A recent investigation revealed telemarketers and direct-mail companies sometimes receive 90 percent or more of the money people donate to charities.
The non-profit organizations end up with just pennies on the dollar raised through solicitation campaigns, and it's all legal.
The Alzheimer's Association office at Ward Warehouse in Kakaako, Hawaii is one of 77 chapters across the country. Its staff and programs help the families of 31,000 people living with Alzheimer's disease in Hawaii.
A recent campaign conducted for the Alzheimer's Association by a mainland telemarketing company generated $16,101 in donations from Hawaii. But the charity received just $19.71 of that money,according to the latest state Attorney General's charitable solicitation financial report.
The telemarketing company that conducted the campaign got more than 99 percent of the funds, leaving the Alzheimer's Association with only twelve-tenths of one percent of the Hawaii donations.
Tim Taravella, director of development for the Honolulu office of the Alzheimer's Association, said he was shocked at the discovery.
Taravella did some checking with officials at his group's headquarters in Chicago and said he found the "Care and Cure" campaign that yielded so little money for his charity was not supposed to raise a lot of funds. Instead, it focused on finding new volunteers who would donate time, money and support in the future.
"It is more of a grassroots volunteer recruiting campaign, versus a fundraising activity," Taravella said. "If it was a fundraising model completely, I would have expected the percentage to be much higher in return to the local chapter."
Hugh Jones, the deputy attorney general in charge of regulating charities for the state of Hawaii, said many people don't know about the lopsided payments that telemarketing and direct mail companies receive for carrying out some charity campaigns.
"We feel that most donors that find that information out are more reluctant to give, so it can come back to bite the charity in many cases," Jones said. "It's not unusual that a professional solicitor will keep as much as 90 percent of the amount raised. Many charities feel that that's 10 percent more than they expected to get in the first place."
The investigators found plenty of examples of the 90-10 split in favor of the fund raisers instead of the non-profit agencies to which people thought they were donating.
The Breast Cancer Survivors Foundation -- based in New Jersey -- reported collecting $46,557 in donations from Hawaii in the last year. The charity received only $4,655 of that.
The direct mail or telemarketing company that conducted the fundraising campaign got 90 percent of the money and the breast cancer non-profit ended up with just 10 percent.
The Firefighters Support Foundation, based in Greenfield, Massachusetts, reports collecting $22,699 from Hawaii residents in the past year. Most of the money -- 90 percent -- went to the marketing company responsible for soliciting the cash. Only 10 percent went to the non-profit that helps firefighters with training and buys them equipment.
"Fundraising is a competitive industry, and what we pay to our fund raiser is the market rate," said the Firefighters Support Foundation's Ralph Mroz. "Further, we have no risk of losing money, as we would if we tried to raise fund ourselves. This is a very real risk. One losing campaign would put us out of business."
He said he did not recall receiving a grant application for fire equipment from a Hawaii fire fighting organization, but said the main focus of his non-profit is to provide training.
The Law Enforcement Officers Relief Fund, headquartered in New Jersey, reported raising $25,255 from Hawaii. The charity received just $2,525 of that, or 10.9 percent of the donations made here, while the marketing company that handled the fundraising campaign was paid 89 percent of the money raised.
A Virginia-based political non-profit called the Tea Party Patriots raised $5,090 in donations from people in the islands recently, but received just $288 or less than 5 percent of that money. The company that solicited those contributions was paid more than 95 percent of the funds.
About 65 percent of the charities that solicit money from people in Hawaii are headquartered on the mainland.
But many local charities – such as the Institute For Human Services, the state's largest homeless assistance organization -- do not use mainland soliciting companies to raise money, so they keep everything they raise.
"For us at IHS, it costs about seven dollars a day to feed someone. So therefore every dollar that we get in can make the difference between someone being hungry that day or not," said Institute for Human Services Development Director Marc Alexander.
"All of our fundraising really is done in-house. We send out regular appeals and newsletters. We communicate regularly with donors. We utilize our website resources to invite people to participate in the mission and vision of IHS," Alexander said.
Some charities have very favorable fundraising ratios, such as the Leukemia and Lymphoma Society, which recently sent mailers to Hawaii residents.
The society reported keeping nearly all of the $7,894 raised across Hawaii in the last year. The solicitation company kept just one percent of the money raised, while the charity got 99 percent.
The March of Dimes reported keeping $7,228 out of the $8,858 it raised in Hawaii, meaning the charity kept 82 percent of the money and the fundraising firm got the other 18 percent.
The AARP said people 65 and older receive more charitable solicitations than any other age group, so the AARP recommends older folks have a conversation with a close family member before giving to a charity.
"So it's more of a plan, as opposed to an emotional response when you get a phone call, or you get an email or you get something in the mail," said Bruce Bottorf, a spokesman for AARP Hawaii.
Hawaii's Better Business Bureau said if a telemarketer is making a fundraising plea seem very urgent, it's important to step back and gather more information before donating your money to them.
"There's a lot of solicitors out there that use pressure tactics or really sympathy tactics to try and get that money right now. Never feel pressure to do so," said Tim Caminos, a spokesman for Hawaii's BBB.
The BBB has some simple questions to ask telemarketers who are required by law to answer truthfully.
"You can ask one, if they are a professional fundraiser; two, who they work for; and three, how much of their money actually goes to the charities," Caminos said.
To make sure 100 percent of your donation ends up at the charity you want to support, go to the non-profit's website and donate directly to the non-profit online. Or call the charity and get their address and then support them the old-fashioned way, by sending them a check in the mail.
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