Beware Charity Phone Calls

Nov. 25, 2009 — -- About twice a year, Al O'Leary gets a phone call at home from people raising money in behalf of New York City police officers. When O'Leary tells them who he is, he said, they invariably hang up.

O'Leary is the communications director of the New York City Patrolmen's Benevolent Association, a union of about 50,000 police officers. The union, he said, never makes phone call solicitations and although O'Leary can't verify that the caller is running a scam -- there are other police unions in the city besides the PBA, he said -- he finds the hang-ups suspicious.

A few times, he said, he asked the callers to send him information about their fundraising efforts and they never did.

O'Leary can't help but assume the worst.

"They're stealing," he said. "They're taking money out of people's pockets who think they're helping New York City police officers and that's simply wrong."

As Americans begin to plan their year-end charitable donations, some government officials and charity watchdog groups are warning consumers to protect themselves by avoiding phone contributions. Some charity solicitation calls, officials say, are downright scams -- like the kind O'Leary believes he has faced -- while others really do represent legitimate charities and nonprofit groups.

But donating to legitimate, professional fundraisers also has a potential downside: Often, only a small percentage of the donations collected are passed directly to the charities. The rest is used to pay the for-profit telemarketers who make solicitation calls on behalf of charities.

For instance, in most of the charitable campaigns conducted in New York State -- 475 of 584 campaigns -- less than 50 percent of the funds collected were given directly to the charities involved, according to a study released this month by the state Attorney General's Office.

In dozens of cases, less than 10 percent of donated funds were passed on to charities.

Attorneys general in several other states, including California, Connecticut, Colorado, Massachusetts and North Carolina, have yielded similar results, according to recent studies.

"I think people who give over the phone are typically unaware how much of their donation remains in their telemarketers' hands," said Sandra Miniutti, the vice president of marketing at the charity watchdog group Charity Navigator. "I don't think people would give if they knew."

The issue, she said, takes on increased significance now, as tough economic times push charitable giving down and nonprofit groups scramble for any cash they can get.

Signing up for the National Do Not Call Registry won't keep consumers from receiving such phone solicitations, Miniutti said.

Telemarketers calling on behalf of charities are exempt from the registry's ban on solicitation calls. When the registry took effect in 2003, she said, it influenced many telemarketers to move into the nonprofit fundraising business.

The shift, she said, meant "you didn't see a whole lot of telemarketing firms go out of business."

The Direct Marketing Association, a trade association representing telemarketers, declined to comment for this story.