Charities take to the streets, but at what cost?

Panhandlers have a new tool: clipboards and binders filled with jarring photos, heart-wrenching statistics, and donation forms.

A nonprofit fundraising trend at play for years in Britain has come to the streets of major US cities. Face-to-face fundraising employs teams of young adults donning official-looking uniforms to solicit donations from individuals. Numerous nonprofits are just beginning to use this method, including CARE USA, Children's International, Amnesty International, and Greenpeace.

Fundraisers view this technique as a way to appeal to young donors who have eluded more traditional efforts. Targeting passersby on densely populated streets with images of extreme poverty, for example, gets many to stop and listen.

But the face-to-face method is receiving a mixed reaction. What most donors don't know and most fundraisers won't say is that the vast majority of these street teams are not employed by the charity they hawk, but by for-profit corporations which take a sizable bite out of these gifts.

These fundraisers typically ask donors for commitments of $10 to $20 a month, providing a seemingly reliable stream of revenue. But most donors don't stick with it. In fact, half stop giving within the first year, according to the Institute of Fundraising in London.

To make matters worse, the cost for this type of outreach ranges from $75 to $100 per donor, say experts, so it would take at least five months of regular donations to make up the fundraising cost.

Some people are irritated by these face-to-face encounters. Amanda Roberts, a 30-something retail salesperson, says she runs into fundraisers on the streets of San Francisco at least twice a day. "I'll cross the street to avoid them. They're annoying, and they'll follow you until you firmly tell them 'no,' " she says.

Watchdog groups have other reasons for concern - in a particular, the lack of disclosure. "This is a really bad way to give," says Daniel Borochoff, president of the American Institute for Philanthropy. "Spend the time to get to know a nonprofit. Make sure their mission matches your goals. This just isn't something that you can get from someone that is rewarded for getting your money on the street."

Nonprofits rarely disclose rates of return on individual fundraising campaigns, instead they typically provide their overall annual fundraising expenses. This has Mr. Borochoff concerned that donors don't understand the real cost associated with street fundraisers. "Donors will have much more impact if they give directly to the nonprofit," he says.

CARE USA said they weren't able to disclose the costs associated with its street fundraisers. "We don't break down our numbers in this way," says Erich Fasnacht, a fundraising manager for the charity. "This program is being tested, but we are pleased with the results."

Little is known about the success of these programs and the largest professional street fundraiser - DialogueDirect - would not respond to repeated requests for an interview. Their website, however, claims that face-to-face fundraising is "extremely cost-effective" and can "achieve a 400 percent return on [a charity's] investment over five years." The firm adds that in 2003, it signed up 230,000 donors worldwide.

Mr. Fasnacht views the program as a success because it brings in new donors: "We're seeing a large number of younger donors who are much harder to reach than with other fundraising techniques."

According to the Institute of Fundraising, 80 percent of street donors are under 40 years old. The Monitor spoke with eight street fundraisers about their job. Six said they were directly employed by CARE USA. One fundraiser with DialogueDirect, who spoke on condition of anonymity, says that his firm instructs him to avoid discussing his employment status. "I'm not supposed to talk about it unless [a donor] really wants to know." He added that he typically signs up about two donors a day - not enough to earn "sign-up incentives" offered by his employer. Instead he relies on what he called a "modest hourly wage."

While CARE USA provides training for the fundraisers, Fasnacht says they don't work for the organization. "The fundraisers are employed by [DialogueDirect], but we do jointly share costs."

This new trend comes at a time of fierce competition among nonprofits. Some 1.5 million nonprofits are registered with the IRS, and about 3,000 are added every day, says Paul Light, professor of nonprofit studies at New York University. "There are a lot of nonprofits out there struggling, and they're being very creative with how they raise money," he says. "You can no longer rely on any one source of revenue."

Face-to-face fundraising isn't for every nonprofit. "Grass-roots and local organization will be the most likely to adopt this approach," says Borochoff. "I also suspect you'll see a lot of people watching what happens with public opinion and how successful these campaigns are."