With the holiday giving season underway, New York State Attorney General Letitia James is reminding New Yorkers to be mindful in their benevolence; risks of fraud, scams and the misallocation of donations are always lurking.
On Monday, James and her office released her “Pennies for Charity: Fundraising by Professional Fundraisers,” report, an annual analysis that details New York’s annual donation data.
“Giving Tuesday” comes on the heels of Black Friday, Small Business Saturday and Cyber Monday, ushering in a season of charitable giving for many New Yorkers.
While a new report shows charitable giving campaigns raised more than $1.4 billion in 2022, the professional fundraisers who help publicize and manage the campaigns took in $347 million for their services — nearly a quarter of all donations contributed by New Yorkers last year.
“Charitable organizations contribute significantly to New Yorkers’ lives and communities. Many provide essential services on which New Yorkers depend. In turn, New Yorkers give generously to support charities that assist in education, the arts, disaster relief, health care, and much more,” the report states. “Whether giving at the holidays, to a specific cause, or in the wake of a disaster, donors should use this report and other tools to give wisely to the charities they wish to support.”
As of October 2023, there were 95,513 charities registered with the Charities Bureau.
In 2021 — the most recent year with data available — approximately 1.5 million New Yorkers who itemize deductions claimed $63.4 billion in charitable contributions on their tax returns. This was a significant increase over the $46.8 billion claimed in 2020.
The report looks at 572 charitable organizations engaged in fundraising campaigns in 2002 using data submitted to the Attorney General’s Office by professional fundraisers. The AG’s report analyzed the data and compared the numbers with previous years’ data to identify trends, positive or negative. Additionally, the report provides insight on charity-based scams and gives tips on how to effectively contribute to the right organizations.
The good news is that charities received, on average, 77 percent of all donations, an increase from the 73 percent return in 2021.
The bad news is that almost half of the fundraising campaigns analyzed — 273 of 572 studied — received less than 50 percent of the funds raised on their behalf; the professional fundraisers they hired kept the rest.
“New Yorkers who generously donate to charities should do so without any fear of their money being misappropriated or mishandled,” James said in a press release. With this year’s holiday season coming at a tumultuous time, many people are actively looking to provide support to any of the numerous causes that have taken on prominent roles in their communities.
Doing so responsibly and safely requires information, which the report offers. It also answers questions like, “How much of my money is actually going to the intended charity?” or “How do I avoid being scammed when contributing to certain causes?”
Pennies for Charity reported that in 2022, fundraising campaigns in New York raised almost $1.5 billion. However, the number actually represents a $221 million drop in total fundraising revenues from the prior year. Furthermore, that $1.5 billion mark isn’t the actual total that went to charities, either. This is where the complications start to arise.
Many charitable campaigns do not market their causes on their own, which is news to a lot of donors. These campaigns often utilize the help of professional fundraisers, who exist to perform much of the heavy lifting involved in raising donations. Professional fundraisers come with their costs and fees, which in turn cut into the total donation revenues. This of course, means 100 percent of a donor’s contribution is not, in fact, going to charity.
James’ report showed that of the $1.49 billion that was donated in 2022, 23 percent of it was retained by fundraisers. Almost a quarter of all donations did not end up with charities. In some cases, the numbers look worse. In 273 of the campaigns, charities ended up with less than 50 percent of funds raised.
While the numbers might appear as discouraging, it’s not all bad. The fundraisers’ reported retained fees of 23 percent are following the steady trend of decline that has occurred over the past few years. In 2018, fundraisers retained 27 percent of donations, for example.
Professional fundraising isn’t necessarily bad either. Charitable organizations rely on their services and expertise to reach donors on a widespread level. Some fundraisers have higher expenses than others. Awareness of fundraising practices can help donors choose where to offer their contributions more carefully. Donors can look up information about charitable organizations in the Pennies for Charity’s database, which holds historical and financial records.
Another unfortunate problem with donating lies in the misrepresentation of fundraising organizations. Telemarketers and political action committees (PACs) are notorious for misleading donors, convincing them to donate under the guise of acting on behalf of good causes and pocketing the money for their own causes.
Thankfully, avoiding such scams is fairly straightforward. One can simply ask questions. On a call with someone claiming to be part of an organization? Just ask what causes they’re affiliated with, where donations go and even asking up front if they’re an actual charity. PAC donations are not tax deductible, unlike charitable donations.
In short, New Yorkers shouldn’t be deterred by scams and other bad apples that exist in the charity space. Donations and support for those in need is invaluable. People should continue giving what they can, with the aim of being more mindful of where they donate. A little research goes a long way. It’s your money, after all.