CGI's Lymerick: America's 50 worst charities rake in
nearly $1 billion for corporate fundraisers
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By Kris Hundley and Kendall Taggart, Times/CIR special report The worst charity in America operates from a metal warehouse behind a gas station in Holiday. Every year, Kids Wish Network raises millions of dollars in donations in the name of dying children and their families. Every year, it spends less than 3 cents on the dollar helping kids. Most of the rest gets diverted to enrich the charity's operators and the for-profit companies Kids Wish hires to drum up donations. In the past decade alone, Kids Wish has channeled nearly $110 million donated for sick children to its corporate solicitors. An additional $4.8 million has gone to pay the charity's founder and his own consulting firms. No charity in the nation has siphoned more money away from the needy over a longer period of time. But Kids Wish is not an isolated case, a yearlong investigation by the Tampa Bay Times and The Center for Investigative Reporting has found. 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. Then reporters took an unprecedented look back to zero in on the 50 worst — based on the money they diverted to boiler room operators and other solicitors over a decade. These nonprofits adopt popular causes or mimic well-known charity names that fool donors. Then they rake in cash, year after year. The nation's 50 worst charities have paid their solicitors nearly $1 billion over the past 10 years that could have gone to charitable works. Until today, no one had tallied the cost of this parasitic segment of the nonprofit industry or traced the long history of its worst offenders. Among the findings: • 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. Over the past six months, the Times and CIR called or mailed certified letters to the leaders of Kids Wish Network and the 49 other charities that have paid the most to solicitors. Nearly half declined to answer questions about their programs or would speak only through an attorney. Approached in person, one charity manager threatened to call the police; another refused to open the door. A third charity's president took off in his truck at the sight of a reporter with a camera. Kids Wish has hired Melissa Schwartz, a crisis management specialist in New York City who previously worked for the federal government after the 2010 BP oil spill. Schwartz said Kids Wish hires solicitors so its staff can focus on working with children, not on raising donations. According to its 2011 IRS filing, the charity has 51 employees. Schwartz also said donors who give directly to the charity instead of in response to solicitations ensure that 100 percent of their pledge will be spent granting wishes. She declined to answer additional questions about Kids Wish's fundraising operations, saying the charity "is focused on the future." Charity operators who would talk defended their work, saying raising money is expensive especially in tough economic times. "No parent has ever turned me down for assistance because we got our money from a telemarketer," said David Thelen, who runs the Committee for Missing Children in Lawrenceville, Ga. The charity is No. 13 on the Times/CIR list. Over the past decade, the charity paid its solicitors nearly 90 percent of the $27 million it raised. It spent about $21,000 each year on its cause, most often buying plane tickets to reunite families. The charity's efforts primarily consist of giving advice to families whose children have been abducted. Thelen said his group has worked with about 300 parents since 1997. But he publicly claims credit for reuniting as many as 1,600 children with their families, even if his charity's involvement was as minimal as posting the child's picture on the charity website. Doug White is one of the nation's foremost experts on the ethics of charity fundraising. A consultant to nonprofits for more than 30 years, White teaches in Columbia University's fundraising management master's degree program. He said charities with high fundraising expenses often rationalize that such costs are inevitable in the early years. But White said the Times/CIR findings, based on a decade of data, show that the nation's worst charities can't use that excuse. White also criticized reputable nonprofits that refuse to condemn bottom-tier charities. "When you start a charity, you have a sacred compact with society," said White, one of 30 charity experts interviewed for this series. "They are ripping off the public under the guise of an organization that's supposed to do good for society." What happened to Gina Brown's mother-in-law is a classic case. Brown said the 72-year-old woman was struggling with dementia when the phone calls started. From 2008 to 2011, telemarketers representing some of the worst charities in the nation persuaded her to write checks and charge donations to her credit card for a total of nearly $15,000. Among those on the Times/CIR list that got multiple donations, sometimes only months apart, were Cancer Fund of America, Children's Cancer Fund of America and the Committee for Missing Children. "She was such a vulnerable person, she must have been on the 'A' list," Brown said. The Minnesota woman discovered the donations, which ranged from $10 to nearly $1,000, only after her mother-in-law was placed in an Alzheimer's facility. "It's hard to come to grips with the thought of her as a victim because she had been such a bright woman," Brown said. "This can happen to anyone." How the list was made BIG SNIP See link for eyeopening and heartbreaking info http://www.tampabay.com/topics/specials/worst-charities1.page |
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