The Coinstar Conundrum and Other Mysteries of Paid Fundraising

Hawaii's charity solicitation report demonstrates why large scale charities continue to rely on contract fundraising.  It works for them.

Taking a look at the charity solicitation report of the Hawaii attorney general for the year ended June 30, 2007, I found a mixed bag of results among the two hundred reported campaigns, hardly the bleak picture painted by the press in the story Hawaii charities left with little after fundraisers take cut, Rob Perez.  Yet it also shows that fundraising is not a sure thing—even large scale, well known charities can have disappointingly low returns.

The only fundraiser that produced consistently high returns for charity was Coinstar, the company that operates coin-counting kiosks.   Coinstar has a program for donating change to selected charity partners with a reduction in its usual fee from 8.9% to 7.5%.  But while it's efficient in percentage terms, it's not that potent as a fundraiser.  Coinstar collected a whopping $1,046.75 in Hawaii in 2006-2007 and passed on $969.26, charging just $77.49 to write checks to the American Red Cross, Habitat for Humanity, the Leukemia & Lymphoma Society and the World Wildlife Fund.

At the other end of the spectrum, even the largest scale campaigns in the report were all over the place in net yield to charity (click on the image to the right for the table, which opens in a new window). 

There were twenty-one campaigns that reported gross receipts over a million dollars (we are guessing that these are full US campaign results, not just the Hawaii portion, but there's nothing in the report to confirm this). 

• The range of yield is from a bit over 7% (Humane Society of America/Share Group) to 82% (Sierra Club/Telefund). 
• Ten campaigns (about half) are bunched in the 50% to 75% yield range.  Sierra Club and St. Jude's  Children's Hospital were above that. 
• There's mixed support for the contention that controversial causes have lower yields.  Planned Parenthood had a campaign with an impressive 65% yield, and the Human Rights Campaign (for lesbian, gay, bisexual and transgender equal rights) was close behind with a 63% yield.  But the ACLU, the National Resources Defense Council, and the National Right to Life Committee all had campaigns with yields in the twenties.   The National Organization for Women had two campaigns with about a 50% yield. 
• Overall, animal groups did not fare well.  The American Society for the Prevention of Cruelty to Animals registered a 54% yield and the Humane Society of the United States reported the worst performance of a large scale campaign at 7%. 
• It is hard to generalize the results because it appears that they employ a range of methods.  Some appear to be telemarketing campaigns (from the name of the soliciting group).  But the largest campaign, for the Paralyzed Veterans of America (EIN 13-1946868 Form 990), surely represents that organization's flagship direct mail campaign of personalized address labels. 
• And even the worst-performing campaign had a return in absolute dollars in excess of $100,000.  The median return in dollars for a campaign with a yield under 50% was $466,000.  Even when the percentage yield is less than desirable, these campaigns still provide substantial dollar returns.  So charities continue to employ them to recruit new donors and to follow up with old ones. 

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