A good cause - or cause for annoyance?
Dinners free from telemarketers might seem nostalgic this holiday season. Although more than 58 million households have joined the federal "Do Not Call Registry," watchdog groups predict that the volume of telemarketer solicitations will increase during the next six weeks, the traditional giving season.
That's partly because the registry allows some groups, including charities, to keep dialing to ask for donations. It's also partly because some nonprofits have surreptitiously hired for-profit telemarketers to raise funds on their behalf. That practice is controversial because telemarketers often keep the lion's share of the money they raise in the name of the charity.
To keep from falling for such telephone appeals, don't make decisions on the spot, consumer advocates say.
"The [charity's] need will still exist after you've done your homework," says consumer writer Elisabeth Leamy in her book, "The Savvy Consumer."
Charities have long supplemented their coffers by selling donor lists to other nonprofits. But what is surprising experts is the growing movement of selling donor lists to for-profit telemarketing firms.
Some charities consider it "free money" and say that receiving 15 percent of these contributions is better than nothing.
"It's money we wouldn't get otherwise," says one fundraising executive, who spoke on condition of anonymity. "Sure, we'd like donors to give us the money directly, but many won't unless they're harassed."
The practice is perfectly legal, says Daniel Borochoff, president of the American Institute of Philanthropy based in Chicago.
"According to a recent Supreme Court case [Madigan v. Telemarketing Associates], it is OK if fundraisers keep nearly all the money raised as long as they don't falsely claim that a larger portion of contributions is going to the charity," he says. "So fundraisers can avoid getting into trouble with the law by not stating what portion of a donor's money goes to the charity."
No one knows how many nonprofits use for-profit telemarketers. But the trend has many watchdogs calling for legislation to curb telemarketers or to demand that they disclose how much is actually going to the charity.
Government officials have been trying to crack down.
Minnesota's attorney general recently challenged Minnesota Public Radio, saying it misrepresented how donor lists were being used. They eventually settled out of court, but the squabble put other charities on notice.
The settlement requires that the organization clearly disclose its fundraising practices and allow donors to opt out of solicitations. Many Minnesota charities are following that guidance.
Several states that operate similar "Do Not Call" lists have tried to expand the ban to include nonprofits, but telemarketers and nonprofits have largely succeeded in blocking the expansion. Congress is considering changing the Federal Registry to include nonprofits, but insiders doubt it will happen soon.
The nonprofit world is taking such action seriously. In hopes of slowing the trend, watchdog groups are publicly censuring charities that sell donor names.
Donors can avoid becoming victims of telemarketing appeals by making substantial gifts to a few organizations rather than sending smaller gifts to many nonprofits, says Trent Stamp, executive director of Charity Navigator. Such concentrated giving, he says, helps nonprofits cut fundraising expenses while minimizing the number of charities with a donor's information.
So while regulators and nonprofits sort through the issue, donors need to be cautious with aggressive phone appeals, says Ms. Leamy, the consumer writer. If the telemarketer can't answer basic questions about the organization, including what share of the donation will fund the charity's programs, be wary.
When it comes to sending money, watchdog groups add, you're probably better off mailing a check directly to the nonprofit, especially to a well-run charity that can put 90 percent of a donation toward its mission.
The American Institute of Philanthropy offers the following tips to slow the number of phone calls from nonprofits:
• Be selective in your giving. Give more to fewer organizations.
• Tell your charity not to sell your information. Consider including a note with your donation with this instruction.
• Write individual charities and instruct them not to call.
• Write to Mail Preference Service, Direct Marketing Association, PO Box 9008, Farmingdale, NY 11735-9008. Say that you wish to have your name removed from both commercial and nonprofit organizations' lists.
• When a charity calls, ask them to put your name on their "Do Not Call" list.
• Check with the consumer-protection agencies in your state and county concerning laws or regulations affecting solicitations.