.  In fact, any person raising money in Minnesota for a charitable purpose can be a “charity” under the law.    This publication is intended to help you navigate the duties that come with fundraising for a charitable cause. 

What Laws Do I Need to Follow if I Fundraise for a Charitable Cause?

  • You must share specific information when you ask for charitable donations, such as where donations will go, whether the donations are tax deductible, and how donations will be used.  See Minn. Stat. § 309.556. 
  • It is important to be very clear what you will do with people’s money when you fundraise.  You cannot be misleading or deceptive when raising charitable funds.  Minn. Stat. § 309.55.
  • You must be very careful to use the money you fundraise for the exact purpose donors intended.  People who fundraise charitable funds have strict fiduciary duties to safeguard that money.  Minn. Stat. § 501B.41, subd. 6.  To fulfill these duties, you must, among other things, only spend money as the donor intended, and have procedures in place to make sure the money is used properly, as described further below.
  • At any time, the Minnesota Attorney General’s Office may request information like donation records, bank statements, and receipts to look into potential violations of these laws.  In addition, if you raise more than $25,000 and meet some other conditions, you may have to register and file specific paperwork with our Office.  See Guide to Minnesota’s Charities Laws
  • While the vast majority of people raising money for charity are careful to follow these laws, there can be consequences for those that do not.  The AGO can go to court to get a violator to stop the conduct and seek penalties up to $25,000 for each violation.  See Minn. Stat. §§ 309.57 subd. 1; 501B.41 subd. 7.  There may also be criminal or other penalties that are outside of the scope of this publication for people who misuse charitable donations.
  • You need to be aware of potential tax consequences that come with raising money.  This is outside the scope of this publication. Consult an attorney or accountant if you need help. 

What Steps Can I Take to Protect Charitable Funds?

  • Be honest, upfront, and specific with donors about how exactly their donations will be used.  Be transparent about any expenses, such as fees charged by a fundraising platform that might reduce the actual amount going toward the charitable purpose. 
  • Keep careful records of how much money you raise and where the money goes. Specifically, keep (1) bank statements, (2) receipts of donations, (3) receipts of how you spent the money, and copies of other records.  You should track and account for every single penny that comes in the door, and every single penny that you spend.
  • Consider setting up a separate bank account to safeguard the funds you raise for charity.  Avoid comingling charitable funds with your own money in your personal bank account. 
  • Create checks and balances to ensure the money safely gets to its destination.  For example, have more than one person in charge of receiving, recording, and depositing donations, and require multiple people to sign checks and approve the money you spend. 
  • Be especially careful with cash, because it is difficult to trace and easily lost.  It is best to have two people simultaneously count any cash donations. 
  • At the end of the fundraiser, update your donors about how their money was used.

Where Can I Learn More?

If you would like to learn more, the Minnesota Attorney General’s Office offers several resources, including Guide to Minnesota’s Charities Laws, Fiduciary Duties of Directors of Charitable Organizations, and Don’t Just Follow the Crowd on “Crowdfunding” Websites. You can find additional information on our website at www.ag.state.mn.us.