A row erupted between two epilepsy charities after revelations that only a small fraction of $2.8 million collected in donations was directly spent on services for people with the condition.
Three-quarters of the cash raised through phone campaigns went to a telemarketing company, with just 2.5 per cent ($70,000) going to Epilepsy NZ - a figure the Fundraising Institute of New Zealand has called "scandalous".
Epilepsy NZ has now severed all ties with the Epilepsy Foundation, the registered charity behind the donor drive.
"I believe that people who were donating believed it was going to the local area and to the services our organisation provides," said Epilepsy NZ general manager Frank Gouveia.
In a statement on its website, Epilepsy NZ said of $2.8m in donations over the past three years, 75 per cent ($2.1m)went to the telemarketing company.
About 22.5 per cent went to the foundation for managing its office in Hamilton, and only about two and a half cents in every dollar "to the local Epilepsy New Zealand Branch to enable it to assist people with epilepsy".
Gouveia said the organisation, which holds Government contracts to provide epilepsy services, would now handle its own fundraising.
"The marketplace for donations is a competitive one and we believe we could probably do a better job of receiving those donations ourselves."
Two annual reports on the Charities Commission website show the Epilepsy Foundation took $1.8m in telemarketing donations for the two years ended March 2008.
The telemarketer took $1.29m, while $468,249 went to the foundation. Of that, $256,000 was spent on operating expenses, and $224,000 went into a capital fund. A total of $49,000 was allocated to "ENZ support costs". The records also show annual grants of around $30,000 to ENZ, but it was unclear whether that money was related to telemarketing.
Epilepsy Foundation board member Paul Manning refused to comment, as did chairman Rodney Fox, who said "it will all become evident in time".
Fox later said: "Be very careful what you say because you're being fed a line of bullshit."
A statement on the foundation's website said the group did not agree with Epilepsy NZ's stance.
"The foundation will demonstrate that its activities have been directed to supporting Epilepsy NZ and people of all ages with epilepsy."
According to the foundation's mission statement, interest from the capital fund would be used for financial assistance for epilepsy services.
Epilepsy NZ president John Molineaux said there was still support for the foundation, which was based on "a noble concept".
But he said the telemarketing drive interfered with local efforts to raise money and offered a poor return.
"The foundation itself got very little out of it and consequently the association [Epilepsy NZ] got even less out of it."
Molineaux said the door was open for a future relationship, should the foundation change its fundraising approach.
Fundraising Institute of New Zealand chief executive James Austin said he supported phone canvassing, which had become more popular with charities.
But he said the key was to be open and transparent about where the money was going.
"Telemarketers are entitled to be reimbursed for their costs but I know of firms that are much more reasonable."
Only giving 2.7 per cent to the end charity was "scandalous". "That's an area of major concern."
Telemarketing companies said the cost of a phone-based fundraising drive could vary widely. Keith Dignan, director of telemarketer Telelink, which is not connected to this case, said it could be as low as 5 per cent, but a campaign focused on generating awareness and finding new donors could cost 100 per cent of donations received.
Charities Commission chief executive Trevor Garrett said donors should ask how much of their money goes to the charity, and advised checking whether the charity is registered, which means their financial records are publicly available.
"People do have to remember there is a cost to fundraising, it's just a matter of making sure that cost is reasonable."
Epilepsy New Zealand, founded in 1956, has 17 branches.By Heather McCracken