April 25, 2018
Mass. Charities Kept 41% of Funds Raise by Pros in 2015

December 1, 2016 — Massachusetts charities that used professionals to solicit funds for them netted an average 41% of the proceeds collected during fundraising campaigns last year, according to a report released this week by the attorney general’s office, up from 38% the previous year.

Sixty-nine conventional professional solicitors registered in Massachusetts raised $201 million in 2015 through 776 fundraising campaigns They transferred $82 million to nonprofits and kept $119 million, according to the office of the attorney general (AG).

The amount of funds going to charities that relied on conventional solicitors continues an upward trend of recent years. In 2012, charities kept 30% of the funds raised by conventional professionals, increasing to 33% in 2013 and 38% in 2014.

Conventional solicitors raise funds via phone, mail, and face-to-face methods. Unconventional solicitors raise funds using other approaches, including soliciting via online fundraising platforms; collecting tangible items from donors, such as clothes and other household goods, assigning a value to them, and then selling them; and selling consumers a chance to win “experiences” via online auction websites and contributing a portion of the proceeds to charity.

Massachusetts nonprofits retained 67% of funds raised by conventional and unconventional solicitors last year – or $387.4 million out of $580.9 million raised by professionals.

The amount raised by conventional and unconventional professional solicitors for Massachusetts nonprofits in 2015 was 7% higher than the $543 million they raised in 2014.

A comparable figure for Massachusetts charities that don't engage professional solicitors is not readily available, as most organizations report total funds raised through internal operations and do not report a net figure, i.e., funds raised minus direct and indirect costs incurred generating those funds.

Some of the largest conventional solicitors, each of which ran campaigns that spanned two or more years, transferred a similar percentage of funds raised to charities in each of the last three years, according to the AG's office. However, the amount they transferred to charities varied. In 2015, they transferred from 12% to 56% of the funds they raised.

There is no requirement that a minimum percentage or amount of funds donated through a professional solicitation campaign be passed on to the charity.

The amount of donations going to the charity last year varied widely, as it has previously – from 100%, meaning all funds raised went to the charity, to a negative percentage of funds raised, which means fundraising costs exceed the total raised.

Reasons for the wide variation in donations ending up with the charity, include the following:
  • Sometimes the costs of a campaign are front-loaded. For example, a campaign may incur significant database development and infrastructure costs in the first month, and if the campaign straddles two or more years, those costs will be reported only in the first year, and will be evaluated only in comparison to the donations received in that same calendar year.

  • In a “sustainer campaign” designed to obtain multi-year donation commitments, donations attributable to the campaign may come in for years after the campaign has ended. Such donations received in subsequent years may be directly attributable to a particular campaign, but are not reflected in the annual report for the year in which the campaign was conducted.

  • Some charities have a variety of goals for fundraising campaigns, such as increasing their donor base or exposure, some of which may not be reflected in the financial results of the professional solicitation engagement.

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