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"I don't think 100 percent is a reasonableestimate [of the net proceeds]," he said.
Those doubts and that law aren't limitedto California.
Nick Winkler, press secretary for the Pennsylvania Department of State, said GCI employees' "100 percent" response would be considered "dishonest, false and misleading" in his state. "The company is probably not working for free, so it's not 100 percent,"he said.
Though its financial statements are not available to the public, and GCI Vice President Jones declined to disclose the company's income, it is safe to say GCI is not working for free. According to the annual reports with the California state Attorney General's office, only one charity made money from GCI last year: Oxfam America reportedly received approximately $774,000, or 39 percent of the total revenue. Conversely, Save the Children and the American Society for the Prevention of Cruelty to Animals reported deficits of $1.8 million and $1.9 million, respectively.
These reports of low or no returns can be deceiving. Several charities said GCI submits projected numbers, or estimates, to the Attorney General, instead of the actual amounts it collects and doles out to the charity. Oxfam calculates its net proceeds based on a five-year projection, because its members contribute for an average of eight to 12 years, according to Hellmann, the fundraising director. Therefore, $774,000 is an inflated amount the charity might make from GCI's yearlong effort — five years later. And while Oxfam spokeswoman Helen DaSilva said in an e-mail that the charity paid GCI approximately $1 million in 2010, she would not say how much GCI actually raised that year. "It's like trying to figure out how effective a retirement plan is by looking at what it can offer you over the course of 12 months," she said.
GCI's Jones wrote that the company's calculations are in compliance with state regulations. Yet, California Attorney General press secretary Lynda Gledhill said she believes the annual reports call for actual revenue — not projections. She was tight-lipped about whether GCI's projection-based reporting and "100 percent" response violate state law. "I don't want to opine," Gledhill said. Senior Assistant Attorney General Belinda Johns, in the Charitable Trusts department, did not respond to interview requests.
That the charities, the California Attorney General's office, and GCI are reluctant to talk about fundraising costs and regulations is exactly the problem, according to Michael Nilsen, the vice president of public affairs for the Association of Professional Fundraisers, an organization with more than 30,000 members internationally (of which GCI is not included).
In his opinion, canvassers should have an honest conversation with donors about the costs and benefits of fundraising. "I think the problem with saying '100 percent' is that it makes it look like there's something wrong with fundraising, and there isn't. Fundraising costs money, but it's one of the big ways charities make money and raise awareness. When you start playing around with the numbers, we lose a lot of credibility, and it doesn't just affect the bad apples."
Styron, from the American Institute of Philanthropy, isn't so sure a more accurate answer will get the results the charity wants. Donors, she said, want to know their money is going to, as she put it, help the dolphins — not pay overhead costs. "Unfortunately, if you said to a donor, point-blank, 'Hey, we're raising money for this important cause. Please give me $50. By the way, none of it will actually go to the charity, because I need to be paid my hourly rate to be soliciting you.' ... Donors aren't going to be enthusiastic to donate under those circumstances," she said.
Donors expect to hear the truth from charities — or the people wearing the charities' names. But in order to raise money, those people may have to stretch the truth.
Unsurprisingly, charity watchdog groups like Styron's advise that people resist street solicitations. Better to go home, do research, and send a donation directly to the organization if it checks out.
"We can come up with theoretical ways of how the system can be changed, but I don't know in practice if it will ever happen. I suspect that it won't," she said.
Changing the system would require aligning for-profit interests with nonprofit values. The union between GCI and the charities is rife with double standards. The "good causes and candidates" — the people in the business of saving the children — seem to look the other way as GCI and its canvassers continue to give donors fuzzy financial information. At the same time, some employees complain that working conditions are less than ideal.
When GCI was founded in December 2003, its founder and president Douglas Phelps was already at the helm of a host of nonprofits and commercial endeavors. Currently, he serves as the chairman of the board for U.S. PIRG, the federation of state Public Interest Research Groups — the first of which was founded by Ralph Nader in the 1970s. Since 1982, Phelps has been the chairman of U. S. PIRG's nonprofit fundraising arm, the Fund for the Public Interest, commonly known as the Fund. He also serves as president of the for-profit telemarketing and fundraising company Telefund, Inc., and trustee of mutual funds investment group Green Century Funds — as well as director of its administrative body, Green Century Capital Management. Green Century Funds is owned by several of the nonprofits and PIRGs.
The list of charities and tie-in organizations that Phelps and other GCI and Telefund executives run is exhaustive. Ten groups are listed as part of an informal umbrella group called the Public Interest Network. A bevy of other organizations also shares some of the leadership and provide aid to the groups within the network.
Owing to the organizations' interconnectedness, GCI has much in common with the Fund, even canvassing for many of the same nonprofits. Sociology professor and former canvasser Dana R. Fisher criticized the Fund in her 2006 book Activism, Inc.: How the Outsourcing of Grassroots Campaigns is Strangling Progressive Politics in America, in which the Fund was called "People's Project." Fisher blamed the progressive left's outsourcing of fundraising for treating young people like an expendable resource, and tainting their experience in public service.
