Wednesday, January 9, 2013

Charity Telemarketing II: Remedies

As discussed in this post's predecessor, Charity Telemarketing I: The Problem, the use of telemarketers to raise funds for charities has become a problem due to the large scale of their campaigns, the minimal funds that reach charities, and the failure of accounting records to reflect this dichotomy.  Given the problem, I now offer up a few possible remedies for consideration.  They are surely not panaceas, but they may help...
  • Limit tax deductions for telemarketing donations.  Currently, a donor who gives say $100 in a charity telemarketing campaign gets a tax deduction of $100, even if only $5 actually reaches the charity.  Ideally, the tax rules would be adjusted to permit only a $5 deduction.  This would also require charities to report the amount of a donor's gift they received.  Realistically, however, contracts with telemarketers can be written to get around any such requirement (say by making the payments primarily fixed rather than vary with donation amounts).  Perhaps a more realistic requirement is that only donations given directly to a charitable organization are tax deductible.  This would at least require any telemarketers to themselves be charities in order to solicit tax-deductible donations.
  • Remove the charity exemption from the do-not-call registry.  As discussed before, a key reason telemarketers are targeting charities is because they are exempt from the do-not-call registry.  If this exemption were removed, the volume of telemarketing calls would drop precipitously.
  • Convince donors to take a more hard-line stance.  Currently, watchdog groups urge donors who receive telemarketing calls to side-step the telemarketer and give directly to the organization.  However, if donors want charities to see a more pronounced downside of participating in these campaigns, donors should instead take a stand.  Donors can contact charities and tell them they will not give to the charity unless and until it ceases the use of telemarketers.
  • Require charity financial reports and/or telemarketing scripts to be audited.  After all, for profit companies seeking debt financing and/or listing on stock exchanges must not only generate financial reports but are compelled to seek third party audit.  For some reason, getting an independent audit of financial reports is viewed as much less essential in the charity world.

What do you think?  I welcome other suggestions to help alleviate the problem of excessive charity telemarketing.

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