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'Chugger' firms revealed
By Jonathan Prynn Consumer Affairs Editor, Evening Standard Last updated at 00:00am on 28.11.03
Profitable do-gooding: young fundraisers on London's streets
They are now a familiar sight on high streets and the Government is so concerned about "charity muggers" - or "chuggers" - that this week it announced tough new regulations.
Now an Evening Standard investigation reveals the firms behind the boom in chugging. They are the shadowy private companies employing the bibwearing young recruiters and make a profit every time a new donor signs on the dotted line.
The big five are the Dialog Group Ltd, which runs the Face 2 Face Fundraising and Dialogue Direct agencies, Push Ltd, Gift Fundraising Ltd, Caring Together Ltd and Fruitful Fundraising UK Ltd.
In less than five years chugging has become big business, generating fees running to tens of millions of pounds annually. The companies also make hundreds of thousands of pounds of profit from the growing industry of "face-to-face" recruitment.
The firms enter contracts with charities to raise funds on their behalf. They typically charge their client charities between £40 and £60 for each donor signed up to a direct debit monthly donation by their bands of fundraisers.
Last year an estimated 690,000 people were persuaded by " chuggers" to give financial support to a charity, according to figures from the Public Fundraising Regulatory Association. At an average fee of £50 per sign-up, that suggests £34.5 million of donations going as income to the businesses
Donors are often unaware that their first 10 months of donations on a typical £5-a-month direct debit will benefit a company. Only after that will the nominated charity be "in profit".
The founding father of " chugging" is a 37-year-old Austrian, Andreas Leitner, who pioneered the technique in the Austrian town of Linz in the mid-90s. Originally a phone-based fundraiser, he approached people direct during the hot summer of 1995 when no one was indoors to take his calls. He then took the idea to Germany, Switzerland and Italy.
In 2000 he settled in Oxford to set up Dialogue Direct, which last year turned over more than £4 million. He has now left to introduce the concept to America.
Paula Morison, group marketing director of Dialog Group, said: "People need to look at forms of fundraising such as direct mail and see that face-toface is by far the most cost-effective for charities."
Reader views (1)
People think that fundraising companies are just out to make money, well they are a business at the end of the day so yeah, they are. But then they are also recruiting long term donors which will benefit the charity.
The costs are laid out for the charity, no-one forces them to use a fundraising company, so if its good enough for the company then why do people have to comment against that?
And when you think how much it costs to produce leaflets and send them to homes, or make a TV commercial and have it shown on tv, then compare it to the amount of donations it brings it, its much lower than face 2 face
- Jemma, Nottingham
