Schuette: Modest improvement but fundraisers still take too much

Attorney General Bill Schuette today announced the publication of Michigan’s second annual Professional Fundraising Charitable Solicitation Report, which helps consumers know how to be smart donors. This year’s report found that charities received only thirty-eight cents for every dollar raised by professional fundraisers licensed in Michigan, up three percent from last year.

The Attorney General's office has the primary responsibility for ensuring charitable assets are being used for the purpose for which they were donated and that organizations are acting as responsible stewards of these assets.

“Michigan citizens who give to their favorite causes deserve to know how much of their donation actually makes it to their intended charity...,” said Schuette. “While I’m pleased we've seen a three percent improvement since last year, it's not enough. I will continue promoting this transparency in hopes consumers and charities will be able to do more to help their intended causes.”

Consumers may access the report by visiting the “Charities” section of the Attorney General’s website at /www.michigan.gov/AGCharities and clicking on “Professional Fundraiser Reports.”   

Under Michigan law, a professional fundraiser is defined as a person or organization that solicits contributions on behalf of a charity in exchange for compensation.  This is different from a charity hiring its own staff for fundraising activities.

Michigan law requires professional fundraisers to submit the results of their campaigns to the Attorney General.  The data includes the type of appeal conducted (mail, telephone, etc.), gross receipts raised, the amount paid to the fundraiser, and the final amount and percentage that went to the charity. Any professional fundraiser licensed in Michigan is required to report these results, so the report includes data from charities across the country.

Although hiring professional fundraisers and fundraising counsel may benefit certain charities, some professional fundraisers leave little of the donations for the intended charity.  According to data aggregated in the Attorney General’s Report, on average, professional fundraisers pocket 62% of funds raised.

According to the Better Business Bureau’s Standards for Charity Accountability, charities should “spend no more than 35% of related contributions on fund raising. Related contributions include donations, legacies, and other gifts received as a result of fund raising efforts.”

States are limited in their ability to pass laws to regulate professional fundraisers’ solicited contributions.  In several cases in the 1980’s, the U.S. Supreme Court ruled unconstitutional state laws requiring that a minimum percentage of each donation go to charity (Riley v. National Fed’n of Blind, Inc., 487 U.S. 781 (1988)).  As a result, states are limited to passing laws that prohibit fraudulent fundraising practices and require reporting.  (Illinois ex rel. Madigan v. Telemarketing Assocs., 538 U.S. 600 (2003)). Michigan law addresses both aspects.

Schuette added that examples of fraudulent fundraising practices prohibited by Michigan law include: (1) falsely telling a donor that he or she gave six months ago and it’s time to give again, or (2) falsely telling a donors that 90% of their donations go to the charity, when that is in fact not true.

Consumers can look for warning signs when answering a charity solicitation call:

—Vague or unresponsive answers to specific questions about how money is used.
—Words in a charity’s name that closely resemble a better-known charity.
—Allowing no time to reconsider your pledge;
—Emotional appeals and high-pressure tactics

To improve transparency and provide donors greater access to this important information, Schuette included professional fundraiser data in the AG online charity search, designed as a central resource for prospective donors to perform general searches for various types of registered charities. Inquiring prospective donors can visit www.michigan.gov/AGCharitySearch.

To fulfill the Attorney General’s oversight mandate regarding charities, the AG Charitable Trust Section registers charitable trusts, registers charities to solicit funds, monitors charitable assets, and oversees any changes that may occur in a charitable entity’s form or existence. The Charitable Trust Section also serves as a repository of information about charities, and protects citizens from illegal scams.  For more, visit www.michigan.gov/AGCharities.