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Attorney General Reports Vehicle Donations to Charities Rose by Nearly 77 Percent in 1998; Thrift Stores Yield Nearly $15 Million for Charities

Legislation by Sen. Byron Sher Introduced To Help Combat Fraud
Monday, March 13, 2000
Contact: (415) 703-5837

(SACRAMENTO) – Attorney General Bill Lockyer issued today a report showing $31.04 million raised by commercial fund-raisers from charitable vehicle donations in 1998, but only 33.6 percent of the total actually reached the charity on whose behalf the solicitations were made.

"Commercial fund-raisers more than doubled their vehicle donation activities in 1998, raising 77 percent more for charities," Lockyer said. "But the $10.4 million paid to charities represents only one-third of the total generated by commercial fund-raisers on behalf of the charities. Clearly, Californians should be asking any commercial fund-raiser who comes calling how much will actually be handed over to the charity from the donated car or other personal property."

Oversight of charitable fund-raising activities currently relies on registration and public disclosures by commercial fund-raisers and charities. In this way, donors may know how much money raised by a commercial fund-raiser actually reaches the charity for which donations were solicited, and whether the charity, which was given the funds in trust, is doing a good job.

Joined by state Sen. Byron Sher of Palo Alto, Lockyer announced introduction of legislation sponsored by the Attorney General's Office to help enforce state laws governing charities and commercial fund-raisers. The Sher bill, SB 2015, would allow the Attorney General to: (1) assess a late fee of $25 for each month or part of the month that a charity is late in filing a registration statement or financial report; (2) makes willful and knowing violations of charitable trust laws a misdemeanor; and (3) allow the Attorney General to pursue contempt proceedings in court for failure to follow a formal voluntary compliance agreement.

"Charities enjoy a position of public trust and it's distressing when some fund-raisers violate that trust," Sher said. "Contributors deserve to have their donations go to the charities they want to help."

Lockyer added, "Donors are left in the dark about their contributions and may be exposed to harmful scams, unless charities and commercial fund-raisers take seriously their responsibility to register and file regular financial disclosures. The Sher bill provides important enforcement tools."

The Attorney General's supplemental report on charitable solicitations by commercial fund-raisers covers vehicle donations and for-profit thrift store operations for 1998. The report may be viewed at the Attorney General's web site: http://caag.state.ca.us. Since commercial fund-raisers are not required to report revenues raised until the year following the fund-raising activity, 1998 is the most recent year for which complete data is available.

Thrift stores sell used clothing and other "salvageable personal property" to the public. Charities that operate their own thrift stores disclose their activities in annual financial reports filed with the Attorney General's Office. Other thrift stores are operated by for-profit vendors that obtain all or part of their merchandise from charities or social welfare organizations that receive donated personal property from the public. These for-profit vendors are considered commercial fund-raisers whose activities for 1998 are summarized in the latest report.

According to the latest report, for-profit thrift stores that purchased goods from charities reported raising $57.56 million and paying $14.61 million or 25.39 percent of the total to the charities (Table 1). The payments to charities were 47 percent more than a year earlier.

For-profit vendors who received a management fee or commission from the charity reported raising $7.38 million and giving $856,419 or 11.6 percent of the total to the charities in 1998 (Table 2.) The total raised in this category was $429,000 more than a year earlier, but payments to charities dropped by $99 and the percentage slipped by 0.7 percent.

Charities selling goods directly to the public file annual reports listing revenues and expenditures. Other thrift stores are operated by for-profit vendors that obtain all or part of their merchandise from charities or social welfare organizations.

The growing popularity of tax-deductible vehicle donations to charities can be seen in the increased activity reported. In 1998, commercial fund-raisers reported 112 commercial vehicle donation campaigns held. Four of the campaigns produced 100 percent returns for the charities, while 18 yielded between zero and 15 percent for the charitable organizations. In 1997, commercial fund-raisers reported 47 vehicle donation campaigns that produced $24.06 million in gross receipts and $5.89 million or 24.5 percent for the charities. The payments to charities ranged from a low of 3.55 percent to high of 73.4 percent.

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