Charitable cash cow - Page 3

Private companies make big profits raising money for nonprofits

Many hire full-time professional fundraisers to seek foundation and government grants or relationships with repeat donors, intangible benefits that can go beyond immediate fundraising goals.

As for telemarketing, Mike Smith, chief operating officer of New Jersey-based Charity Navigator, suggests that when donors receive a call, they can just hang up and cut a check directly to the nonprofit.

The debate over nonprofit fundraising costs is nothing new, but with information increasingly available on the Web, consumers are in a much stronger position to give wisely.

The San Francisco AIDS Foundation publicly and angrily parted ways with its commercial fundraiser, Pallatto Teamworks, in 2001 due in part to a dispute over how much the company charged to operate the California AIDS Ride. The charity has since created its own fundraising arm, steadily improving its rate of return from an average of 54 percent over the past seven years to 66.5 percent last year.

The foundation uses another company, MZA Events, to manage its annual AIDS Walkathon, which has averaged a healthy 63 percent return since 1999 with improved results over each of the last three years.

But officials with the SF AIDS Foundation believe telemarketing has enabled it to achieve greater public awareness. It also began moving the task in-house during the past six months and anticipates greater savings.

"Every dime we save in production is a dime that can go to our clients and our programs and our services," said Dave Ellison, spokesperson for the foundation. "We're always extremely aware of how important it is to keep the costs down because we see the benefits every day in the lives of our clients."

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