Fundraising businesses can take a big chunk of non-profits' donations

CEDAR RAPIDS, Iowa (KCRG) -- 'Tis the season for giving but if that holiday donation request is being made over the phone, consumer beware.

Ruffalo Noel Levits on Novemver 27, 2019 (Josh Scheinblum/KCRG).

"Iowans should be suspicious, should be very careful," Iowa Attorney General Tom Miller said.

Miller recommends the public do their research before donating to any organization soliciting funds, especially if that group has hired an outside company to call you.

"It's hard to make a total blanket statement that they're all bad, but the industry, the outside fundraising industry that focuses on telephone and certain kinds of mailing, are really suspect," Miller said.

Among Miller's concerns is that professional fundraisers may not make it clear just how much of a cut of your donation they get.

South Carolina requires private fundraisers to report all of their work, including that which was done out of state. That is how the I9 investigative team found out the Kirkwood Community College Foundation lost nearly $2,000 in a 2017 fundraising campaign where they ended up paying the company it hired more than they raised.

Des Moines University Osteopathic Medical Center lost $16,000 that same year.

Both non-profit organizations used the same private fundraiser, Cedar Rapids-based Ruffalo Noel Levitz.

The national I9 investigative team identified Ruffalo as one of the largest for-profit fundraisers in the country. Ruffalo says it works with 1,900 campuses and non-profits each year and has raised more than a billion dollars.

I9 reached out to Ruffalo for an interview for this story, but they declined.

The University of Northern Iowa Foundation has used Ruffalo's fundraising services for 10 years. James Jermier, president of the UNI Foundation, said he was not available for an interview to discuss this story.

Records show Ruffalo raised more than $370,000 in a phone campaign for the UNI Foundation in 2017, but only 82% of that, $307,000, actually went to the charity.

Different records from the Ohio Attorney General's office further reveal that between October 2016 and June 2019, Ruffalo took about a 15% cut from what it raised for the UNI Foundation. Those records also show that the UNI Foundation has managed to keep a larger percentage of their funds than many other clients of Ruffalo. Other non-profits like The National FFA Foundation (8%), the University of Maryland Foundation (1%), the Rutgers University Foundation (14%), and Drexel University (.33%) only kept a small percentage of the total funds raised by Ruffalo on their behalf.

Kristin Pates, the campaign director for the United Way of Story County, works for among the most financially-efficient non-profit groups in the country, according to CharityNavigator.org. Charity Navigator is a group that evaluates and scores non-profits based on their financial health, accountability, and transparency.

They gave United Way of Story County a perfect score and noted they only spend seven cents to raise each dollar they bring in. The UNI Foundation is not among the non-profit organizations which Charity Navigator has reviewed.

Pates says they do not use a private company to make phone calls to raise money on their behalf, relying instead on their volunteers for that. She said for some groups, hiring a company to help them raise money makes financial sense.

"If you're working on a special program or a special appeal, building site, then those reputable donor management companies, fundraising companies makes a lot of sense," Pates said.