Telethons and The Special Olympics:
WHERE DOES THAT MONEY REALLY GO?
by Keith Storey
Problems with the telethon organizations - the Muscular Dystrophy Association, United Cerebral Palsy, Easter Seals and the Arthritis Foundation - as well as the Special Olympics, have been well documented in this and other disability publications. But there's an issue which has been raised and discussed that still needs clear documentation: where does the money come from, and where does it go?
As I would talk about concerns with telethons and the Special Olympics in my classes, students would ask, "How much money do they take in? Where does it go?" I decided to find out.
With all of the five organizations reported on here, it took repeated phone calls and registered letters over many months to get them to send information - especially their IRS 990 forms. I started this project in the fall of 1996 and spent until August, 1997 trying to get information.
The MDA refused to send me their IRS 990 forms. I had to go to one of their regional offices where I was told (according to a letter from their central office) that I could not photocopy any information (unless I had brought my personal scanner!), that I had to leave all my things and go into a room with only a pencil and pad of paper to write down information, and that a staff person had to be with me while I did so. So much for helpfulness!
The American Institute of Philanthropy was also a good source of information on these groups.
According to the American Institute of Philanthropy's report, the MDA spent 69-74 percent "on charitable purpose" that year. That's a phrase the AIP uses in its reports. It's "the portion of total expenses that is spent on charitable programs. In AIP's view," says its report,. "60 percent or greater is reasonable for most charities."
According to AIP, it cost MDA $22-28 to raise every $100. AIP says that "$35 or less to raise $100 is reasonable for most charities." The AIP gave MDA a "Grade B" - Good.
Many non-profit organizations use commercial fundraisers. When you get a call from a charity, in may in fact be from one of these commercial fundraisers.
The National Easter Seal Society used My Favorite Charities as a commercial fundraiser. The December, 1996 California Attorney General's Report on Charitable Solicitation by Commercial Fundraisers reported that My Favorite Charities raised $101 for the Society; for this the Society paid My Favorite Charities $3,399. The AIP reports that in that year the National Easter Seal Society spent 57-80 percent "on charitable purpose" and their "cost to raise $100" was anywhere from $24 to $57. AIP rated them Grade D (Unsatisfactory).
The Arthritis Foundation also used My Favorite Charities as a commercial fundraiser. The same California Attorney General's report showed that for the $150 raised through My Favorite Charities, the Foundation paid the fundraiser $3,350. According to the AIP, The Arthritis Foundation spent 70-80 percent "on charitable purpose"; their "cost to raise $100" ranged between $14 and $24. The AIP rated them Grade B (Good).
It is interesting to note that the Special Olympics paid Epsilon, identified as a direct mail consultant, $611,818, and telemarketing consultant Meyer Associates $552,983. The firm of Robinson, Lake, Sawyer, Miller got $318,622 for "Public Awareness with respect to the 1995 Special Olympics World Games." Kershner & Company was paid $292,763 for a "Public Awareness Campaign Nationally." Attorney Cherry Joy Beysselance got $134,458 from the organization that year.
A number of Special Olympics groups in California also raised money; their efforts are detailed in the Attorney General's Report.
Northern California Special Olympics used Capa, Inc. of Chattanooga, Tennessee as a Commercial Fundraiser in 1995 to raise $45,241 - of which 10 percent ($4,524) went to the Special Olympics.
Southern California Special Olympics used Dialamerica Marketing Inc. of Mahway, NJ as a commercial fundraiser. They raised $106,560; $31,578 (29.6 percent) of that went to the Special Olympics. The group called California Special Olympics used Dialamerica Marketing Inc. of Mahway, NJ also: They raised $477,658 - of which $222,568 (46.6 percent) went to the Special Olympics. California Special Olympics also used Heritage Publishing Company of Sherwood, Arizona as a commercial fundraiser. Heritage raised $830,533 for them. Of that amount, $274,674 (33.1 percent) went to the Special Olympics.
The International Special Olympics - the corporate head of Special Olympics - used Meyer Associates, Inc. of St. Cloud, Minnesota as a commercial fundraiser; Meyer raised $68,330. Of that, $39,090 (57.2 percent) went to the Special Olympics.
The AIP reported that 57-70 percent of the corporate group's expenses were "on charitable purpose." Their "cost to raise $100" fell between $23 and $36. Their AIP rating was grade C (Satisfactory).
1. Make a phone call to the charity. Ask for a copy of their "latest financial report and IRS 990 forms."
Make sure that you get the IRS 990 forms - because they will have a lot of important information not in the financial report. Be sure to get the name of the person you talk to; record the date and time that you made your request.
2. If you get no response to your phone call, send a registered letter asking for the above information.
3. As a final measure, you can contact the IRS for the 990 form. To do this, you must fill out and submit a Form 456A (a request for a copy of an exempt organization's tax form). On this form, be as specific as possible: include the name and address of the organization (and be sure you have its name correct!) specify what years' 990 forms you want. The charge is $1 for the first page and 15 cents for each subsequent page. Requests for 990s must be sent to the IRS Ogden Service Center, PO Box 9941, Mailstop 6734, Ogden, UT 84409. The toll-free phone number is 800/829-3676.
4. Try Web sites. Here are some Internet web sites for more information:
5. Contact overview organizations. These groups issue reports such as the ones used in this story:
American Institute of Philanthropy, 4579 Laclede Avenue, Suite 136, St. Louis, MO 63108, 314/454-3040.
Independent Sector, National Center for Charity Statistics, 1828 L Street, NW, Suite 120, Washington, DC 20036.
6. Get Commercial Fundraiser Information from your state. Most states keep information on commercial fundraisers. To get copies of the reports, write to the Attorney General of your state. In California request the "Attorney General's Report on Charitable Solicitation by Commercial Fundraisers." Other states have similar reports.
Keith Storey is an Associate Professor of Education at Chapman University in Concord, California.
Write to The Ragged Edge
Back to cover page
Table of Contents
© Copyright 1998 The Ragged Edge
This Website produced by Cliffwood Organic Works