Attorney General Lockyer Issues Report Showing Continuing Trend: Less Than Half of Donations Solicited by Commercial Fund-Raisers Reached Charities

(SACRAMENTO) – Attorney General Bill Lockyer today issued a report showing just over $193.27 million in charitable donations were raised by commercial fund-raisers in 1999, but less than half of the total actually reached the charity on whose behalf the solicitations were made.

The Attorney General also issued a supplemental report showing donations of used cars remains a popular way of giving to charity. Commercial fund-raisers reported raising $32.38 million in revenues from 120 used vehicle donation campaigns. Of the total, charities received 32.7 percent or $10.59 million, slightly more than a year earlier.

"While improving in 1999, the trend seen over the years continues with charities receiving less than half of every dollar raised by their commercial fund-raiser," Lockyer said. "Compared to the static 43 percent of recent years, commercial fund-raisers reported giving 48 percent of the $193 million collected to charities. Still, most of these commercial enterprises are using significant portions of the money raised on behalf of charities for solicitation expenses and fund-raiser profits."

In addition to being able to view the new summary reports on the Attorney General's web site, Lockyer announced that Californians now will be able to search whether a commercial fund-raiser is registered and view the latest copy of annual reports filed by these paid solicitors on behalf of charities. The new feature available at http://caag.state.ca.us/charities is similar to the searchable data base for charities registered in California made available by the Attorney General.

The Attorney General's Summary of Results of Charitable Solicitations by Commercial Fundraisers covers the results of 496 fund-raising campaigns reported for 1999, generally for-profit businesses that contract with a charity to raise donations for a fee or percentage of the money raised. Historically, only about one-third of the total dollars collected by commercial fund-raisers in California actually went to charities.

The Attorney General's Supplemental Report on commercial fund-raising activities covers vehicle donations and for-profit thrift store operations for 1999. For-profit thrift stores reported $65.6 million in revenues and $12.82 million in payments to charities. This included $7.5 million in revenues for vendors who receive management fees or commission from charities, who gave 8.4 percent or $631,361 to charities.

The Attorney General noted that commercial fund-raising accounts for only some 5 percent of the billions in donations solicited annually by charities. Most of the 80,600 charities registered in California use direct solicitations for donations.

To provide a better snapshot of commercial fund-raising activities, the latest report was changed to include only multi-year fund-raising campaigns that were concluded in the reporting period of 1999. This will allow revenues and expenditures by commercial fund-raisers to be more accurately reflected since on-going campaigns could result initially in higher expenditures. The change resulted in 29 fewer fund-raising campaigns in the reporting period.

Of the total 496 commercial fund-raising campaigns reported in 1999, 192 (39 percent) gave over 50 percent to charities; 82 (17 percent) gave 31-50 percent to charities; 44 (10 percent) gave 21-30 percent to charities; 48 (10 percent) gave 16-20 percent to charities; and 130 (26 percent) gave 15 percent or less to charities. There were 33 commercial fund-raising campaigns that resulted in zero dollars going to the intended charity.

The number of vehicle donation campaigns in 1999 was similar to a year earlier but more than double the activity in 1997 when 47 campaigns raised $24.1 million with 24.5 percent being paid to charities.

Lockyer noted that the summary reports intended to help donors, potential donors and charities to review commercial fund-raising activities so they may make better informed choices.

Lockyer also issued guidelines for use charities when hiring a commercial fund-raiser. The guidelines include general advice on selecting a fund-raiser and a "model contract" that outlines key issues for consideration by a charity when contracting with a commercial fund-raiser. The model contract may be viewed on the Attorney General's charities web site.