Utility fund-raising effort takes heat for opt-out strategy: Critics say customers should be asked if they want to contribute to Operation Round Up-or any charity

October 3, 2005

The concept is a noble one: By rounding their bills up to the nearest dollar, utility customers can turn pennies into a philanthropic windfall for a worthy cause.

Indeed, Operation Round Up programs at nearly 250 electric cooperatives nationwide-including 22 in Indiana-have collected more than $50 million for charity since the fund-raising effort began in 1989.

But some observers question the method most participating utilities use to get their members involved. Rather than being asked to give, residential and commercial customers are automatically enrolled in the Round Up program, and those who don't want to pay more must ask to be excluded.

"The fact that they make the customer say no is forced giving," said Dwight F. Burlingame, associate executive director of the Center on Philanthropy at Indiana University. "I don't see that as charitable."

"In this situation, I'd much rather see an opt-in" approach, concurred Linda Carmody, president of the Better Business Bureau of Central Indiana. "I would imagine that consumers would normally look at the bottom line on their utility bills and pay it. How many consumers simply don't realize they are donating to this program?"

Round Up organizers in Indiana and elsewhere say they make a concerted effort to ensure members know why their bills are increasing, explaining the program in bill inserts, newsletters and on the utility's Web site, for example. Participants also get a letter each year detailing how much they donated.

"Most people, once they find out what the program is, are fine with it," said David Toll, marketing manager for RushShelby Energy in Shelbyville. "It's for a worthy cause."

Indeed, Round Up veterans say customers are typically pleased that their relatively small contributions-donations average $6 a year-can be put to good use.

"It has made such a huge difference, had such an impact on our community," said Martha McMillan, who coordinates the original Operation Round Up at Palmetto Electric Cooperative in South Carolina.

More than 80 percent of Palmetto's 60,000 customers participate, she said, and that program has raised more than $3.2 million since its inception. Round Up grants have been used for a variety of causes, from implementing a 911 emergency system in a poor county within Palmetto's territory to paying past-due medical bills for a needy child.

The program had such impressive results that electric cooperatives around the country clamored to start one of their own. At last count, 247 had received permission to use the trademarked name and Round Up logo.

A recent survey of participating utilities indicated customers have given more than $50 million over the years, McMillan said, but she couldn't break that total down. About half of Indiana's 43 co-ops have some form of the program, including five in central Indiana that together raise about $400,000 a year.

Boone REMC in Lebanon is among the most recent converts. It started telling members about the program this summer and expects to start rounding up bills next month. Response so far has been generally positive, said John Wallace, the utility's director of communications and marketing.

"People view it as a way to make a relatively small contribution and put that with thousands of others to do something pretty significant," he said. "We're in a relatively unique position to help them do that."

Before jumping on the bandwagon, Boone REMC surveyed its members to gauge their interest in the program. So far, only about 500 of the co-op's 10,000-plus customers have asked to be excluded, Wallace said.

"Some people think, 'I want to decide when and how to make a donation,'" he said. "That's absolutely fine with us. This is a voluntary program."

Still, Wallace admitted that some customers might have missed the promotional materials offering information on Round Up. So members can opt out of the program after it begins and get their money back.

When the program is in full swing, Wallace expects a participation rate of 60 percent to 70 percent-much better than the 10 percent or so Palmetto's McMillan said is typical for programs that adopt the less-common practice of asking members to participate.

"It's a huge difference," she said, justifying the opt-out policy the South Carolina co-op established.

Even so, not all Round Up programs take that approach.

At Hendricks Power Cooperative in Danville, for example, members must choose to participate in Operation Round Up. The utility ditched the opt-out model after an early attempt to implement the program faltered in the mid-1990s, said Ray Monts, director of marketing and economic development.

Hendricks resurrected Round Up in 1997, and now about 5 percent of its 20,000 members contribute.

"The opt-out policy works a lot better," Monts admitted, "but our customers told us they didn't like that."

Martinville's South Central Indiana REMC saw participation decline to about 73 percent after it stopped enrolling customers automatically a few years ago, Round Up coordinator Stacey Seaton said. But the change to the 10-year-old program was inadvertent, she said, and organizers are looking to return to the opt-out approach.

"We want to make sure every new member sees it and knows about it," she said.

Providing information is one thing. Signing donors up without their permission is quite another, the Center on Philanthropy's Burlingame said.

"It's pushing the envelope," he said. "It isn't illegal, but ethically it raises questions about the gifts being voluntary. Do customers even know they're giving?"
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