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With more than 76 percent of the more than $240 billion in annual contributions to nonprofits in the U. coming from individual donors (American Association of Fundraising Counsel [AAFRC] Trust for Philanthropy 2003), misreporting by nonprofits can potentially have a large effect on the distribution of donations among nonprofit organizations.

Additionally, a number of studies provide evidence that donors direct their charitable gifts to nonprofits that report higher program ratios and lower fundraising ratios.

Prior research has supported a concern by regulators and donors that nonprofits have incentives to understate fundraising costs and may inappropriately allocate these costs to other activities.

Nonprofits that use external accounting services are more likely to properly classify the cost of their telemarketing campaigns as professional fundraising fees.

Smaller nonprofits, less monitored firms, and those with less accounting sophistication are more likely to inappropriately report telemarketing costs as a component of net revenues rather than as expenses. Using a conservative approach that understates the extent to which nonprofit organizations violate the reporting rules, our study indicates that 74 percent of the regulatory filings from nonprofit organizations fail to properly report telemarketing expenses. When you're ready to let them off, you might close with ``Is it clear that I never want telemarketing calls from anyone? If you feel like making them pay, keep going: How many telemarketing firms cheat the public and even the charities with distorted accounting ploys "Misreporting Fundraising: How Do Nonprofit Organizations Account for Telemarketing Campaigns? We compare state telemarketing campaign reports with the associated information from nonprofits annual Form 990 filings to directly test nonprofits revenue and expense recognition policies.Thus, we may have underestimated the degree to which misreporting occurs.Despite our conservative test design, we find that over 74 percent of the organizations in our sample fail to properly report telemarketing expenses. My meal was cold but it was the best meal in a long, long time.

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