Thursday, November 21, 2013

CHARITIES - Telemarketing Sharks

"One donation to charity telemarketer spawns more solicitation calls" by Kendall Taggart, Center for Investigative Reporting 11/14/2013


Judith Johnson of Stacyville, Iowa, doesn’t get out much anymore.

Legally blind and living on a small Social Security pension, the 72-year-old used to go to church once a week.  She stopped out of fear that her new walker would snag on the railroad tracks she had to cross to get there.

But Johnson, whose tiny apartment is decorated with crucifixes, still believes it’s her duty to help those less fortunate.

So when telemarketers call on behalf of cancer patients, homeless veterans or disabled firefighters, the retired secretary finds it hard to say no.

That penchant for giving made Johnson the target of America’s billion-dollar charity fundraising industry.

In one recent year, callers persuaded her to write 25 checks to 11 different charities.

The repeated calls were no fluke.

Each one can be traced back to a single source – Associated Community Services, a Michigan-based company that is one of the nation’s largest charity telemarketing firms.

After Johnson gave to one charity, the firm put her on a list that got her bombarded with calls for nearly a dozen more company clients.  Telemarketers sometimes called several times a day.

Johnson told one phone solicitor she couldn’t afford to give to a charity called Children with Hair Loss.

“She said, ‘You’re going to let this poor little child be bald-headed when they’re only 4 years old?’ ” Johnson recalled.  “I really felt bad for the children, so I think I gave her around $10.”

Unbeknownst to Johnson, about $1.75 of that donation made it to the charity.  The telemarketing firm pocketed the rest.

Johnson’s story is just like that of millions of Americans who give once over the phone only to find themselves flooded with calls for more causes.

To track how this happens, the Tampa Bay Times and The Center for Investigative Reporting scrutinized how a single company, Associated Community Services, operated in one state that has amassed a treasure trove of data.

Reporters interviewed 10 current and former employees and examined internal company documents subpoenaed by the Iowa attorney general.  Iowa regulators used the records, which provide a rare glimpse into the inner workings of the charity industry, to build a case against the firm.  Earlier this year, a judge in Iowa ordered Associated Community Services to stop soliciting in that state until it fully complied with a subpoena.  The telemarketer is appealing the ruling.

In interviews, phone solicitors described the tactics they used to persuade donors to give.  Along with the records, which include details about every Iowa donor who gave 10 times or more, their descriptions reveal a deliberate strategy of targeting trusting donors and exploiting their generosity to fuel profits in the name of charity.

From March 2010 through June 2011, nearly 400 Iowans made 10 or more donations to the firm’s charity clients.  Total number of donations from the frequent-donor group: more than 5,500, worth a combined $102,000.

Associated Community Services would hit up its most reliable givers dozens of times in a year, with no regard for their age or financial situation.

Calls came so often that nearly half of the repeat donors gave to two different charity clients in a single day.

In an email, company officials said they call people on their hot list randomly and do not purposefully call multiple times a day.

“If the stars aligned properly, it is possible that a potential donor phone number could be called for several charities in one day,” President Richard Cole wrote.  “But this would be an unusual incident.”

Cole also said the company does not target the elderly and has no way of knowing the age or financial situation of the people they call.

But the Iowa attorney general found that most of the company’s prolific donors – those who gave 20 times or more – were 69 or older.

The top donor was a man in his 80s in Dubuque.  In just over a year, he made 38 donations totaling $1,375 to 13 of the telemarketer’s charities.

Six times, he gave to two of the firm’s clients on the same day.

The Iowa data details one company’s operations in a state with roughly 3 million residents.  But industry experts and the firm’s employees who worked the phones say it is representative of how Associated Community Services and many other telemarketers do business across the nation.

Industry experts said such practices are used primarily by telemarketing companies that do cold-calling and take a percentage of the donations raised, rather than a flat fee, for their service.

The vast majority of the nation’s 1.6 million nonprofits do not use telemarketing firms.  Charities that hire these phone solicitors wind up with a fraction of what gets raised.  Financial filings by clients represented by Associated Community Services show the firm and its related companies keep as much as 85 cents of every dollar donated.  Once charities pay their own administrative costs – including rent and salaries – it often means pennies on the dollar make it to those in need.

"America's Worst Charities"

No comments: