Be Sure to Read the Fine Print
Some rather upsetting news about several national charities today.
This morning many news outlets broke the story on how multiple national charities, including the American Cancer Society and (importantly to us) the American Diabetes Association, have made some terrible deals with telemarketers. The basic idea is that each charity partnered with a telemarketing agency in order to gain more donations. However, what donors didn’t know was that almost NONE of their money would go to the charity they wanted. In fact, the telemarketing agency got an 80 percent cut, the charities merely were given 20.
As you may expect, this has caused a huge uproar, and is merely another sign that you can’t really be sure where your money is going with specifying what you want done with it.
Two things are surprising about this development:
1. It’s almost shocking that charities would agree to such a deal. If the goal is to raise funding, how much business did these telemarketers have to do in order to justify taking 80 percent of the profits? Even so, if you’re a non-profit, why would you ever take a deal like that to begin with?
2. The fact that donors were lied to about where their money is was going. Now, it remains to be seen how much of this was a problem of the telemarketing company or with the charities themselves, but until this investigative report was done no one had any idea where their money had gone. This helps to further our argument that transparency and corporate governance are ABSOLUTE NECESSITIES for non-profit organizations. Keeping donors informed is vital for both parties, and it’s a shame that things like this can happen when people are giving out of their own kindness.
We’ll keep track of this story as more develops.
Until Next Time
–Nick
In general, I don’t oppose charities spending money for fundraising efforts. If its a choice between spending $0 to raise $1000, or spending $1000 to raise $10,000, I’d probably always choose the latter (not to mention the brand-awareness that the $1000 earns from those who don’t contribute).
I can accept a 10% “reinvestment” of raised money into fundraising. Even 25%, and if brand-awareness is a goal, maybe even more. The American Red Cross often gets a bad rap for all the money they spend on fundraising, but they still net a lot of donation dollars which are put towards noble causes. They were there after 9/11. They were there after Hurricane Katrina. I can respect that.
80% seems quite high, but then telemarketing for charity, I would surmise, is a bit ineffective. Out of 200 calls, how many donations would you expect ADA would get? Maybe one? That’s why the rate is so high. Personally, I think telemarketing for this cause isn’t a good idea to begin with. But if they are doing it, they most certainly should be truthful about it, which apparently they’re not. That’s not right.