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Scottsdale Police Organization Gives Telemarketer Two-Thirds Of Donations Made For Needy Kids
Later this month, the Police Officers of Scottsdale Association, or POSA Inc., will host its 12th annual Christmas Shop With a Cop event, where hundreds of underprivileged kids and teenagers go on a shopping spree, $150 each, with police officers.
It’s one of POSA's two signature events for kids, the other being its Back-To-School program, that the union fundraises for year-round. The labor organization's President Jim Hill said they recently split the Christmas event into two days.
Few things tug at the heartstrings more than cops helping underprivileged kids, and the numbers show it.
Annual donations for the programs jumped by more than 82 percent between 2006 and 2012, according to the labor organization’s tax records. Tax records for 2013 have not yet been filed.
In total, almost $4.5 million was raised over that seven-year period.
But how much actually goes to the kids each year? Not much. In some years, less than 10 percent.
Tax records show about two-thirds of the annual donations automatically go to a for-profit telemarketing firm called PFR Promotions LLC, which conducts all of the organization’s fundraising throughout the year.
The labor organization keeps the remaining one-third, and much of that goes into various operating expenses and paying other things, including the salary of the organization’s Executive Director Cindy Hill, who ran for Scottsdale City Council this year and is also President Jim Hill’s wife.
In 2010, for example, PFR raised about $544,000 and the labor organization kept about $200,300. However, only about $47,000 was spent on the kids programs, less than 9 percent of that year’s total donations.
Jim Hill said there’s no way they spent such a small amount, and suggested his previous treasurer must have made a mistake on the tax documents, which he said he never handles.
“If there was $200,000 kept there and only ($45,000) was spent, then we should have $150,000 laying around and I have no idea where that would be,” Hill told KJZZ News during an interview at a car wash fundraiser in Scottsdale last month.
He declined, however, to look back at his files and set the record straight for the purpose of this story.
Hill also defended the telemarketing expenses.
“Fundraising is a necessary, call it, evil, of the business,” Hill said. “If you want to raise that kind of money, you’re going to have to spend the money to go out and have somebody do it for you.”
Nonprofit experts say telemarketers are notorious for taking huge chunks of the money they raise, and in recent years it’s put big charities such as the American Cancer Society and the American Diabetes Association under scrutiny.
Sandra Miniutti, spokeswoman for Charity Navigator, a New Jersey-based nonprofit watchdog group, said it’s just plain deceptive to donors and is something the industry frowns upon.
“To be sending two-thirds, I don’t know that there’s ever a rational reason that could justify that. That’s just way out of the norm and not necessary,” Miniutti said.
Ron Sellers, a president of Grey Matter Research & Consulting in Phoenix, said there are a few circumstances where paying big telemarketing expenses could be justified.
“If you’re able to turn those one-time donors into multiple-time donors or sustainers, then what seems on the short term to be a very questionable or even bad investment, long-term can turn into a fantastic investment,” he said.
However, if the nonprofit consistently raises more money than it needs, he said the charitable programs should be expanded or fundraising be scaled back.
Hill said the programs serve more and more kids every year, although he couldn’t quantify the growth off-hand during the interview at the car wash and he didn’t respond to KJZZ’s attempts to follow up.
However, while annual donations for the two programs have grown substantially over the years — about $531,000 in 2006 versus $969,000 in 2012 — program expenses have stayed roughly the same.
The labor organization has spent roughly between $45,000 and $115,000 each year on the two programs, plus a few smaller charitable events it hosts. That’s according to the organization’s tax records from 2006 through 2012, and tax records for 2012 and 2013 for the group’s 501(c)3 charitable organization, called POSA Outreach Inc.
Hill said the telemarketer only is contracted with the labor organization, a 501(c)5, and the money raised had previously stayed on the organization’s books. But starting in 2012, they began shifting the funds over to POSA Outreach, where Hill is also president and Cindy Hill, his wife, is also executive director.
PFR representative Peter Dellolio said the labor organization is PFR’s largest of two clients. The second is a sheriff’s union in Bexar County in Texas, where a recent article by the San Antonio Express-News discovered PFR also keeps two-thirds of donations.
Additionally, PFR shares an office space with the labor organization and the 501(c)3 in downtown Scottsdale.
Hill said it was his idea to have PFR relocate from its home base in Tucson a few years ago because, after so many years of working together, it made things easier.
“That’s unusual,” Sellers said. “I wouldn’t necessarily go so far as to say that’s problematic or unethical.”
But Michael Nilsen, spokesman for the Association of Fundraising Professionals, disagrees.
“To me, that’s even more troublesome because you need to have some arm’s length there," Nilsen said. "Frankly that’s a huge red flag."
He said his organization tells people to be careful with telemarketers, which is a touchy thing to say when dealing with groups such as police and fire unions.
“It’s a very tough issue and a very tough area,” he said. “You certainly want to support your police and your firefighters but there’s a lot of telemarketing firms that are doing percentage-based compensation, which we think is unethical, that tend to work in these areas and I think donors need to be very careful when they get these calls.”
Miniutti at Charity Navigator said potential donors should be cautious because it plays to the emotional side of giving.
“People don’t necessarily stop and think, ‘Where’s my money going?’” she said. “They just hear ‘help a sick kid’ or ‘help your local firemen or policemen.’ And we give with our heart and people don’t use their head because if they knew that two-thirds of what they gave was being kept by the for-profit firm, nobody would give.”
EDITOR'S NOTE: This article has been modified to reflect the Policy Officers of Scottsdale Association is registered with the IRS as a labor organization.
Updated 12/16/14 at 4:45 p.m.