For years now I have politely declined whenever someone on the phone asked me to give to a charity. And I've advised others to do the same.
But even I was shocked by the a recent Bloomberg article revealing that well-known and respected national charities have engaged in what appears to be donor fraud though the hiring of unscrupulous telemarketing firms.
Bloomberg investigated one particular telemarketer, InfoCision Management Corp. That company has worked with some of the best known national charities such as The American Cancer Society and the American Diabetes Association, among others.
The Bloomberg article found that often call-center employees misrepresented themselves as volunteers or employees of the charities, lied about the percentage of the funds raised that went back to the charity, and even recruited people they called to raise money from their friends and neighbors.
What was more shocking to me than the actions of the telemarketer was the attitude of the charity officials the article quoted.
They compared themselves to businesses that have sales on which they lose money in order to get customers in the door. They claimed that once they had the names of donors who had responded to the telemarketing, they could continue to raise money from them, thus justifying the misleading and expensive telemarketing campaigns. They also dismiss their telemarketing practices by saying their fundraising costs are in line with the rest of the charitable world.
Many large charities do hire outside consultants to help with their direct mail solicitations, their marketing programs, and their telephone campaigns. But those consultants should be paid like any supplier, with fees that are in line with industry standards.
The charities that worked with InfoCision signed contracts that allowed the telemarketing firm to keep a percentage (a huge percentage in most cases) of the money raised. That elevated the stakes considerably. The more money raised, the more went to the telemarketer. That kind of arrangement can only lead to abuses. In the cases cited in the article, it led to lying, stressed, underpaid telemarketing employees, and donors who, rightfully so, felt swindled.
Obviously, this behavior needs to be stopped. Frankly, nonprofits are not businesses. The term "loss-leader" has no place in the charitable lexicon. And it doesn't work. Donors obtained in this way are not likely to become long time, loyal supporters of charitable causes. It just leads to "churn" in the charity's donor database, and the enrichment of telemarketing fatcats.
So what can donors do? Simply do not donate over the phone, unless you know the person calling and already have a personal connection to the organization (for instance, your alma mater). There is no way for any of us to know how that money will be spent. Research the causes you care about and give directly...either at the charity's secure website, with a check sent to its offices, or through personal contact with the staff at the charity.
Charity Navigator, a charity watchdog, says "just hang up." If enough of us do that, perhaps things will change.
Read more:
- Safe Giving Guide for Donors
- 3 Ways Your Charitable Giving Could Go Bad
- Should I Give to Charities that Use Professional Fundraising Companies?
Photo: John Foxx/Getty Images
Comments
Insofar as this article discusses commission-based telemarketing, I agree wholeheartedly. I detest this form of sales marketing in any business, and I feel that it tarnishes the image the nonprofits want to project.
However, your statement that non-profits are not businesses is somewhat misguided. Non-profits have the same expenses and must operate with the same (or stronger) internal controls as any for-profit business. They develop business (strategic) plans, have departments that are responsible for facets of the business, and have the same expenses as any other business. The larger the nonprofit, the higher the overhead, just like any other business. Ergo, they have to produce revenue. Their profits do not benefit a select group of stock owners, or the individual “owners” because the owners and users of their services have to be, by law, the public and the target demographic. Certainly, some nonprofits have abuses, or their administrative costs are far higher than they need to be, but the answer to that is for donors to check them out on one of the many charity rating sites, or to ask for their annual report and most recent 990′s, which they must provide to anyone.
Thanks, R.L. for commenting. I agree that nonprofits do have many things in common with businesses, but I think their obligation to serve the greater good should be a barrier to misleading practices that might be acceptable in a business setting. When those practices shade into the abusive, they really tar the entire sector, even when it is just a small number of organizations that are at fault. I wish more people would use the research tools that are easily available to check out charities before they donate to them. I’m going to keep encouraging that.