Fundraising methods

Charity "muggers"

Among the most controversial practices is the use of paid on-the-street fundraisers (dubbed charity muggers or "chuggers"). Clipboard-carrying chuggers are a regular sight in city centres, waylaying shoppers in the hope of signing up a new donor.

A lot of chuggers work on contract to fundraising companies. They're normally paid by the hour but can also earn extra if they have a good "success rate". If you sign up, it's possible for your first year's donation to be drained off in fees.

Several charities we spoke to said they use paid on-the-street fundraisers or have done so in the past.

• Save the Children uses Support Direct, a division of The Cobra Group which promotes itself as one of the world's leading "direct sales and marketing companies".
• New Zealand Red Cross works with a company called Cornucopia Fundraising. The company's website lists a range of other charities it works for both here and in Australia.
• The World Society for the Protection of Animals (WSPA) contracts a company called 2evolve, active both here and across the Tasman.

New Zealand Red Cross, Save the Children and WSPA all say they've found street fundraising an effective way of building a profile and bringing in new supporters. But getting exact information on how much it costs and how much money it raises is difficult. Charities regard contracts with commercial fundraising companies as confidential.

Not everyone in the sector believes the returns are worth it. Oxfam has used paid on-the-street fundraisers in the past but Executive Director Barry Coates says it isn't good value for money and would be reluctant to do it again. He says there's often a high "drop out" rate of donors signed up this way and they tend to have less connection with the charity than those who sign up of their own accord. Another charity, World Vision, told us it decided not to use the method after recently running a trial.

In the UK, public irritation with street fundraising has led some charities to abandon the practice. UK regulations now require chuggers to disclose to potential donors how much they're paid. We'd like to see the same rule here.

Telemarketers

If you've given to a charity over the phone, the person asking for your money was probably employed by a telemarketing company. If so, it's likely a chunk of your donation has bypassed the charity and gone straight into the company's coffers.

According to pay rates we were quoted, charity telemarketers earn around $13 an hour. But it's harder to find information on how much of the money they raise is returned to the charity. Neither the companies nor the charities make this info available.

The worst case we've found involved a telemarketing company called Community Support Group. In 2002, we reported this company was taking at least 70 cents from every dollar donated. Fair Go recently reported one of the people behind the scheme, Shaune Malloch, is running another telemarketing company claiming to be raising funds for charity.

Fair Go has advised people not to donate to these three ventures Malloch is raising funds for: Auckland Volunteer Animal Rescue, Road Safety Education Campaign, and Community Crime Prevention Trust.

Razzle dazzle events

Fundraising companies have also made inroads into managing big charity events like auctions and balls. Their fees vary and, in some cases, they're paid on a percentage of the funds raised - so the more the event brings in, the bigger their cut. In 2003, the Fight for Life charity boxing event came in for flak over claims that former rugby league star Dean Lonergan's management company was paid this way.

Taking a percentage fee is controversial. It's also unethical, according to the Fundraising Institute of New Zealand's code of ethics. Lisa Wells, Chair of its Ethics Committee, says the code prohibits tagging fees to money raised. The institute's policy is that fundraisers should charge fixed fees, which are more transparent.

Lisa Wells also runs her own fundraising company and she's not a fan of glitzy events. She says it's common for 70 percent of the money raised to go in expenses. Big events may help raise the profile of a charity but as a fundraising tool their effectiveness is low, she says.