Schuette: professional fundraisers still keep too much of your donaton

Attorney General Bill Schuette has announced the publication of Michigan's third annual Professional Fundraising Charitable Solicitation Report, which shows how much fundraising campaigns benefit charity—and how much they benefit the fundraisers.

As reported in the New York Times, The Giving USA Foundation, a national charity tracking organization, estimates that Americans gave $358 billion to charity in 2014.  This was an increase of $47 billion over 2007—the year that had marked the previous peak of charitable giving in the United States—and put 2014 donations above pre-recession levels.

The 2014 Michigan report found that charities received fifty-five cents for every dollar raised by professional fundraisers licensed in Michigan.  This is a substantial increase from last year’s average of 38%, but the increase is largely due to the addition in this year’s report of one very large, very efficient internet fundraiser.  If this one fundraiser were not included, the percentage plummets from 55% to 30%, 8% lower than last year’s average.

“Michigan citizens deserve to know exactly where their money is going when they open up their hearts and wallets to charity,” said Schuette.  “Our annual report gives donors the facts they need to give wisely and to avoid those charities and fundraisers that claim to be helping others but are really helping themselves.”

Consumers may access the report by visiting the “Charities” section of the AG website at www.mi.gov/charity and clicking on “Professional Fundraising Charitable Solicitation Reports.”    

Professional Fundraisers vs. Charities

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 that hires its own staff members for development.

Michigan law requires professional fundraisers to submit the results of their campaigns to the Attorney General, including the type of appeal conducted (mail, telephone, etc.), gross receipts raised, amount paid to the fundraiser, and 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 charity, with some telemarketers pocketing 85-90%. On average, telemarketers kept 68% of donations in 2014.

Fundraising Best Practices

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.”

Schuette noted that states are limited in their ability to pass laws to regulate professional fundraisers’ solicited contributions.  In several cases in the 1980s, the U.S. Supreme Court ruled unconstitutional state laws requiring that a minimum percentage of each donation go to charity.  As a result, states are limited to passing laws that prohibit fraudulent fundraising practices and require reporting from charities and their professional fundraisers. Michigan law addresses both.

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

Schuette Takes Action

In May 2013, Schuette ordered Associated Community Services (“ACS”), a professional fundraiser in Southfield, to cease and desist its use of a deceptive telemarketing rebuttal. ACS telemarketers referenced the company's license with the Attorney General's Office as a way of convincing donors that their credit card data was safe with ACS.  This was misleading because a professional fundraising license with the office is not an endorsement of that fundraiser's credit card security practices.

In February 2014, ACS settled, agreeing to pay $45,000 and modify its credit card rebuttal statement.  For more information on Attorney General Schuette's investigation and this settlement visit the Department's website.

In May 2015, Schuette joined state law enforcement partners in every state in the nation, the District of Columbia, and the Federal Trade Commission, to jointly file a federal lawsuit against four phony cancer charities and their operators, who allegedly scammed more than $187 million from consumers throughout the country.  Settlements have already been reached with several of the defendants, while the litigation remains pending against others.


Empowering Consumers

There are important measures consumers can take to protect themselves against bogus charities:

Be cautious when someone calls and asks for a donation. It is hard to know who is really on the other end of the line. Even if it sounds like it might be a reputable charity, some organizations use names that closely resemble well-known charities. And many calls are made by professional fundraisers that will keep more than half of your donation; some keep as much as 90 percent! If you still want to give, remember that you can always hang up, research your own charities, and give directly to the charity.  This way your charity will get 100 percent of your donation.
 Beware of vague or unresponsive answers to specific questions about the charity and how money is used.
 Don’t be pressured into making an immediate donation; avoid anyone that tries to make you feel guilty.
To improve transparency and provide donors greater access to this important information, Schuette enhanced the Attorney General's online charity search feature to include professional fundraiser data.  The Attorney General's annual Professional Fundraising Charitable Solicitation Report provides a year-end compilation of data, while the online charity search feature provides campaign information as it is filed throughout the year.
The online charity search is designed as a central resource for prospective donors to perform general searches for various types of registered charities.  For instance, donors may search by key words within the organization's purpose, as well as by city, county, state, name, or any combination of these. Inquiring prospective donors can visit www.mi.gov/charitysearch.

Attorney General's Responsibility to Protect and Preserve Charities

The Attorney General's office has the primary responsibility for ensuring that charitable assets are being used for the purpose for which they were donated and that organizations are acting as responsible stewards of these assets.  To fulfill this mandate, the Attorney General's 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 an important repository of publicly available information about charities, and protects citizens from illegal scams posing as legitimate charities.  For more information on the Attorney General's oversight of charitable solicitation in Michigan, visit www.mi.gov/charity.f State Ruth Johnson and Rep. Lisa Posthumus Lyons announced a new bill was introduced today that would allow Michigan voters the option of casting a secure absentee ballot without giving a reason.
“Thanks to our long-held commitment to protecting the security and integrity of elections, Michigan is now ready to offer this option to accommodate Michigan’s hardworking families’ busy schedules,” Johnson said. “I look forward to working with lawmakers to see this signed into law.”
House Bill 4724, sponsored by Lyons, would allow Michigan voters to apply for and receive an absentee ballot at their city or township clerk’s office after meeting the same identification requirements as when voting in person on Election Day. If approved, Michigan would join the 27 other states and the District of Columbia that offer no-reason absentee voting.
“We should give all voters a convenient way to have their voices heard on Election Day,” said Lyons, R-Alto, who chairs the House Elections Committee. “My legislation offers that convenience while protecting the integrity of our
elections.
“Too often we hear about friends or neighbors who fib about being out of town to cast an absentee ballot. We should be realistic about absentee voting and offer the convenience to everyone eligible to vote.”
Historically, about 20 percent of ballots cast in a typical election are voted absentee. Under existing law, casting an absentee ballot is an option for voters who are
Age 60 years old or older
Unable to vote without assistance at the polls
Expecting to be out of town on Election Day
In jail awaiting arraignment or trial
Unable to attend the polls due to religious reasons
Appointed to work as an election inspector in a precinct outside of the voter’s precinct of residence.
Lyons’ committee is expected to take up the bill on Wednesday and hear testimony from Johnson.

Since elected, Johnson has made election integrity a priority through the state’s first ever post-election audits, online training for Michigan’s 30,000 poll workers, the expansion of electronic poll books and initiatives to clean up Michigan’s voter rolls.

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