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Summary of Results of Charitable Solicitations By SUMMARY OF CHARITABLE SOLICITATION CAMPAIGNS CONDUCTED BY PROFESSIONAL FUNDRAISERS IN CALENDAR YEAR 2018 XAVIER BECERRA Attorney General State of California SUMMARY OF CHARITABLE SOLICITATION BY PROFESSIONAL FUNDRAISERS FOR CALENDAR YEAR ENDING 2018 (Government Code section 12599) TABLE OF CONTENTS PAGES SUMMARY 1 - 8 TABLE SUBJECT/TITLE 1 ALPHABETICAL LISTING BY CHARITABLE ORGANIZATION 2 LISTING BY PERCENT TO CHARITY IN DESCENDING ORDER 3 THRIFT STORE OPERATIONS – GOODS PURCHASED FROM CHARITY 4 THRIFT STORE OPERATIONS – MANAGEMENT FEE/COMMISSION 5 VEHICLE DONATIONS – ALPHABETICAL LISTING BY CHARITABLE ORGANIZATION 6 COMMERCIAL COVENTURERS – ALPHABETICAL LISTING BY CHARITABLE ORGANIZATION California Department of Justice November 2019 SUMMARY Every year Californians provide generous support to charities by giving directly to charities or through professional fundraisers hired by charities. Professional fundraisers that solicit donations in California are subject to the Attorney General’s regulatory oversight. Professional fundraisers are required to register and report to the Attorney General’s Registry of Charitable Trusts. For more information on the registration and reporting requirements of professional fundraisers, please visit our website at oag.ca.gov/charities/pf. One type of professional fundraiser is a commercial fundraiser, which refer generally to a person or an entity retained by a charity to solicit money or property on the charity’s behalf. The commercial fundraiser may solicit donations via direct mail, online through a website, by door-to-door solicitation, through telemarketing, auctions, entertainment events and through the sale of used personal property such as clothing, household items and vehicles. Commercial fundraiser may be paid either a flat fee or a percentage of the donations collected in the charity’s name. By law, commercial fundraisers operating in California are required to register with the Attorney General’s Registry of Charitable Trusts and file a Notice of Intent before soliciting donations. For each solicitation campaign conducted, commercial fundraisers are then required to file annual financial report that disclose the total revenue raised, expenses incurred and net amount paid to the charity that retained the fundraiser. Another type of professional fundraiser is a commercial coventurer, which is defined as any person, who for profit, represents to the public that the purchase or use of any goods, services, entertainment, or any other thing of value will benefit a charitable organization or will be used for a charitable purpose. This Summary Report is prepared from self-reported information contained in the annual financial disclosure reports filed by commercial fundraisers and commercial coventurers for the calendar year 2018, and includes statistics for donations of both cash and used personal property (such as clothing and vehicles). The Summary Report includes information only from complete financial reports that were received before November 4, 2019. Tables 1 and 2 provide information from reports submitted by commercial fundraisers that solicit donations via direct mail, telemarketing, auctions, and entertainment events. Tables 3, 4, and 5 provide information from reports submitted for thrift store operations and vehicle donation programs. Table 6 provides information from reports submitted by commercial coventurers. Compliance Efforts Made In 2018 In November of 2018, the Registry of Charitable Trusts issued 59 Delinquency letters 3 to commercial fundraisers who had not filed financial reports from 2014 – 2017. The delinquency letters resulted in 184 financial reporting being filed. Submissions filed in response to the delinquency letters has resulted in more accurate reporting for 2018. The revenue reported in the Attorney General’s report for 2017 increased from $676.6 million to $733.2 million as a result of the filings submitted in response to the delinquency notices. Likewise, these filings also changed the amounts reported being distributed to charities from $491.1 million to $525.3 million. A few commercial fundraisers failed to comply with the delinquency notices and administrative actions were taken against. Charities cannot contract with these organizations to raise funds in California until the commercial fundraisers resolve their deficiencies with the Registry of Charitable Trusts. The fundraisers who were refused registration based on the failure to file annual reports are listed below: Your Voice Media, Inc. Fine Line Communications Ltd I Give On: The Givers Marketplace Comparison Figures for the Past Five Years of Reporting The table below shows the last five years of revenue raised by professional fundraisers, as well as the percentage of the revenue distributed to charitable organizations. In the last five years, revenue raised from general fundraising has increased 61.3 percent and the amount paid to charities has also increased from 67.98 to 80.49 percent. For vehicle donation programs, the percentage distributed to charities over the past five years has seen little change from 35.18 to 36.89 percent, but the total revenue raised through vehicle donations increased by approximately 180 percent. 2018 AG Report - Comparison Figures for the Past Five Years of Reporting General Fundraising 2014 2015 2016 2017 2018 Total Revenue $502,943,048 $530,604,241 $627,796,564 $733,156,543 $810,360,614 Amt. to Charity $341,902,211 $378,240,303 $430,791,761 $525,272,177 $652,230,894 Percent to Charity 67.98% 71.28% 68.62% 71.65% 80.49% Thrift Stores (Cost of Goods) Total Revenue $176,144,260 $50,856,151 $53,866,509 $47,810,261 $48,841,608 Amt. to Charity $13,658,085 $14,113,083 $16,414,416 $10,441,533 $7,869,770 Percent to Charity 7.75% 27.75% 30.47% 21.84% 16.11% Thrift Stores (Fee/Commission) Total Revenue $4,267,852 $1,953,902 $1,426,722 $1,367,406 $1,356,259 4 Amt. to Charity $156,445 $96,147 $114,000 $108,000 $102,000 Percent to Charity 3.67% 4.92% 7.99% 7.90% 7.52% Vehicle Donations Total Revenue $31,947,112 $65,141,095 $76,531,032 $91,937,288 $89,437,738 Amt. to Charity $11,239,609 $25,913,798 $34,708,779 $30,642,422 $32,991,082 Percent to Charity 35.18% 39.78% 45.35% 33.33% 36.89% Commercial Coventurers Total Revenue $195,750,285 $73,993,453 $195,339,276 $250,269,750 $86,171,730 Amt. to Charity $36,179,455 $44,857,555 $25,574,925 $46,375,872 $18,020,619 Percent to Charity 18.48% 60.62% 13.09% 18.53% 20.91% Some of the Worst Performers Based On a Five-Year Cumulative Review Charities should consider the prudence of hiring fundraisers that continuously fail to perform over the years. Likewise, donors and grant makers may want to exercise caution in supporting charities that hire fundraisers with poor track records. The table below shows the amount of total revenue raised in the past five years by the worst performing professional fundraisers based on a five-year cumulative review of prior reports submitted to the Attorney General. The table also shows that some of the charities lost more money than was raised, or received less than three percent of the total funds donated. It is important to note that most of the charities registered with the Attorney General’s Registry of Charitable Trusts do not use professional fundraisers to raise funds. 5-Year Revenue Amount to Charities % to Charities 1. PUBLIC OUTREACH FUNDRAISING, LLC $2,161,244 -$9,131,561 -422.51% 2. WAYS FUNDRAISING USA $723,171 -$1,442,932 -199.53% 3. FACE TO FACE OUTREACH, INC. $732,602 -$976,884 -133.34% 4. NEW CANVASSING EXPERIENCE, INC. $5,054,089 -$5,882,919 -116.40% 5. APPCO GROUP U.S., INC. $5,214,755 -$4,592,885 -88.07% 6. GRASSROOTS CAMPAIGNS, INC. $40,298,883 -$16,888,840 -41.91% 7. GORDON & SCHWENKMEYER, INC. $5,034,204 -$1,118,905 -22.23% 8. INTEGRAL RESOURCES, INC. $2,096,294 -$453,931 -21.65% 9. TSM DONOR ENGAGEMENT TEAM, INC. $3,555,445 -$742,302 -20.88% 10. KKA ENTERPRISES, INC. $10,131,111 $203,500 2.01% Description and Summary of Information in Tables 1 and 2 Table 1 -Alphabetical Listing of Charitable Organizations: This table lists in alphabetical order each charitable organization that hired commercial fundraisers. 5 Table 2- Listing by Percent to Charity in Descending Order: This table lists charitable organization arities in descending order by the amounts raised. • The information reported in Tables 1 and 2 was obtained from 718 completed financial reports, compared to 762 reports reviewed for the 2017 year. • Commercial fundraisers raised $810.4 million in charitable contributions in 2018, an increase of approximately $77.2 million over the amount reported in the 2017 year. • From the amount collected, the distribution to charity in 2018 was approximately $652.2 million, an increase of approximately $127 million from the amount reported in 2017. • The average distribution to charity from all campaigns conducted by commercial fundraisers in 2018 was 80.49 percent, an increase of 8.84 percent compared to the 2017 average of 71.65 percent. Overview of Thrift Store Operations and Vehicle Donation Programs Thrift stores raise charitable funds selling “salvageable personal property.” Thrift stores may be operated directly by a charity or through a for-profit vendor. For-profit vendors are defined as commercial fundraisers if they (1) receive a management fee or commission from a charity for operating the thrift store, or (2) purchase a majority of the goods sold from charities or social welfare organizations at negotiated prices. (Government Code, § 12599.) Charities that operate their own thrift stores incur overhead and other expenses associated with the operation of a retail store. After those expenses are paid, the earnings are used to support charitable programs and other operational expenses. Vehicle donation programs have become more popular over the past several years.
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