Friends,
A story in today's New York Times reports that while the trend of building donations into the cost of retail items has escalated, it has led to a host of worries about the accountability of those dollars. With very little transparency and often just the word of the retailers that the funds will find their way to the nonprofits, many observers and analysts feel that the lack of regulation, along with no registration requirements by state charity boards, makes it likely that consumers will be scammed. In some cases, the charities are unaware of products carrying their logos or that money is due them from the sale of items.
I have always been uneasy about retailers co-opting the good will generated by nonprofits. For me, philanthropy is a thoughtful act--as a fundraising professional I believe that we are in the business of helping people to make intelligent decisions on where to direct their charitable dollars. As the article noted, giving at the cash register is somewhat coercive. Worst of all, I fear that this is yet another burgeoning scandal that erodes donor confidence in the management of nonprofits.
For several years, corporations have been enamored of "cause-related marketing." While I have some friends in the nonprofit community who work in this area, here too I have my misgivings and question the motives of companies when they align their public image with high profile charities. I have also found that corporate "philanthropy" (where I gained some of my earliest chops as a fundraiser at the Hartford Stage Company during the era of big giving by United Technologies, Aetna, The Hartford, and The Travelers) carries big strings for the nonprofit. At a time when only 4.3% of all philanthropic dollars come from corporations, declining by nearly 7% from the previous year (Giving USA 2006), I am convinced that nonprofits must redouble their efforts in the growth areas of fundraising--individual gifts, bequests, and foundation support.
While composing this blog, I noticed a new article in the Washington Post about a study by the American Institute of Philanthropy that reveals how eight veterans charities, including some of the nation's largest, have given less than one third of the monies they raised for veterans and the wounded. One "group passed along 1 cent for every dollar raised... Another paid its founder and his wife a combined $540,000 in compensation and benefits last year." I'm sure that we'll be reading a great deal more about scandals in nonprofit land over the next several months
Obviously, we continue to advise our clients to maintain strict policies of transparency.
Talk to you soon!
Bob
