It’s the season for charitable giving, but beware. The New Hampshire Office of the Attorney General released a report last week that revealed that 80 percent of charities that use paid solicitors receive 25 percent or less of the money donated.
“Similar to ‘buyers beware,’ there has to be ‘givers beware,” said Anne Edwards, interim director of Charitable Trusts. “I think the findings are going to be surprising to the public, especially to people who tend to donate to phone or mail solicitations.”
The 24-page report is the first of its kind for New Hampshire. It lists the names of charities and nonprofits that reported on charitable campaigns from December 2012 to October 2013. Information on the report includes the names of the paid solicitors they hired to run each campaign, a breakdown of each campaign’s gross revenues, expenses paid to the solicitors, the total balance to the charity, and the percentage of the gross revenues the charities actually received.
While the low percentages of money to the charity can be troubling to donors, some charities and nonprofits still find paid solicitors beneficial. In some cases even a considerably small percentage can mean large cash dollars. New charities also do not have established donor lists to contact, so it makes more sense for them to hire paid solicitors. And even though the charities won’t see large returns, they are building name recognition, Edwards said.
“You have to look at the expenses that are associated with raising money,” said David Lang, president of the Professional Firefighters of New Hampshire, an organization that has paired with paid solicitors to raise money for a variety of outreach projects. “It’s not cheap. … Some people would say, ‘Why not just have people send money in directly?’ But how many folks would automatically send in without getting a call from people who let them know what we are doing?”
Not all New Hampshire charities use paid solicitors, Edwards said. For example, the Boys & Girls Club and the Animal Rescue League of New Hampshire have well-established donor lists and run their own local events, she said.
Small local charities may opt to hire paid solicitors because their manpower can be too small to get results, said Terry Knowles, assistant director of the office of the Attorney General’s Charitable Trusts Unit.
“Basically our organization is run mostly by volunteers. If fundraisers are not being paid, then we get what we pay for,” said Dana Hussey of the New Hampshire Veterans of Foreign Wars.
Paid solicitors’ speech rights are highly protected under federal law. In the 1980s the U.S. Supreme Court ruled that these companies have the right to speak as the charities they represent and do not have to announce themselves as for-profit companies.
The New Hampshire report is the first in response to a bill passed during the last state legislative session, and new reports will be published regularly.
“They decided they would like that information shared with the public so people can see how much of their money is going to charity and how much going to paid solicitors,” Edwards said.
Fraud a problem too
The report calls attention to a slew of other red flags associated with potential charity fraud, Edwards and Knowles said. The New Hampshire Office of the Attorney General was involved with the national investigation of Bobby Thompson, who solicited an estimated $100 million worldwide. Last November Thompson was sentenced to a minimum of 10 years in prison on 23 charges of theft, money laundering, and other offenses.
After the nationally visible case, “We started looking at it here as well,” Edwards said. “We advise givers to be cautious of veterans organizations, because as far as we can tell there are several organizations that will misuse the good name of vets as a way to raise money but don’t provide anything to New Hampshire veterans.”
The charitable trust unit is working on a separate report regarding the state’s veterans organization that will be released in the spring, Edwards said. Until then, she advised donors who want to support veterans to stick to tried and true New Hampshire veterans organizations like the VFW and the American Legion.
“With some of the other [charities], we’re not sure who they are and we’re not sure what their services are,” she said.
But fraudulent charitable organizations are not confined to veterans groups. “Copycat” charities choose names similar to well-established ones so that prospective givers get confused as to who they are giving their money to. In the past few years, the Attorney General’s office has discovered a handful of entities where money was being raised in the name of charity but was pocketed instead, Knowles said.
“The sad part of the solicitation is those folks who come in … and pencil whip phony pledge organizations,” Lang said. “They have names that sound legit, and people who support us get fooled. … That’s really the real sad part of this, because it hurts charities.”
As seen in the December 19th, 2013 issue of The Hippo