Milwaukee, Wis., March 26, 2012 — For many donors, nothing tugs at the heartstrings—and loosens the purse strings—more than a picture of a child.
The Better Business Bureau (BBB) recommends that donors understand where their money is going before contributing to a children’s charity. In too many cases, the lion's share of a charitable donation goes not to help the kids, but to pay the high cost of telephone and direct-mail fundraising.
"It's a sad reality that there are children’s charities that feel they have to contract with expensive outside fundraisers to bring in money,” said Randall Hoth, Wisconsin BBB president/CEO. “Profit-making fundraising companies sometimes take $8, $9 or more from every $10 donation, leaving the charities with pennies.”
“Most of us are touched by the stories and pictures of ill or hungry children,” Hoth added. “If you donate, give where your money can do the most good. Give, but give wisely.”
The BBB has found numerous examples of high fundraising costs associated with nationally soliciting children’s charities. The costs are recorded on the charities’ Form 990 reports filed with the Internal Revenue Service. Among charities with high fundraising costs:
- Kids Wish Network of Holiday, Fla., a wish-granting charity for ill children. The charity reported that 10 fundraising companies raised nearly $16 million on behalf of the charity in 2010, the most recent year in which information is available. Of that, about $1.9 million went to the charity, or 12 cents of each $1 donation.
- Children’s Cancer Fund of America of Powell, Tenn., a charity that assists families of children with cancer. The charity reported that six fundraising companies brought in $8.4 million in 2010. About $1.6 million of that total – or 19 cents of each dollar – went to the charity.
- Autism Spectrum Disorder Foundation of Schererville, Ind., a charity that addresses childhood autism issues. The charity reported that its three fundraisers raised nearly $2.6 million in contributions in 2010. Total to the charity: $164,000, or about six cents of each $1 donated.
- National Cancer Assistance Foundation of Sarasota, Fla., which operates Children’s Cancer Dream Network, Children’s Cancer Assistance Fund and Breast Cancer Assistance Fund. Two fundraising companies took in $1.8 million in donations on behalf of the charity in 2010. The total paid to the charity: $143,000 or eight cents of each $1 in donations. Precision Performance Marketing, a St. Louis County-based business that does direct mail fundraising work for the charity, kept $792,000 of $817,000 it raised for the charity, leaving the charity with three cents of each dollar donated.
- National Children’s Leukemia Foundation of Brooklyn, N.Y., which says it funds leukemia research, family outreach and other programs. The 2010 990 report says three fundraisers brought in nearly $3 million. The charity ended up with 20 cents of each $1 raised.
Often, the money that goes directly to benefit the children is even lower after the charity accounts for salaries, rent, legal and accounting costs and other expenses.
Children’s Cancer Dream Network, a program of National Cancer Assistance Foundation that grants wishes for children with cancer, reported revenues of $1.2 million in 2010, and said it spent $15,600 (a penny of each dollar) to directly benefit cancer patients and their families.
The BBB’s advice for donors:
- Find out if the fundraising campaign of any charity that solicits you is being run by a profit-making fundraiser. Ask how much of your contribution will go to the charity and how much will be retained by the fundraising company.
- Before donating, ask for written information about a charity’s programs and finances – especially if you are unfamiliar with the organization.
- Don’t bend to pressure to give money immediately. A charity that wants your money today also will welcome it at a later date.
- Be cautious about charities that use names similar to well-known national organizations. Sometimes, an organization will choose a name hoping that donors will confuse it with the better-known charity.
- Check a charity’s IRS Form 990 report by visiting www.guidestar.org. The Internal Revenue Service requires most tax-exempt organizations to file a Form 990.
- For more information on a charitable organization, check its Charity Review at www.bbb.org or contact the BBB at 414-847-6000 (metro Milwaukee), 920-734-4352 (Appleton), 608-268-2221 (Madison) or 800-273-1002 (elsewhere in Wisconsin).