Local fund raising company making millions on charity donations

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by Chris Nagus / News 4

KMOV.com

Posted on April 30, 2013 at 10:42 PM

Updated Wednesday, May 1 at 8:24 AM

(KMOV) -- Have you ever donated to a charity and wondered if your money is actually helping a good cause?

Some charities only receive seven percent of your donation, so where’s the rest of the money go?

It turns out in some cases, it’s going to a for-profit business in west St. Louis County that’s working hard to get donations to their cause.

The offers come in the mail, a sweepstakes with a suggested donation to causes like cancer and autism.

Daniel Borochoff is president of Charity Watch, an organization originally founded in St. Louis and now run from Chicago.

“If the fund raisers are in it for the money they are going to go after the most popular causes,” he told News 4.

At Charity Watch, employees comb through charity tax records to determine which ones are good and which ones are bad.

Some of those charities have raised millions of dollars through a company called Precision Performance Marketing based out of Kirkwood.

“They offer a plan that is inefficient and wasteful, they are really expensive to use them” said Borochoff.

The St. Louis Better Business Bureau warns consumers about PPM.

The company sends out mailers and works to raise money for charities.

One of the charities PPM had a contract with is the National Cancer Foundation, based out of Sarasota, Florida.

According to tax records, PPM raised $816,767 for the charity in 2010. Of that money, $792,484 went to the fundraiser and $24,283 went to the cause itself.

In 2011, PPM raised more than $1 million. That year wasn’t as lopsided, but PPM still made more than $432,000.

When News 4 asked Charity Watch about the National Cancer Foundation, Borochoff explained that they “get an ‘F,’ they only give seven percent of the budget to programs.”

News 4 Chris Nagus visited the National Cancer Foundation offices in Florida.

At that time the charity’s president, Paul Debonis, was not in.

According to the BBB, Debonis used to work in St. Louis and worked at the exact same address used by Precision Performance Marketing.

Minutes after Chris Nagus left the charity’s office, Debonis called him. He said he was tired of people asking questions about his connection to PPM and sometimes he just wants to shut his charity down.

Another one of the charities associated with PPM is the Child Crisis Network, according to its records, it used to be located inside a tiny apartment near Ft. Lauderdale.
 

When Chris Nagus knocked on the door, the man who lived there said the guy who ran the charity used to be his roommate, but these days he’s in California.
 

IRS records from 2008 reveal PPM raised more than $21,000 for the Child Crisis Network, but PPM collected $215,913 in fees.

Michael Confalone is the president of PPM.

He declined an interview, but provided us this email in response to our questions

“PPM is a for profit company that provides marketing services to charities.  We comply with every law and registration in every state, and have never had any complaints of any kind from the state regulatory agencies.  None of the charities we work with are related to PPM or anyone connected to PPM in any fashion.  We do not have any control over any of the charities or the means by which they fundraise.  Consequently, we do not direct any aspect of their fundraising strategies, long term; just provide mail servicers for them to build their donor base.  Most smaller, newer organizations that are trying to distinguish themselves need to do direct mail campaigns.  Being small and new, they are more apt to have higher fundraising costs.  It is an age old dilemma that has existed for decades and isn’t new to our clients, to us, or to the nonprofit industry as a whole. Most of our clients have informed us of their long range goals and plans to become more fundraising-cost effective. Without fundraising, there would not be anything to spend on programs.  We are always concerned with price for our clients because if we are not the cheapest vendor they will go elsewhere. Our contracts are not binding in any way to the charity.  They are free to cancel at any time.  The charities we work with all know they are obligated by law to disclose to donors their Form 990 and the costs of fund raising and we believe they comply.

The amount of money paid to PPM by NCAF in 2010 is not profit to PPM it is the cost of operating the program. Most of the $816,767 dollars raised went to paying for the hard cost of operating the program such as postage, paper, envelopes, letter shop fulfillment, creative design and compliance fees just to name a few. These types of arrangements are typical in the not for profit industry mainly because they allow the charity to focus on fulfilling their program services instead of taking on the huge debt incurred while building a donor base through a full-fledged direct marketing effort.

Regarding your question about Paul DeBonis and PPM working at the same address the explanation is simple. I used to own a company that leased a space in the building PPM now resides. When I sold the company I left and started PPM out of my home. Paul started working for that company after I sold my interest in it. As PPM grew and I needed office space I moved back to same building. When Paul started his charity he approached PPM to inquire about the consulting services we performed and if we could help him with his fundraising efforts.”    

 

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