AKRON, Ohio - An Akron-based telemarketing firm is defending its fundraising practices following a series of reports that claim charities failed to receive a majority of funds raised.
InfoCision Corporation said news reports about its work are "completely false and misleading."
In Ohio, for example, the company came under scrutiny last April when the Ohio Attorney General's Office accused it of making "false and misleading statements" and "failing to make required disclosures" while soliciting donors over the phone.
In one recording supplied by the Attorney General's Office, an InfoCision telemarketer is heard claiming that "75 percent of every dollar goes directly to serving people with diabetes and their families."
Yet 2009 and 2010 contract agreements with the association show it agrees to accept just "15% of the gross revenue."
InfoCision settled the allegations but denied it violated the law. The company agreed to stop all misleading behavior.
A 5 on Your Side review of records supplied by the Ohio Attorney General's Office shows InfoCision raised $171 million in 2009 and 2010 for scores of charities in Ohio, but charities received just $69 million.
InfoCision Chief of Staff Steve Brubaker said dollar amounts released by attorneys general offices across the country don' t tell the whole story.
"We deliver a positive result to the client because they have new donors and they're able to share their message across the country -- it's positive," said Brubaker.
Brubaker added that charities hire them to make calls and InfoCision has related expenses.
"We pay our employees, we pay for the cost of facilities and all those things -- and we try to make a 10 percent profit."
But some donors who have received calls from InfoCision telemarketers were surprised to learn that charities enter into contracts that can result in as little as 15 percent of funds raised.
Carol Patterson said she's surprised charities would agree to give up the cash.
"The American Diabetes Association went into a contract with them and knowingly went along with this -- so I think they need to do some changing," said Patterson.
In a news release, the company said "it's important to understand that most charities use telemarketing as part of their overall fundraising strategy."
Here is the full statement issued by InfoCision:
"The important fact is that all Nonprofit organizations need to raise money, which is essential to their success and all the good works they accomplish. InfoCision supports their missions by carrying the majority of the costs of fundraising for them. We do NOT keep the money raised. Nothing could be further from the truth! Each charity has an annual budget goal to raise a certain amount, let's say X million dollars. On average an organization will budget 25% of the total raised for administrative, fundraising and other marketing costs. The remaining 75% is always used by the organization for the critical programs and services they provide so well. InfoCision is paid out of the budget for fundraising, plain and simple. We bill the client for our costs, then pay all our wonderful 4400 employees, for facilities, phone bill, technology, mailings, etc. and as a business strive for a 10% margin…although in the economic climate of the past few years, we have struggled to reach this target.
"For 30 years, InfoCision has partnered with the largest and most reputable Nonprofit organizations in the world. If the calls we make for charities were unsuccessful for them and, if they were unhappy, we would not be able to continue representing them, nor would they want us to.
"The campaigns mentioned in the report were all designed as donor acquisition appeals to breakeven upfront. Without proactively attempting to acquire new members, any charity will ultimately lose its membership through normal attrition and in time may no longer exist. Once a new member has been acquired, all their subsequent contributions will provide significant net return to the client over time and more than pay for the initial cost to bring them on. All our neighbor to neighbor campaigns recruiting volunteers provide a much needed educational and outreach mission where for example, diabetes tests, cancer prevention or the signs of a stroke information kits are distributed out to millions of families to help them be aware of risk factors and improve their overall health. There is no initial net return anticipated from these types of campaigns because it's all about engaging new donors and getting educational information into the hands of people who need it.
"Think about all the research and all the good being done by the world's leading health organizations to fight disease…Leukemia,
Heart, Diabetes, Cancer…we help all these causes. Without telephone prospecting bringing on new donors and volunteers, the mission could not be accomplished. For-profit businesses roll out new customer acquisition types of campaigns all the time, such as free giveaways of sample products. Consumers don't question this strategy even though it drives up marketing costs. Stores use what's called loss-leaders to get people through their doors. They'll take a loss on say a gallon of milk in hopes the consumer will purchase other marked-up items in the same trip and, become a regular customer because of their shopping experience.
"Charities do many different types of fundraising campaigns each year. Isolating just one individual campaign's report filed with a state attorney-general gives a distorted and confusing view. To find out how much a nonprofit organization commits to its core mission, review the Nonprofit's Form 990 filed each year with the IRS, which provides a comprehensive summary of the way an organization's uses all the funds entrusted to them.
"InfoCision's message is honest and clear. Any deception comes from the reporter's story. This type of irresponsible journalism seeks to hurt those valuable national charitable organizations who do so much good…they are our clients and we are proud to be their partner."