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March 23, 2013

Charity database is a formidable tool

Michigan Attorney General Bill Schuette recently turned a spotlight onto the world of charitable fundraising, bringing much needed transparency to the professional fundraising industry.

As the LSJ reported last year, many charitable organizations contract with professional fundraisers whose billed services consume the bulk of the donations. While not illegal, such practices leave a bad impression for disappointed donors who thought most of their money would help a favored cause.

Last week, Schuette released online at www.michigan.gov/agcharities a searchable list of charities that use professional fundraisers. The AG’s office did the math on what percentage of the money raised goes to the charity. (The report focuses on professional fundraisers, not work done by the charities’ staffers.)

Overall, the share going to charities is just 35 percent.

That means 65 percent goes to fundraising costs — the opposite of the Better Business Bureau’s Standards for Charity Accountability, which say a charity should spend no more than 35 percent of related contributions on fundraising.

Still, some charities did better, and some fundraising firms have track records much better than others.

State law requires charities to file their fundraising contracts with the attorney general’s office, and those records have been available to consumers for inspection. But until now, there was no simple online source where Michigan donors could quickly assess a telemarketer’s request to see how much money would go to charitable purposes.

In releasing the information, Schuette also noted that it’s against state law for a telemarketer to tell a potential donor that 90 percent of the gift will go to the charity if that is not the case.

Now consumers can easily detect such fraudulent claims and report them.

Such transparency is essential to letting consumers evaluate which charities have better records, and also to letting charities know which fundraising firms are likely to bring them more return for their good works.

By making the contrasts so clear, the public accountability will doubtless motivate improved practices in the entire industry. That, ultimately, benefits donors, as well.

This much-needed resource is an improvement over past practices in the attorney general’s office. Protecting the rights of Michigan consumers and donors has long been a celebrated role of the office. The new database is a formidable resource in that endeavor.

Lansing State Journal

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