In late 2013, Lonnie Orr received a gift that would prove extremely annoying: a year-long membership to the National Rifle Association. The membership ended in December 2014. But fundraising calls from the gun rights organization did not.
Orr, a Kansas resident, says the NRA’s Ohio-based fundraising company, InfoCision Management Corporation, repeatedly hit him up to renew his membership. His cellphone number, to which the calls came, had been on the National Do-Not-Call Registry since 2004, and he repeatedly told telemarketers to stop contacting him. Nevertheless, they persisted.
Those allegations, and similar complaints from another target of the NRA’s fundraising operation, are the subject of a federal lawsuit filed last year alleging that the gun rights group and its fundraising contractor violated federal law with repeated “auto-dial” calls to potential donors’ cellphones (PDF). The lawsuit sheds light on how prominent nonprofit groups have leaned on telemarketers to solicit large numbers of contributions—and how those fundraisers have pocketed large portions of the money they’ve raised for their clients, and even occasionally skirted the law in raising it.
Orr and his co-plaintiff, Bill Porter, allege that InfoCision, with the NRA’s knowledge and consent, ignored repeated requests to be removed from the NRA’s telephone fundraising lists. They’re seeking monetary damages for alleged violations of the Telephone Consumer Protection Act and an injunction to prevent future violations.
Neither the NRA nor InfoCision responded to requests for comment on the lawsuit.
InfoCision, the nation’s second-largest telemarketing firm, has raised money for some of the biggest names in politics and political advocacy. Its clients included groups supporting 2016 Republican presidential candidates Donald Trump and Ben Carson. Federal political committees have paid the company nearly $25 million since 2013, according to the Center for Public Integrity. But it also raises money for apolitical charities such as the American Cancer Society, the American Heart Association, and even the United States Olympic Committee.
The NRA has employed InfoCision since 2012 under a contract that grants the fundraising company up to 65 percent of the funds it raises on the NRA’s behalf. InfoCision gets between $2.50 and $3.75 for each “completed call” to potential NRA donors, and up to half of the regular payments for new or renewed NRA memberships.
“WHEREAS,” the preamble of that contract declares, InfoCision’s “personal and professional reputation is above reproach and will reflect positively on NRA in all of its endeavors on behalf of NRA.”
The NRA renewed that contract last summer. Just six months later, InfoCision was in hot water with federal regulators. In January, the company settled a suit brought by the Department of Justice on behalf of the Federal Trade Commission, which alleged that InfoCision fundraisers had illegally solicited donations for its clients after telling those they called that no financial contributions would be requested (PDF). InfoCision disputed the FTC’s allegations, but agreed to pay a $250,000 fine to settle them.
According to documents on file with the North Carolina secretary of state’s office, InfoCision has conducted five fundraising campaigns for the NRA since 2013 that collectively raised more than $50 million. But just 43 percent of the funds were paid to the NRA. The rest covered InfoCision’s overhead and expenses.
That’s actually more than InfoCision generally provides to the groups it raises money for, according to other documentation on file with North Carolina regulators. An analysis of documentation on file for 392 InfoCision fundraising campaigns from 2006 to 2017 shows that the company kept two-thirds of the funds it raised on behalf of its clients.
Those fees seem exorbitant on their face—and InfoCision has been criticized for misleading potential donors about the percentage it keeps—but experts say they’re not out of the ordinary for such companies, and don’t amount to price-gouging. “Generally the profit margins of call centers are pretty lean,” according to Shannon McCracken, the chief development officer for Charity Navigator, a consumer group that monitors nonprofit groups and educates potential donors.
Companies such as InfoCision offer even large organizations like the NRA a way to streamline a fundraising operation that would probably be even more expensive for those organizations if they conducted them in-house. “A lot of the really large, brand name organizations, the majority of their funding comes from individual, small donors,” McCracken said in an interview. “And to do that at scale, they either have massive staff or they’re outsourcing. For most organizations, it’s going to be more efficient and safer to outsource to professionals who do this.”
If those high fees are unavoidable, they can also have the effect of obscuring, for a potential donor, exactly where his or her money is going. Many of those speaking with an InfoCision fundraiser, after all, will not know that a majority of their donation is not going to the charity that fundraiser is representing.
And whether that fundraising is done in-house or through an outsourced call center, McCracken says, the risk of running afoul of laws and regulations governing telemarketers increases as those fundraising operations scale up.
“There is risk any time you start to work with a larger body of people,” McCracken said. “The more people you bring in the more risk there is someone will go off script.”