MELISSA BLOCK, HOST:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
AUDIE CORNISH, HOST:
And I'm Audie Cornish. In this part of the program, we're going to pick up the phone.
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UNIDENTIFIED WOMAN #1: Hi Ms. Patterson, calling this evening on behalf of the American Diabetes Association. I'm a paid solicitor from InfoCision and the American Diabetes Association...
CORNISH: That call came in August of last year to Carol Patterson of Courtland, Ohio. The caller, as she said, was a paid solicitor from InfoCision. A telemarketing company also based in Ohio. On its website, InfoCision claims to raise more money for nonprofit organizations over the phone than any other company in the world. It holds, or has held, contracts with some of the biggest American charities: the American Diabetes Association, the American Cancer Society, March of Dimes Foundation and, full disclosure, it's also worked on behalf of some public broadcasting stations.
But a new investigative report in the October issue of Bloomberg Markets found that in many cases, most of the money raised by InfoCision never makes it to the nonprofits they say they're supporting. The story focuses on one technique used by InfoCision telemarketers.
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UNIDENTIFIED WOMAN #1: And since diabetes is at an all-time high among Americans, we really need your help to raise awareness and find a cure. So we'd like to send you out a kit of 15 pre-printed letters that go to your neighbors on Fallen Drive. You just hand them out or stamp and address them and drop them in the mail.
DAVID EVANS: Well, they call and they say they're not asking for money, but they're asking for you to volunteer and send out a solicitation letter to 15 of your friends or neighbors.
CORNISH: David Evans wrote the story for Bloomberg Markets.
EVANS: And people perceive that since they're saving the charity the stamp, that this is actually an efficient way to raise money.
CORNISH: So you actually pieced together the numbers though behind the contracts that InfoCision has had with these charities. And what do they say?
EVANS: Well, indeed, we found for a four-year period from 2007 to 2010 InfoCision raised about $425 million dollars for nonprofits. And most of that money was kept by InfoCision - 52 percent - with the minority going to the charities. And in the case of some charities, it was actually much, much less than that. And the most alarming thing that we found is that the solicitors are taught, using scripts, to lie.
To tell people that most of the money is actually going to the charity, when, in fact, most of the money is going to InfoCision. And when I asked, for example, the vice president at the American Diabetes Association why that was, it was explained to me that people wouldn't give money if they knew the truth.
CORNISH: I want to play a part of one call from an InfoCision representative who, in this call, was calling on behalf of the American Cancer Society. And actually she had called Paul Kolb of Cleveland Heights, Ohio. And what she didn't know is that Kolb happens to be an investigator for the Ohio Attorney General's office.
PAUL KOLB: Then does the money go to you guys and then to the American Cancer Society?
UNIDENTIFIED WOMAN #2: No we only get like 22 percent. Only 22 cents of the dollar. We don't get that much but, I mean, taken out, the Cancer Society gets 78 cents of every dollar. The other 22 cents is separated...
CORNISH: So David, did the Cancer Society really get 78 cents on the dollar?
EVANS: No. In fact, we found the Cancer Society never got more than half. And typically they got less than half of the money raised. In some cases, they got zero. In 2010, it was even worse than that. In 2010, the contract with InfoCision estimated that the Cancer Society would get 44 percent of the money.
The script that was being used, that was approved by the Cancer Society, told folks that about 70 percent of the money overall was going to the Cancer Society. In fact, when the reports came in, we found the filings that showed how much the Cancer Society actually got for 2010. And it was zero. And in fact, the Cancer Society had to pay a $113,000 dollars to InfoCision, in addition to turning over the $5.4 million dollars that had been raised.
CORNISH: Why would this charity, or any charity, sign a contract in which they would not make any money, which, in fact, they would lose money?
EVANS: Well, for example, the American Diabetes Association told us that they're hoping to get names so they can get more money from in the future. But they said. Richard Erb, a vice president at the American Diabetes Association, told me, if we came into it and said, geez, I'm not going to make a dime on this, do you think we'd have anyone who'd give us money? In other words, they can't tell people the truth in order to get money through telemarketing, so they have to conceal that the vast amount of money that's actually going to the telemarketer.
CORNISH: So it sounds like they were, it was very much a long-time practice. I mean, InfoCision is a big company that's been around for awhile.
EVANS: InfoCision has been around for 30 years. They've been very profitable. There's a stadium in Akron, at University of Akron, that's now called InfoCision Stadium because they gave $10 million dollars. There's a graduate program of business at the University of Akron that actually has an InfoCision call center paid for with a $3.5 million dollar donation where there's a dozen phones and students learn how to be telemarketers as part of their graduate education.
CORNISH: Now we've discussed this as being deceptive and perhaps unethical. Is it actually illegal?
EVANS: Well, it's definitely illegal to lie. InfoCision paid a $75,000 fine in February to the Ohio Attorney General's Office after they were accused of lying about the amount of money that was going to the charities. And they were also accused of having their employees pose as volunteers in order to coax money out of donors.
CORNISH: What kind of response did you get from InfoCision? Were you able to talk to them?
EVANS: Well, InfoCision declined an interview. They did give us a statement in which they said that they've been servicing these charities for many years. And they have many happy charity clients.
CORNISH: David, the last thing I'd want to do is discourage people from giving to charities generally. So what is it that people could do, given this information that you're telling us, to avoid this altogether? I mean, how can you give to a charity and know that your money is actually getting to the charity?
EVANS: Well, I think an important thing people can do is research and not to be responding to a telemarketer's call. But to do your due diligence and find out if this a charity that you really want to give to.
CORNISH: David Evans, thank you so much for talking with us.
EVANS: It's been a pleasure to be here.
CORNISH: David Evans is senior writer with Bloomberg, talking about his article "Duping the Donors" in the October issue of Bloomberg Markets.
InfoCision also sent us a statement. It reads, and I quote, "It's important to understand that most charities use telemarketing as part of their overall fundraising strategy. Without proactively attempting to renew lapsed members or acquire new members, any charity will ultimately lose its membership through normal attrition, and in time may no longer exist. Once the lapsed member has been renewed, or the new member has been acquired, all their subsequent gifts will provide significant net return to the client over time." The statement goes on, "For profit businesses roll out new customer acquisition types of campaigns all the time, such as free giveaways of sample products. Consumers don't question this strategy even though it drives up marketing costs."
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BLOCK: This is NPR. Transcript provided by NPR, Copyright National Public Radio.