Net Present Value: Supreme Court ruling on cost of fundraising earlier this year

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Thursday, November 27, 2003

Supreme Court ruling on cost of fundraising earlier this year

A story on how a loophole in the Do-not-call Registry allows charities to still telemarket to you which could mean a slew of misleading or even fraudulent calls from or on behalf of charities. It is recommended that the cost of fundraising should never be above 35% of the money raised but according to this Wall Street Journal story (subscription required):

It isn't up to the group soliciting you to offer information. A recent Supreme Court case makes it clear that it is up to the donors to ask the right questions. In Madigan v. Telemarketing Associates Inc., Illinois's attorney general's office charged Telemarketing Associates with soliciting funds on behalf of a charity called VietNow National Headquarters, and giving VietNow just 15% of the funds, about $1 million of the $7.1 million raised between 1987 and the end of 1995.

The Supreme Court this year ruled that Telemarketing Associates was within its First Amendment rights to pocket as much as it wanted, as long as it didn't lie to donors when asked.

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