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Once they get an initial donation, they keep after those people they know are sympathetic to the cause, and enough of them continue to respond, and enough of THEM continue to escalate their level of donations, that as an aggregate, they take in more than they spend. And every so often they get some serious benefactors. But for the masses, they follow the Law of Diminishing Returns to determine how many times they can send out a mailing and it still be profitable.... some people respond on the first mailing, some on the third, some on the tenth. But they know, like all good marketers, how many times they can send a mailing to a list and still take in more than they spend.
The charity enlists fundraisers, who make their money writing and printing and mailing the solicitations, regardless of donation level. And if the charity spends $1,000,000 to net $1,001,000 in donations, then it justifies the program because they have a profit. (That may be a stretching a bit... but you gotta spend money to make money.)
Sort of like Hannity's scam... they take in millions at his "Freedom Concerts" but spend virtually all of the money on private jets and caviar and appearance fees and publicity. But there's enough left over that they can throw a few thousand into the "scholarship fund" and consider the whole thing a "legitimate charity" at least for tax purposes.
They all just say "proceeds go to Charity ABC" and that can mean almost any percentage of the take AFTER expenses.
Not ALL charities do this, but a LOT of them do, especially those that do a lot of outbound solicitation.
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