Is it true that charities only have to give 3% of the funds they collect to the cause they say they are collecting for?
Depends on the charity. Here is one site that reviews charities for operating expenses; there are others. As a factual matter, if I learned that a charity consumed 97% of its donations in operating expenses I would label such a charity as a scam and not donate anything. I might also consider alerting the appropriate regulatory agencies because that just doesn’t sound right.
Oh sorry, I misread your question. You’re asking about mandatory minimum donations, which would not depend on the charity. It would instead depend on what state and/or federal law under which the charity is organized.
I’ve never heard of that, but I have heard of charities operating this way:
Riverside’s Police Department is looking for charitable donations and hires Riverside Charities, Inc. to do the fund raising. RPD says, “We’d like to raise about $1000.” RCI says “No problem.” They actually get $5000 in pledges, but only contracted with RPD for $1000. They keep the rest.
I’ve read that with some of the local charities in my area, that it’s often 10-25% of the total “take.”
It just so happens there was an article in Tuesday’s Wall Street Journal about this subject. From the article:
Sadly, the answer to Hydrocortisone’s question appears to be yes, so long as the charity is honest about the fact. Word to the wise, therefore, from someone who works in the industry: ask up front what proportion of your donation will actually reach the intended beneficiary. If the solicitor won’t give you an answer, or you don’t like their answer, move on.
I think I know what you’re thinking of. You’re talking about the rule that any foundation must disburse 5% of its assets to charitable work in any given year. A foundation is a non-profit organization organized for charitable work. They have some large amount of money in their investments which they were given years (or even decades) ago that is supposed to be used for a particular charitable purpose. Usually they started by being created in the will of some rich person. The will stated that some large portion of the estate will go to establish a charitable foundation for some given charitable purpose. Usually the will indicates who the trustees of this foundation will be. The money given to the foundation will not go immediately for charitable purposes. The money will be invested. The idea is that (more or less) the money originally invested will remain in the investments, and the interest from that money will be used for charitable purposes.
In 1969, a federal law was passed (in the U.S.) stating that at least 6% (later reduced to 5%) of all the assets of a foundation must be disbursed for charitable purposes in any given year. The problem was that some foundations were only slowly (or not at all) disbursing the money in their investments for charitable purposes. Because 5% or 6% is pretty close to what a foundation can make in interest in one year from its investments, this law at least comes close to making it true that a foundation will be spending nearly all of its interest on its investments on charitable purposes. This then means that a foundation can be perpetual, but it will not be quickly growing in size (of its investments) because it doesn’t disburse its money.
There are some caveats that should be noted. Some foundations are not meant to be perpetual. They were originally set up to spend all the money they were given within a certain period of years, and if they don’t spend it all at the end of that time a court will intervene and determine what is to be done with the remaining money. Also, some foundations have their money well invested and are making more than 5% on their investments each year. If they only spend 5% each year, they may well be slowly growing in value. Furthermore, some foundation get new endowments given to them which they add to their investments.
The charities you give to are not foundations. The money they spend for charitable purposes each year is the money that they are given that year. Sometimes some of the money given to them in a particular year comes from a foundation.
I used to have fun with “non-profit” agencies trolling for money via telemarketing.
Pretty sure that any website that’s a real charity would end in .org, not .com am I correct? They really blew a gasket when I inquired about that, so maybe my hunch was correct. Unfortunately there are so many scam artists I don’t tend to donate anything at all. Maybe the legitimate charities could hire some hitmen to take care of the crooks 
Your hunch is incorrect. The non-country-code top-level domains (except .edu, .mil and .gov) are pretty meaningless. A competent charity would want to get a .org domain but it may not have been available, or they may just be dumb.