Charity telemarketing calls are difficult to avoid, and just as difficult to navigate if you answer one unintentionally. CharityWatch has long warned donors that donating in response to such calls will most likely result in very little of what you donate ending up at the charity. Charity telemarketers are most often employees or independent contractors of for-profit, professional fundraising companies that deduct excessive fees from what you give before what is leftover is eventually conveyed to the recipient charity.
Because charities are allowed to spend 99% of your donation on overhead without breaking any laws, unscrupulous nonprofits have little incentive to avoid contracting with telemarketing companies that raise a lot of money for the charity overall, but that do not do so in a financially efficient way. For example, say there is a small charity that is accustomed to raising $100,000 per year in donations. It then hires a for-profit telemarketing company to raise donations on its behalf. The telemarketer ends up raising $2 million dollars for the charity that year, but keeps $1.5 million of those donations for itself in the form of fees, passing on only $500,000 to the charity. From the charity's perspective, it has increased its revenue five-fold for the year. From the telemarketer's perspective, it is $1.5 million richer.
So what's the problem? The problem is that much more could have been accomplished with your donation had you instead donated to an efficient and effective charity working in a similar cause area. While all charities must spend some money to raise money, organizations that are able to maintain reasonable overhead spending can accomplish much more with your donations.
Telemarketing Sales Rule Helps Protect Donors
Enacted in 1995, the Federal Trade
Commission (FTC) created the Telemarketing Sales Rule (TSR), which is a
comprehensive set of regulations designed to protect consumers from fraudulent
and misleading telemarketing practices. The rule covers a wide range of issues,
including deceptive sales tactics, payment methods, and the establishment of
the National Do Not Call Registry.
Impact on Donors
The TSR has had a profound impact on
the world of charitable telemarketing, affecting both the organizations seeking
donations and the individuals making contributions. Here's how the rule impacts
donors:
- Transparency in
Solicitations: Telemarketers
are required to disclose key information during their calls, including the
identity of the charity they represent, the purpose of the call, and the fact
that it is a solicitation for a charitable donation. This ensures that donors
are well-informed before making a decision.
- Prohibition of
Misleading Statements: The TSR
prohibits telemarketers from making false or misleading statements to potential
donors. This helps maintain the integrity of charitable giving by preventing
deceptive tactics that could exploit the generosity of individuals.
- Verification of
Donations: In cases where a donor agrees to
contribute, telemarketers must send either: advance written authorization from the donor, an audio recording of the donor giving unambiguous affirmative oral authorization; or written confirmation of the transaction sent to the donor before submitting the charge for payment.
For more detailed information on the requirements listed above click here.
Impact on the
General Public
Beyond its relevance to donors, the TSR has a broader
impact on the general public, particularly on those who receive unsolicited
telemarketing calls. Here are some ways the rule benefits the public at large:
- National Do Not
Call Registry: The TSR
empowers individuals to reduce the number of unwanted telemarketing calls they
receive by allowing them to register their phone numbers on the National Do Not
Call Registry. Telemarketers are required to refrain from calling numbers
listed on the registry, giving individuals greater control over their privacy.
- Restrictions on
Hours of Calling: The rule
establishes specific time restrictions for telemarketing calls, prohibiting
calls before 8 a.m. and after 9 p.m. This ensures that individuals are not
disturbed during inconvenient hours, promoting a more respectful and
considerate approach to telemarketing.
- Ban on Abusive
Practices: The TSR prohibits certain abusive
practices, such as repeated calls with the intent to annoy or harass, as well
as threats or intimidation. This protects the public from aggressive and
intrusive telemarketing tactics.
Nonprofit
Exemption
It is important to note that
nonprofit organizations that conduct their own telemarketing campaigns are not
restricted by the TSR. However, after the USA Patriot Act was passed in 2001, for-profit
telemarketers that conduct solicitations on behalf of charities were
brought within the scope of this regulation. For-profit telemarketers soliciting on behalf of charities are exempt from the TSR as long as they do not materially misrepresent any of the following:
- The nature, purpose, or mission of the
charity they are soliciting on behalf of.
- The tax deductibility of any donation.
- The purpose for which the donation will
be used.
- A charitable organization or
telemarketer’s affiliations, endorsements, or sponsorships.
Additionally, these "telefunders" are unfortunately exempt from the National Do Not Call Registry, but must comply with a charity's entity-specific Do Not Call requirements. These entity-specific Do Not Call requirements prevent telemarketers from calling an individual who previously requested no more calls from or on behalf of a specific charity.
You can report a violation of the National Do Not Call Registry here. Just remember that, according to the Federal Trade Commission (FTC), "Even if your number is registered, some organizations may still call you, such as charities, political organizations, and telephone surveyors."
Bottom Line
Donating in response to a charity telemarketing call is unlikely to result in the majority of your donation being spent on the charitable programs you are intending to support. Instead of donating reactively in response to such a call, consider visiting CharityWatch's list of Top-Rated charities and donating directly instead.
This analysis was made possible by contributions from donors like you. As the only charity watchdog in the United States, CharityWatch relies on public support to fund our work with journalists, our research into wrongdoing in the nonprofit sector, and our charity ratings. Your donations are noticed, needed, and greatly appreciated.
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