Commercial fundraising firms turn over an average of 73% of funds raised to the nonprofits that retain them, according to a new report from the New York state Attorney General’s office. But “there is a minority of [fundraising firms that] collect fees so large that charities receive only a small fraction of the total amount donated through a campaign,” according to the report’s authors.
The authors analyzed data from 658 fundraising campaigns conducted either entirely or partially during 2021 by for-profit fundraisers in New York. That’s a dip from the 718 campaigns conducted the previous year, a drop attributed to COVID-19-related restrictions. “With vaccine eligibility limited until the second quarter of the year, live fundraising events remained difficult,” report authors wrote. “Charities and fundraisers had to pivot as the pandemic ebbed and flowed.”
The report does not break out whether potential funders were from prospect databases or lists provided by the individual nonprofit. The two types of lists often have different remittance rates. Representatives for the New York state Attorney General’s office did not return messages at deadline seeking clarification regarding whether remittance rates on these types of lists differed.
On the whole, the campaigns analyzed raised more than $1.71 billion, around $248 million more than was generated in 2020, despite the drop in the number of campaigns, according to Pennies for Charity: Fundraising by Professional Fundraisers, the new report from New York state Attorney General Letitia James’s office. Of that, the nonprofits received just less than $1.25 billion. More than half (60%) of the money raised was generated by two donor-advised funds – Network for Good, which coordinates Facebook-based campaigns, and Eaton Vance Distributors.
The $464 million retained by fundraisers made up 27% of all gross receipts, a percentage that has held more or less steady since 2018. But remittance rates to individual nonprofits varied widely: In 42% of the campaigns analyzed, charities received less than 50% of the funds raise. And in 15%, the expenses generated by the fundraisers exceeded the revenue generated, costing these charities an aggregated $10 million.
Among the report’s other findings:
* Online funding, which had jumped 21% during 2020, continued its rise, growing an additional 9% during 2021.
* Millennials, the generation coming into its own as funders, are responsive to peer-to-peer fundraising efforts. Nearly four in 10 (39%) have made donations via social media in support of someone they know.
* Telemarketing use as a fundraising channel has been dropping. During 2020, 410 campaigns employed telemarketing, a figure that slipped to 401 in 2021. Part of the reason for telemarketing fundraising’s decline might be rooted in its efficacy – for the fundraisers. In 2019, 195 fundraisers retained more than 50% of the dollars collected via these campaigns. By 2021, that number had dropped to 158 fundraisers.
The New York state database of charities and fundraising activity records upon which the report is based is available here: https://charitiesnys.com/. Individual campaign records include the name of the charity, name of the professional fundraiser, filing year, gross receipts, net remitted to charity, percentage remitted to charity and the amounts of uncollected pledges reported.