An article recently published in The Lehigh Valley’s local newspaper, The Morning Call, gives a behind the scenes look at the Firemen’s Association of the State of Pennsylvania’s fundraising activities for the past seven years. The article, ‘Pennies on the Dollar’ by Time Darragh, gives insight as to how much fundraising can really cost and in the case of the Fireman’s Association, 87 cents for each dollar donated. The association used professional fundraising company Civic Development Group to make phone calls and send out mail pieces.  This brings professional fundraisers and their use of funds in to question. An excerpt from the article says, “The firefighters’ example may be extreme, but state records since 2002 show fundraisers that charge more than they deliver to the charities they serve are the norm.”

Since 2002 $7.2 billion has been raised in Pennsylvania for nonprofits and 53% of that covered fundraisers’ fees and costs, a percentage that is way above the maximum recommended by the Pennsylvania Association of Nonprofit Organizations (PANO). PANO recommends that charities and nonprofit organizations bring in at least three times the amount of money they spend on fundraising. Some examples from the article of inefficient work done by professional fundraising firms are as follows.

The East Stroudsburg University Foundation in East Stroudsburg, PA took a chance by hiring Ruffalocody, a well-known fundraising firm, to reach out to alumni who have not yet donated to the school. Instead of experiencing the success that Ruffalocody is known for, East Stroudsburg University lost $18,450 from the campaign because they could not raise enough money to cover the costs of the fundraising firm.

Another Pennsylvania school, DeSales University, used Ruffalocody as well for their fundraising in the past and lost over $1,000  in their campaign.

The American Breast Cancer Foundation has only been able to put 12 cents from each donor dollar towards their cause during the last five years of fundraising in Pennsylvania. The other 88% went to the companies that ran their campaigns. The Vice President of the foundation, Tammy Wagner,  has said that the fundraisers ”have not kept $0.88 on every dollar, rather, that is the cost of raising the funds necessary to provide these services.” And while that may be true there is something to be said about the fact that the American Breast Cancer Foundation spends far more money on fundraising activities than on providing breast cancer patients with wigs, prosthetics, cash grants, and direct aid (all part of their main mission).

The American Association of State Troopers located in Tallahassee, Florida used two Texas based fundraising firms to raise money. Since 2002 the firms, Statewide Calling Inc. and Statewide Appeal Inc., have raised $27 million for the nonprofit but have also cost them $22.4 million which means the American Association of State Troopers will never see 82% of those funds.

Lucille Freeman of the fundraising company Smith-Freeman Associates in Temple, PA says many nonprofits seem “perfectly happy” accepting a small percentage of funds raised by solicitors because they do not have the expertise or experience to do their own fundraising. This complacency is not okay since it is preventing nonprofits from reaching their full potential.

Some fundraisers even decide to keep a large fixed portion of donor dollars for themselves regardless of  costs. For example, Smith-Freeman Associates keeps 70% of the money raised. To quote the article, “Fundraising professional organizations in general frown on paying solicitors a pre-established percentage of donations, saying it could encourage high-pressure tactics.” One example of this would be The Association of Fundraising Consultants not being  in favor of commission-only deals because they tempt consultants and any other outside fundraising firms to go after the biggest and easiest contributions rather than what would best suit the long-term objectives of a nonprofit.

Not all professional fundraisers have to be so costly for a nonprofit organization. The Indiana University of Pennsylvania hired fundraiser Ellen Ruddock for a major capital campaign. She raised almost $31 million and was able to give the school $30.4 million since her costs equated to only 1.5% of the donated money.

Alex’s Lemonade Stand is great example of a nonprofit that does not use costly fundraising firms to raise money. They call on people everywhere to be volunteers and run lemonade stands to to raise both money and awareness for pediatric cancer. Last year, the foundation donated $4.2 million to hospitals and cancer research centers out of the $6 million that was received in donations

While the article does highlight many examples of ineffective use of funds by professional fundraisers, outside fundraisers do not have to be the enemy. We, here at Pacesetter Enterprises, offer the most cost effective and affordable options possible for nonprofit organizations. We take into consideration their long-term goals and objectives and create a strategy using direct mail, email, and social media that will help nonprofits to reach them. Our integrated campaigns reach people at personal and various levels and increase the likelihood of their giving and also work to increase their overall lifetime donor value.