When fundraising looks an awful lot like plain old fraud

Nearly 60 cents of every dollar collected in third-party fundraising campaigns went to charitable causes over the past fiscal year, with the remaining 40 percent gobbled up in overhead and administrative fees.

The N.C. Office of the Secretary of State released its 2016-17 Charitable Solicitation Licensing Division annual report last week — just ahead of the Thanksgiving holiday, when Christmas fundraising efforts begin in earnest.

Secretary of State Elaine Marshall said numbers are moving in the right direction. This year, charities and nonprofits received 59.25 percent of fundraiser proceeds compared to 58.14 percent in 2015-16.

While there’s cause for optimism in the report, there are also grounds for outrage. In some cases, less than 10 percent of fundraiser proceeds made it to the sponsoring charitable organization.

• Custom Fundraising Solutions of Raleigh raised $15,613 in a partnership with Southern Nash High School on May 2, but the school’s cut of the proceeds was just 21.9 percent, or $3,420.

• Corporations for Character, LLC collected $59,774.44 for the Breast Cancer Outreach Foundation, Inc. on June 2, but the foundation received a paltry 11.44 percent, or $6,836.09.

• Courtesy Call, Inc. took in $91,475 in an Aug. 12, 2016 fundraiser for Help the Vets, Inc., but the veterans’ charity received just 10 percent — $9,147.

• Trigger Agency, LLC raised $124,602.72 for the Spirit of Hope Children’s Foundation, Inc., but gave the foundation a parsimonious 3.9 percent of gross receipts — that’s $4,853.63.

Not all fundraisers are created equal. The stingiest bunch seem to be phone solicitors, which command high percentages for their own overhead.

Meanwhile, photography companies that offer portrait sittings as fundraisers for volunteer fire departments offer roughly a 50-50 split — a better value for charities considering the service they provide is more labor-intensive than picking up the telephone and making cold calls.

It’s about proportionality and common sense. Most of us would agree that a portrait session for charity is a worthwhile way to give if the photographer receives about half of the fee and the remainder is a donation. But if someone calls you at home to ask for money, you’d rightly assume the solicitor’s cut should be substantially less than half of your pledge.

“Most of us understand that some amount of what we give will be diverted to pay for running a charity’s office or to pay for the fundraising effort,” Secretary of State Marshall said in a news release. “However, I doubt most of us could understand why a majority of each dollar we gave went to those things. We expect our donations to help the causes we support.”

Calling people to raise money for a good cause and keeping 70, 80, 90-plus-percent of the proceeds ought to be criminal. It sounds an awful lot like obtaining property by false pretense, a Class H felony in North Carolina.

But while the Secretary of State’s office regulates fundraisers, a press release notes that it “cannot legally penalize a charity for using the majority of its donations on fundraising or administrative overhead.”

Seems to us that state lawmakers need to pass strict new charity fraud statutes or add teeth to guidelines that are already on the books.

In the meantime, it’s buyer — or in this case, giver — beware.

Sunshine is the best disinfectant, and Marshall hopes her agency’s annual report can guide generous families and individuals toward legitimate fundraisers.

“If you look up groups you have given to over the past year, and you don’t like how they have spent the monies they have raised, then that’s where you need to start asking questions to determine if they deserve your continued support,” Marshall said.

The 2016-17 report is available online at www.sosnc.gov.

People will have to use their own judgment and make informed choices about whether and when to donate, but given the excessive overhead that’s rampant in phone solicitations, we urge our readers to cut out the middleman.

The next time a caller claims to be raising money for a cause you’d like to support, whether it’s your local school or fire department or a well-known national nonprofit, let the telemarketer know you can pitch in without his or her help.

Contacting your charity of choice at its business office and making a direct donation could make the difference between almost all and almost none of your money being used for its intended purpose.

The Wilson Times