Charity report gives nonprofits black eye, critics say

Several Jewish nonprofit agencies are smarting from a state attorney general's report that commercial fund-raising firms are keeping the bulk of the money they raise rather than giving it to the charities that employ them.

The agencies and their representatives charge the report is misleading and unfair.

On average, only 43 cents of every dollar wind up in the charities' coffers, according to the annual report issued by Bill Lockyer, California's attorney general

Although many Jewish charities use volunteers to solicit donations, Lockyer's report listed some that employ professional solicitors, including Chabad of S.F., the Union of American Hebrew Congregations and One Israel Fund Ltd.

The new report suggested Chabad had the worst record of all Jewish charities in Northern California. Of $103,094 raised for that organization by the Daily Planet of San Jose, Chabad took home only 16 cents of each dollar, or $32,323.

On the other hand, San Francisco consultant Laura Talmus turned over 90 cents for every dollar she raised for the UAHC, the congregational arm of the Reform movement, a hefty gross of $1,157,261.

Meanwhile, the Jerusalem Foundation collected nearly half a million dollars. But that nonprofit agency netted a mere 16 percent of the take after paying its commercial fund-raiser, the Milwaukee-based A. B. Data Ltd.

One Israel Fund Ltd. received 60 cents on every dollar raised by Beverly K. Hewett, its West Coast regional director. While that may sound questionable to some, Hewett's return to the charity far exceeded the statewide average of 43 cents on the dollar. Calls to Hewett were not returned by presstime.

Despite Talmus' strong showing in the report, the San Francisco consultant still criticized it heavily, coming to the defense of those organizations that were tarnished.

"They were throwing all kinds of fund-raising services all in one pot," said Talmus, a 20-year fund-raising veteran who admits few can match her record for high returns. "You cannot deduce anything based purely on percentages."

Rabbi Yosef Langer, spiritual leader of Chabad of S.F., charged that both he and the Daily Planet were unfairly sullied by high-profile news stories.

"I don't want to be put in the category [of charities that siphon off donor dollars]," he said.

Langer said the firm isn't purely a fund-raiser. It keeps such a large portion of the proceeds because it runs services for Chabad. The firm, for example, handles Chabad's Project Pride, a drug awareness and rehabilitation program, and a missing persons program that has united runaways, many suffering from mental illnesses, with their families.

The company donates $1,000 a month to Chabad and also generates in-kind donations from the community. He produced records that detailed a multiservice contract.

"They're a for-profit business and they do a lot of public relations work for us in these efforts," a distressed Langer said. "We benefit tremendously. They distribute 3 million pictures [of missing persons] a year in this state."

But Lockyer said hiring commercial firms to raise funds carries big risks. In some cases, he said, fund-raising costs exceeded the profits, and charities wound up in the hole.

Still, there are good reasons why some agencies pay big bucks to commercial firms, said Jon Friedenberg, executive director of the Jewish Federation of Greater San Jose.

While an organization such as a Jewish federation can fuel fund-raising drives with volunteer labor, that is not realistic for all agencies, he said.

"Certainly, larger and better-established organizations are able to raise money more efficiently in-house," he said. "It's reasonable for younger, newer organizations to have higher fund-raising costs — start-up costs — than at federation, where we have thousands of loyal donors who give every year."

But even the South Bay mega-agency does sometimes hire an outside firm to make follow-up calls to donors who have not yet paid what they have pledged.

"It works out to about $3 a call," Friedenberg said. "They get a flat fee. It's definitely worth it."

But none of the criticism lobbed at the attorney general's report swayed Pat Wallace, president of the Better Business Bureau of the Bay Area. Wallace, an expert in nonprofits and charitable giving, said a charity is stiffing its donors if the firm it hires keeps too much of the money it raises.

But is that the charity's fault?

"It absolutely is, because they sign a contract," said Wallace, who uses the attorney general's annual report to compile a customized analysis of nonprofit organizations. "They will say, 'Well, if I didn't hire this guy, I wouldn't even have the 20 percent he gave me.' That is a very short-sighted viewpoint. Who needs them if they can't generate enough to cover their own expenses?"

Few on the list meet the BBB's minimum for a recommendation: 50 percent of funds going to the charity.

"Our minimum used to be 65 percent, but so few [charities] qualified we switched," said Wallace.

Wallace's advice to donors: "If it's a phone solicitation, hang up. That's where most of the rip-offs occur."

And his advice to nonprofits dealing with commercial fund-raisers: "Read that contract. Insist on a healthy percentage — not 20 percent, not 30 percent. And if you don't understand it, have an attorney read it. And 15 percent is pretty pathetic."

Not necessarily, some say, citing other gains such as expanding a donor list.

And a commercial campaign is only part of a total fund-raising package that may also include face-to-face solicitations, which is more labor-intensive but results in larger gifts, said Rabbi Larry Rubinstein, director of development for the New York-based UAHC.

"Here at the UAHC, we do both," said Rubinstein, who advises the organization's 900 Reform congregations on capital campaigns.

"We expect to pay a set fee — not a percentage," Rubinstein said. "And we have a lot of high-end involvement. We don't just turn everything over to the consultant. We're monitoring things all the time."

The chemistry between charity and consultant is critical, Talmus said. She said she chooses her clients carefully.

"My values speak loudly in terms of my selection of clients," she said. "I can't take on too many clients because there is a lot of sweat equity here."

Talmus organizes major events, such as a celebration for Congregation Sherith Israel senior rabbi, Martin Weiner. She also conducts feasibility studies for Jewish community centers and day schools, and "then set up and run a campaign."

But "I start with nonprofits at every level of sophistication, including some that don't even have a full-time staff member yet," she said. "I quote a flat fee to a client up front based on what I know there needs to be done. And I will stack my record against anyone who does what I do."

But Talmus, who also volunteers her services as a board member of the American-Israel Friendship League and other community boards, suggested charities check references before they contract with a commercial firm.

Talmus Associates also did well by Peninsula Temple Beth El. The firm turned over $220,054 of the $289,506 she raised to the San Mateo Reform congregation.

Other findings in the state report:

*One Israel Fund Ltd. hired Hewett to tap donors. Her company raised $28,557. Sixty percent of that amount, or $17,139, went to the organization.

The Southern California offices of the Anti-Defamation League of B'nai B'rith realized only slightly less than 26 percent of the $365,470 raised by Facter Direct Ltd., a Los Angeles firm.

And a Los Angeles chapter of the American Jewish Congress, best known for its vigilant support of the separation of church and state, received only 43 cents on every dollar raised — a total of $78,140 — by the Los Angeles-based Events Unlimited Inc.

*The Union of Council for Soviet Jews kept nearly 60 cents on the dollar of the $346,624 raised by A.B. Data Ltd.

*In Southern California, Temple Aliyah hired Hang-ups Art Enterprises Inc., which brought in $13,580 — but turned only 25 percent of that to the congregation.

In fact, others serviced by Hang-Ups in Southern California, also fared poorly. Congregation Beth Shalom, received less than 25 percent, or $3,574, although Hang-Ups brought in $14,294. Riverside Hadassah saw only 23 percent of the $6,840 raised. Donors contributed nearly $10,000 to Valley Beth Shalom, but only $2,259, or 23 percent, made it to the synagogue. Temple Akiba netted even less: 22 percent.

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Rebecca Rosen Lum

Rebecca Rosen Lum is a freelance writer.