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    More Than Half of NY Charitable Donations Go to For-Profit Telemarketers

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    More than half of the money raised in New York for US charities ended up in the pockets of the for-profit telemarketers hired to raise it, according to an annual report from the state’s Attorney General's office.

    This year's Pennies for Charity report found that of the $302 million donated to charities in 2013 using paid telemarketers registered in New York state, a whopping 52% of it went to pay those fundraisers, rather than to direct work on the causes being promoted. 

    The report is issued every year by the office of NY Attorney General Eric Schneiderman to evaluate how efficient charities are at spending the money they raise directly on the cause they support, and how much gets lost to fundraisers, fees and operational costs. 

    In this case, there was an improvement over 2012, when 63% of funds raised paid for the cost of the fundraising itself. 

    It should be noted that one of the best was also one of the highest grossing: the Leukemia and Lymphoma Society was the top grosser, with over $50 million dollars raised, and 99.67% of that went directly to the charity. 

    On the other end of the spectrum, take the United States Olympic Committee, for example: they raised $355,768.76 but according to data, only 2.32% went directly to the charity's work. 

    Silicon Valley of Non-Profits

    The report surveyed 573 campaigns conducted in 2013 using telemarketers registered to solicit donations in New York. Of those, 435 retained less than 50% of the funds collected. And in 101 of those campaigns the charities actually lost money, spending more than they raised.

    2013 was also a record breaking year for fundraising in the state, where the total amount of money raised for charity was 20% more than in 2012 and the highest total amount on record. Nationwide, charitable giving has doubled — in real terms — since 1990. 

    The giving industry is huge in New York, with the report calling it the "Silicon Valley of Non-Profits." The state has the largest total number of workers and the second-highest percentage of its workforce operating in some sort of non-profit organization.

    The top five highest-grossing charity fundraising campaigns accounted for $84.2 million, or 27.8 %, of all funds raised, in 2013, according to the Pennies for Charity report
    The top five highest-grossing charity fundraising campaigns accounted for $84.2 million, or 27.8 %, of all funds raised, in 2013, according to the Pennies for Charity report
    Fraud is Easier by Phone

    The report outlines several reasons why solicitation of donations by paid telemarketers leads to inefficient use of money people expect to go to charitable causes. For example, the anonymity of a phone interaction makes fraud and misrepresentation on the part of the solicitor more likely. 

    The practice also encourages was the report calls "me-too" charities, which piggy-back on the name recognition of reputable charities to gather funds for themselves. One example is the "Kids Wish Network" which sounds a lot like the "Make-a-Wish Foundation." The former pays over two thirds of its receipts to fundraisers, while the latter doesn't use telemarketers at all.  

    Hiring out to a for-profit telemarketing firm can also mean charities have a hard time keeping an eye on the company's practices. The report specifically cites InfoCision, Inc, which was reported to Charities Bureau in relation to 41 campaigns, and in 31 of those, they kept over half of the money they raised. Incidentally, InfoCision provided services for the United States Olympic Committee, mentioned above. 

    How to Be an Informed Donor
    The report cites resources for researching charities in New York State, such as CharitiesNYS.com, but nationwide there are several charity watchdog groups that publish reports or provide searchable databases so generously-minded citizens can find out how much of their money is really going to their cause. 

    Charity Navigator, Charity Watch, BBB Wise Giving Alliance, and GuideStar all provide reports, search tools and tips for donors.
    Charity Navigator's list of 10 Charities Overpaying their For-Profit Fundraisers
    Charity Navigator's list of 10 Charities Overpaying their For-Profit Fundraisers
       
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    charity, Silicon Valley, California, United States
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