The ugly side of charity

By FOONG PEK YEE and NG CHENG YEE

More NGOs and charitable bodies are turning to professional fundraisers to shore up their income. But with minimal supervision and no legislation, the money collected is subject to abuse.

CHARITY has become a business. For both the charitable organisation and the middleman who acts as a professional fundraiser, it is a win-win situation. The former gets an income by lending its name and the latter makes a profit for itself by doing a good deed.

But the one who stands to lose in this equation is the person who contributes to the good cause, not knowing that only a portion of his money goes to the cause.













Doing it on their own: Beautiful Gate prefers to organise activities to raise funds with the help of its volunteers rather than pay fundraising companies.

Malaysians, fairly generous by nature, rally to all types of causes – to support those stricken by illnesses, affected by natural disasters, in dire need of surgery, left homeless by fire and host of other problems.

Often, a meal at a coffeeshop or restaurant is interrupted by those seeking a donation for an orphanage, old folks home, disabled bodies or people with special needs.

However, whether a solicitation for donation is genuine or not is hard to verify on the spot. But what concerns the authorities is the growing trend of charitable organisations which rely on professional fundraisers to collect on their behalf.

Many of such organisations, homes and NGOs (non-governmental organisations) are more than happy to let someone else do the work for which they have no expertise, manpower or time. The authorities are concerned that this has led to some form of abuse – and profiteering.

Segambut MP Datuk Dr Tan Kee Kwong, who has been involved in charity work for years, has seen the ugly side of fundraising.

“Somebody even used my name to sell a dinner table for RM50,000,” said Dr Tan, whose father, the late Dr Tan Chee Khoon, was a politician remembered for his contribution and service to the poor and sick.

“I have vast experience in charity work, and I can tell you that using agents and professional fundraisers is a very bad thing to do. It will end up with lots of problems and abuse,” he says.

Dr Tan: Somebody used his name to sell a dinner table for RM50,000.

And the abuse can come in various forms – from inflating the price of goods and services in the name of charity to taking advantage of the kind-hearted public.

For instance, one would pay RM10 for a simple car sticker in the name of charity when the cost of the item is a mere fraction of the sum paid.

“But why must the public be made to buy things or services which are priced so ridiculously high and the professional fundraisers or businessmen get a cut.

“Charity for whom? The professional fundraisers as well,” says MP for Ayer Hitam Dr Wee Ka Siong who believes it is time for the government to act on such profiteering.

Worse still, he adds, the donors are made to think that the entire amount goes to charity and this is the same as cheating.

Among the popular items on sale for charity are greeting cards and stickers where the sales people are able to lug around easily.

A salesperson working for a fundraiser, when questioned, shares that of the RM10 paid for a car sticker, RM5 is for the charity home, RM4 for the professional fundraiser and RM1 for the salesperson. The company he works for currently employs 12 sales people whose income is purely based on commission.

He adds that based on what he is able to sell, he earns an average of RM30 a day peddling the stickers at shopping centres.

Do the people he approaches question him on the charity he is collecting for? ”Some of them do ask questions. But there are others who say leave it to Karma on how the money is being used,” he says.

Professional fundraisers getting into the act is certainly not new and such fundraising is seen as a business, especially in the West.

The New York State Attorney General Report on fundraising campaigns in New York State in 2002 reveals that the bulk of the donations had gone to telemarketing companies instead of the charitable organisations.

A total of US$184.3mil (RM632mil) was raised by 607 fundraising campaigns in 2002 but only 31% of the funds or US$57.1mil (RM197mil) went to the charitable organisations.

The rest was paid to the telemarketers as fees and other costs of the campaigns, said the AG's report.

Veteran fundraiser Ann Woo says it is best that non-governmental organisations raised funds on their own instead of engaging professional fundraisers.

With almost 25 years of experience in fundraising, Woo, who is executive secretary to Nanyang Press Foundation, a non-profit organisation active in charity work, says the lack of control in the handling of funds raised has contributed to abuse of the money.

Prior to joining Nanyang Press, Woo was Malaysian Red Crescent Society's community service officer, head of public affairs for the Monfort Boys' Town (a home for underprivileged boys in Selangor) and public relations and fundraising director for Hospis Malaysia.

The fact that there are big and small companies involved and that they have been around for a long time speaks volumes« ANN WOO
She says there are individuals or companies “going undercover” in the name of fundraising to make money.

“The fact that there are big and small companies involved and that they have been around for a long time speaks volumes,” says Woo when asked how lucrative this business could be.

Not only is this lucrative business, it allows for “creative accounting” in terms of administrative fees and costs, says a senior medical specialist who is familiar with the work of some NGOs.

“I once met a high-ranking official of an established charity organisation flying business class and staying in a five-star hotel. He said he was there to attend a seminar related to his charity work. I couldn't help but wonder if all these expenses would be charged as administrative costs,” he adds.

On accountability and transparency in the collection and usage of funds for charity, Bukit Mertajam MP Chong Eng suggested a law to get charitable organisations to declare their collection and use of funds.

Such a law had seen the cancellation of the registration of 45 charitable bodies in the New York State in 2002 because they had failed to file in their 2001 reports.

Although Woo too laments the lack of control and transparency of fundraising, she is not sure if legislation is the answer.

“At the end of the day, it really depends on how ethical those involved in fundraising are,” she says.

Although there is currently no legislation on fundraising, Woo says the Welfare Department has a guideline (that is not binding) for an allocation of 30% for the professional fundraiser and 70% for the beneficiary.

A spokeswoman from the Women, Family and Community Department Ministry says NGOs registered with the welfare department and wanting to engage a company to raise funds must state their intention when they request for a “confirmation letter” from the department to raise funds.

“The department will only consider issuing the letter if the amount to be paid to the company is not more than 30%.”

She said professional fundraisers, many of which are public relations companies, should let contributors know their role and their cut before asking for donations.

“Those who donate should also know they have the right to such information.

“Please take the initiative to ask before donating so that those who are out to abuse your kindness and generosity will not get away so easily,” she adds.

Nevertheless, the ministry official says it is in the interest of NGOs not to engage the services of professional fundraisers.

“NGOs must be very careful or else they may end up losing money instead,” she says, citing cases whereby the NGOs had to fork out money to pay the professional fundraisers because the amount raised was not enough to cover the share of the professional fundraiser.

Since expenses incurred in fundraising would deducted from the funds raised, Woo's advice to NGOs and charitable is: “Learn how to raise funds so that you can keep a large portion of the money.”

Chong advocates that how money collected through fundraising is spent be made available for public scrutiny so that contributors could decide whether or not an organisation deserved their support.

“Being good-hearted is important but we must be smart too. We must not let people abuse our kindness,” she says.

Source : http://thestar.com.my/news/story.asp?file=/2007/4/15/focus/17377277&sec=focus