Citizens Against Government Waste suggested that its overall fundraising was highly efficient -- costing just 19 cents per dollar raised, according to its 2006 tax return.
But the group came up with that figure by designating most direct-mail and telemarketing costs as "services." The practice is legal if information, such as criticism of pork-barrel projects, is included in fundraising pitches. The American Institute of Philanthropy estimated the actual cost of the group's overall fundraising at 69 cents per dollar.
Some other economic-policy nonprofits steer clear of commercial fundraisers, emphasizing foundation grants and direct contact with donors.
Telemarketing and mass mailings can raise awareness, but "there's always something about it that rubs me the wrong way," said Ryan Alexander, president of Taxpayers for Common Sense in Washington, D.C. "It's important that people know that their dollars are going to the mission."
Joseph Bast, president of the Heartland Institute, a Chicago nonprofit that promotes free-market approaches to environmental and social problems and accepts corporate donations, said he didn't trust telemarketers to safeguard his group's image, especially when returns can be low.
"It's not a very good risk," he said.
Costs and credibility
American generosity has its limits. The charitable pie in the U.S. has accounted for about 2% of the gross domestic product since 1970.
Meanwhile, the number of charities has risen dramatically. More than 1.9 million nonprofits -- one for every 150 U.S. citizens -- fill gaps in government services, give voice to diverse views and compete fiercely for this limited share of donor dollars.
Tax laws, designed to encourage giving, don't take into account how much money reaches the charitable cause. Donors to commercially run drives can write off the entire donation, even if most of it goes to the fundraiser.
Lawmakers periodically have considered reining in the fundraising industry. But the U.S. Supreme Court has limited their options by upholding the free-speech rights of fundraisers and charities.
Recently, public confidence has been shaken by news of inefficient for-profit fundraisers used by police and firefighter charities. And congressional hearings depicted some veterans' charities as little more than shells that enrich fundraisers and executives.
In a national survey conducted in March, 70% of those polled said charities waste "a great deal" or "a fair amount" of their funds.
