Professional Fundraisers for Charitable Purposes
Charities use various professional fundraisers to solicit donations. Professional fundraisers may include commercial fundraisers, fundraising counsels, and commercial coventurers. There are mandatory registration requirements and contract requirements for commercial fundraisers and fundraising counsels that must be adhered to both by the charities and their respective fundraising professionals. Please note that certain terms must be included in the contract. A model contract is available.
Historically, use of professional fundraisers has meant higher costs for charities. Most of the charities that are registered with the Registry of Charitable Trusts do not employ professional fundraisers. Historical figures show that solicitation campaigns conducted by commercial fundraisers deliver to charities, on average, less than 50 percent of the contributions raised. The remainder is retained by the commercial fundraiser for reimbursement of expenses and payment of fundraising fees. Likewise, a charity may spend significant resources retaining fundraising counsel.
A commercial fundraiser can be a person or organization who is paid by a charity to solicit money or property on the charity's behalf. The commercial fundraiser may solicit donations through various means, such as: direct mail, telephone, email or internet platform, auction at charity events, event ticket sales, vehicle donation, or thrift store operation.
A fundraising counsel can be a person or organization who is hired by a charity to plan, manage, advise, counsel, consult, or prepare materials to solicit donations for charitable purposes. Unlike the commercial fundraiser, a fundraising counsel does not solicit donations from the public, and does not receive or exercise any control over the solicited funds or property. Instead, the donations go directly to the charity.
A commercial coventurer can a person or organization who, for profit, is primarily engaged in a business other than in connection with raising funds for charitable purposes. A commercial coventurer represents to the public that the purchase or use of its goods or services will benefit a charitable organization.
Crowdfunding sites provide an online place for individuals, businesses, and/or nonprofits to solicit funds. These sites provide easy-to-use interfaces to those who may not have the ability to build their own site. The individual business models vary, but many employ “gamification” techniques (e.g., trackable fundraising goals) and social media to encourage donations. Donations are made through the site and disbursed to the solicitor. In exchange, the sites may take a portion of each donation. If a crowdfunding site meets the legal definition of a commercial fundraiser or fundraising counsel, they are required to register and comply with all reporting requirements. Further information regarding crowdfunding can be found in the Attorney General’s Guide for Online Charitable Giving. Note that donations to crowdfunding sites may not be tax exempt.
The Attorney General’s Office prepares an annual summary report derived from the financial disclosure documents filed by commercial fundraisers and commercial coventurers. These reports include statistics for donations of both cash and used personal goods. The reports are available on the Registry Reports page.