Be Careful Of Where You Donate

The Los Angeles Times web site hosts a database that monitors the money spent by non-profit organizations to raise funds — and how little money was returned to the non-profit by the fund-raisers. (The database is limited to fund-raising reported to the state of California from 1997 to 2006.)
The database reports, for example, that Concerned Women for America’s education and legal action fund collected $14.7 million in gross revenue via for-profit fund-raisers during the decade.
However, CWFA only received $975,000 from its fund-raisers. It seems that more than a million dollars per year, or 93.4 percent of donations collected by for-profit fund-raisers and reported to California, went to the fundraisers, who were primarily:
InfoCision Management Corp., an Ohio telemarketing company with conservative-Christian and GOP clients,
MDS Communications Corporation, an Arizona/California outfit that also serves National Right to Life, FRC, the Republican National Committee, the National Republican Congressional Committee, and the National Republican Senatorial Committee. (They also serve the global anti-hunger charity CARE — perhaps some polite letters to CARE are in order.)
Regency Communications, apparently a now-defunct Texas telemarketer that was tied to Jerry Falwell’s Liberty Alliance and The Rutherford Institute
I understand that for-profit telemarketers don’t just raise funds; they charge fees to non-profits to conduct political advocacy, such as rallying members to call lawmakers about an antigay vote. CWFA donors expect their donations to be spent as described by the telemarketer, but CWFA’s for-profit fund-raisers can spend their majority share of the donated money any way they please. They can redirect non-profits’ fund-raising revenues — via discounts, pro bono work, and fresh donations — into partisan political campaigns. And non-profits can choose to overpay their fund-raising contractors, with the knowledge that the overpayment will benefit allies who use the same contractor.
In fact, there are vague signs of such a redistribution of donor cash at MDS Communications: While CWFA received an average 6.6 percent return from all reported for-profit fund-raisers, its returns from MDS are often negative: CWFA has repeatedly spent more than it received. Meanwhile, Family Research Council has enjoyed a 30.6 percent return on donations and National Right to Life has received returns of up to 50 percent from various MDS campaigns from 1997 to 2006.
In 2007 federal tax filings, CWFA reported $10 million in direct public support. While other organizations conduct their political advocacy in-house to maintain control of their message and conserve cash, CWFA paid its for-profit contractors more than $4 million in 2007 — $2.8 million of which appears have been for-profit political advocacy rather than pure solicitation.
The Los Angeles Times story focuses on excesses of charitable fund-raising, and so it does not report, nor even question, MDS’s fund-raising results for Democratic and GOP committees.
There is a strong and largely unregulated potential for cronyism among religious shell organizations; insiders who double-dip as employees and as contractors; fund-raisers; partisan political interests; and unrelated political causes (such as free trade) that would offend many donors to religious-right shell organizations.
Concerned Women for America isn’t alone in preying upon donors’ patriotism and concern for children while handing donations to cronies, according to the Times:
Among The Times’ findings:
More than 100 charities raised $1 million or more from commercial appeals but netted less than 25 cents per dollar. Fundraisers got the rest.
In 430 campaigns, charities got nothing: All $44 million donated went to fundraisers. In 337 of those cases, charities actually lost money, paying fees to fundraisers that exceeded the amount raised.
In hundreds of other campaigns, charities apparently entered into contracts that limited their share of donations to 20% or less, no matter how successful the campaign.
Groups with strong emotional or patriotic appeal — those supporting animals, children, veterans and public safety workers, for instance — often fared worst. Missing-children charities received less than 15% of more than $28 million raised on their behalf.
What additional restrictions, if any, are needed to prevent religious non-profit organizations from hiring fund-raisers that may siphon off donations for partisan political uses, out of sight of the donors?
And what more must be done to prevent religious organizations from abusing their tax-exempt status?