There are over 1,000,000 orgs that 'qualify' for this subsidy. We can't begin to compute the costs savings to American taxpayers if these special privileges were abolished by Congress.
Where is the Money Going? - Half of Charitable Donations Solicited by Commercial Fundraisers Goes to Overhead
Monday, December 03, 2012
Charities don’t always raise money directly. Sometimes they use professional charitable fundraisers who take a portion of the solicitations for fees or other overhead expenses.Sometimes those fundraisers don’t take anything and sometimes they take a lot. The California Attorney General’s office reports that, on average, commercial fundraisers kept about half ($172.8 million) of the $338.5 million they pulled in last year.
The disparity between charities was marked. The Cleveland Clinic Foundation received 100% of the $590,208.40 raised by Harris Connect, LLC, while the Keck School of Medicine of USC had the opposite experience with the same company. Keck received $13,981, while Harris Connect got $325,633.05.
The Susan G. Komen Breast Cancer Foundation received 100% of the $1.27 million raised by New Balance Athletic Shoe, Inc., while the American Red Cross received $79,100 raised by West Business Solutions, LLC, which pocketed $270,197.
Planned Parenthood got none of the $237,522.99 raised by Integral Resources, while MDS Communications brought in $1,278,658 on behalf of Tea Party Patriots, but only turned off $15,603 to the group.
At the other end of the scale, InfoCision raised $5,831,672.34 for The Leukemia and Lymphoma Society and kept only $17,111.25.
The attorney general’s report does not explain the disparity in experiences except to note that, “Negative amounts in the ‘To Charity’ column indicate the campaign raised less than the commercial fundraiser fee guaranteed in the contract between the charity and the fundraiser.” Charities are sometimes willing to pay fundraisers, including telemarketers, hefty fees to raise their profile and recruit donors and members who will contribute to the organization in the future.
The amount raised in 2011 was $24.4 million less than the year before, but the distribution to charities was still $11.7 million more than 2010 because the fundraisers took a smaller percentage. In 2011, charities received 51.05% of all the money raised, compared to 44.38% the year before.
The information was gleaned from 851 financial reports from fundraisers. Many charities don’t use commercial fundraisers, but if they do, they pay a flat fee for their services or percentage of the contributions collected.
-Ken Broder
A 501(c) organization, also known colloquially as either a 501(c) or a "nonprofit", is an American tax-exempt nonprofit organization. Section 501(c) of the United States Internal Revenue Code (26 U.S.C. § 501(c)) provides that 28 types of nonprofit organizations are exempt from some federal income taxes. Sections 503 through 505 set out the requirements for attaining such exemptions. Many states refer to Section 501(c) for definitions of organizations exempt from state taxation as well.Find your own state here
To Learn More:
Report: Half of California Charity Donations Lost to Overhead (by Judy Lin, Associated Press)
Summary of Results of Charitable Solicitation by Commercial Fundraisers for Year Ending 2011 (California Office of the Attorney General) (pdf)
