Every dollar sleazy “charities” take in is a dollar that could instead have gone to a strong charity doing valuable work with the funds entrusted to it.
The connection between sleazy “charities” and paid telemarketing can’t be denied — they frequently travel together. Just take a look at the results so far from Operation False Charity headed by the Federal Trade Commission, including the lawsuits filed by the CA Attorney General’s Office.
Comment: Charities exist to do the work of their missions and causes. When they raise money from donors, donors have the right to expect that a high percentage of donated funds will go to the work. Donors should also expect that the charity will incur reasonable administrative costs to manage its operations, and reasonable fundraising costs to support its work.
People can debate what should be the minimum percentage of a charity’s expenditures that go to its mission or cause (i.e., programs) as opposed to administration and fundraising. But I can’t imagine that anyone would argue that 50% or less is a suitable level of spending on mission or cause.
Sleazy charities: Look at the three Santa Ana “charities” we recently named Charity Skunks – and you’ll see that on average a piddly 5.3% of their expenditures went to their purported missions. If only 5.3% of your spending goes to your mission, you’re at least sleazy, and you’re probably not a charity by most definitions.
Paid telemarketing: Our recent sampling of results from a telemarketing firm used by all three Santa Ana “charities” showed that (on average) of every dollar the telemarketer raised from donors, less than 15 cents went to the charity client. Counsel defended the small portion going to charity by saying the telemarketers “didn’t pay more to charities because they incurred high costs.”
The three Santa Ana sleazy charities referenced above were big users of paid telemarketing contractors. Sleazy charities and paid telemarketing together — is this a coincidence?
There are plenty of strong charities out there to support, that don’t use paid telemarketers.
For those charities that do use paid telemarketers, I’m adopting a “rebuttable presumption” approach against donating:
- I presume a charity that uses paid telemarketers is unworthy of my confidence or support (that is, they don’t get a penny from me),
- unless and until the charity rebuts the presumption by providing to me solid evidence (through its Form 990 and otherwise) that it is worthy, that its use of paid telemarketers is cost-effective and suitable in its overall operations, and that it appropriately uses the moneys entrusted to it.
Feel free to join me in this.
Note: Well-managed charities can and do make cost-effective use of their board members and other volunteers in calling donors — that’s quite different from paid telemarketing.