Wednesday, June 12, 2013

Tampa Bay Times: America's 50 Worst Charities Rake in More Than $1 Billion For Corporate Fundraisers, Give Little to Charitable Causes

A special report published in the Tampa Bay Times contends that over the past decade, the nation's 50 worst charities paid more than $1 billion to for-profit corporations but gave very little to charitable causes.  The report comes at the conclusion of a yearlong investigation by the Times and The Center for Investigative Reporting.

Using state and federal records, the Times and CIR identified nearly 6,000 charities that have chosen to pay for-profit companies to raise their donations.  The investigators then reviewed records over the past decade to zero in on the 50 worst such charities, based on the money they diverted to boiler room operators and other solicitors during that time period.

According to the Times, these nonprofits adopt popular causes or mimic well-known charity names that fool donors. They then rake in cash, year after year, then pay their solicitors for their services.  Over the past 10 years, these payments have amounted to more than $1 billion.

Among the report's findings are:

• The 50 worst charities in America devote less than 4 percent of donations raised to direct cash aid. Some charities give even less. Over a decade, one diabetes charity raised nearly $14 million and gave about $10,000 to patients. Six spent nothing at all on direct cash aid.

• Even as they plead for financial support, operators at many of the 50 worst charities have lied to donors about where their money goes, taken multiple salaries, secretly paid themselves consulting fees or arranged fundraising contracts with friends. One cancer charity paid a company owned by the president's son nearly $18 million over eight years to solicit funds. A medical charity paid its biggest research grant to its president's own for-profit company.

• Some nonprofits are little more than fronts for fundraising companies, which bankroll their startup costs, lock them into exclusive contracts at exorbitant rates and even drive the charities into debt. Florida-based Project Cure has raised more than $65 million since 1998, but every year has wound up owing its fundraiser more than what was raised. According to its latest financial filing, the nonprofit is $3 million in debt.

• To disguise the meager amount of money that reaches those in need, charities use accounting tricks and inflate the value of donated dollar-store cast-offs — snack cakes and air fresheners — that they give to dying cancer patients and homeless veterans.

The question we must answer is this: what can we do to put an end to this conduct?  Should the federal government act?  The state governments?  I do not know, but I am convinced that the public would benefit greatly if these so-called charities are made to account for every penny they raise.

VEJ   

http://lawprofessors.typepad.com/nonprofit/2013/06/tampa-bay-times-americas-50-worst-charities-rake-in-more-than-1-billion-for-corporate-fundraisers-gi.html

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