The Law of Fundraising. Bruce R. Hopkins

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Название The Law of Fundraising
Автор произведения Bruce R. Hopkins
Жанр Экономика
Серия
Издательство Экономика
Год выпуска 0
isbn 9781119873457



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in fees.45 This investigation received national attention over how much a charity should spend in order to make money, and at what point is this number so high as to invoke criticism.46 Of the $14 million that animal charity Society for the Protection of Children and Animals International raised in 2010, it spent less than 0.5 percent—about $60,000—in small cash grants to animal shelters across the United States.47 (SPCA International also spent about $450,000 of this amount to bring back animals from Iraq and Afghanistan as part of its “Baghdad Pups” program.) In 2012, both the Disabled Veterans National Foundation and SPCA International received “F” rankings from CharityWatch, a charity-ratings group. Both organizations blamed their cost allocations on a prominent university philanthropy professor's expert opinion.

      In 2015, the Federal Trade Commission (FTC) and 58 agencies from all 50 states and the District of Columbia filed a complaint charging four cancer charities and the individuals controlling them with allegedly swindling more than $187 million from consumers. The federal court complaint charged Cancer Fund of America, Inc. (CFA) and Cancer Support Services, Inc. (CSS), their president, James Reynolds Sr., and their chief financial officer, Kyle Effler; Children's Cancer Fund of America, Inc. (CCFA), and its president and executive director, Rose Perkins; and the Breast Cancer Society, Inc. (BCS), and its executive director and former president, James Reynolds II.

      In the complaint, the FTC and state agencies labeled the cancer groups “sham charities” and charged the organizations with deceiving donors and misusing around $187 million in donations from 2008 to 2012. According to the complaint, the defendants represented themselves as legitimate charities that spent 100 percent of their proceeds on services for cancer patients, such as hospice care and buying pain medication for children. The complaint alleged that these claims were false and that the charities operated as “personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation, with none of the financial and governance controls that any bona fide charity would have adopted.” Investigators found that, in reality, the charities spent less than 3 percent of donations on cancer patients.

      According to the complaint, the defendants used the organizations to pay lucrative salaries to family members and friends and spent contributions on personal items such as cars, trips, luxury Caribbean cruises, college tuition, gym memberships, concert and sporting event tickets, and dating site memberships. The defendants also hired professional fundraisers who received up to 85 percent or more of every donation. The complaint asserted that in order to hide their high administrative and fundraising costs from donors and government regulators, the defendants falsely inflated their revenues by reporting more than $223 million in donated gifts-in-kind that were allegedly distributed to international recipients. The complaint states that by reporting the inflated gift-in-kind donations, the defendants created the impression that they were more efficient with donors' dollars than was actually the case. Thirty-five states also alleged that the defendants filed fraudulent and misleading financial statements with state charities regulators.

      Soon thereafter, the New York attorney general announced that the office had filed a court action to close the National Children's Leukemia Foundation (NCLF) and to hold its president and others accountable. The lawsuit came after an investigation by the Attorney General's Charities Bureau revealed that the NCLF, which held itself out as a leading organization in the fight against leukemia, did not conduct most of the programs it advertised, including claims that it operated a bone marrow registry and fulfilled the last wishes of dying children. The court papers charged that, despite claims it had a board of directors and other financial and scientific controls, the 20-year-old organization was in fact operated by a single founder out of the basement of his home.

      In February 2016, a federal class action was filed against Gospel for Asia, one of the largest mission organizations in the United States. The lawsuit alleged that the founder of the entity took offerings from tens of thousands of individuals, claiming it was feeding and housing impoverished people. In reality, according to the allegations, the founder used the contributions to build an empire, including a $20 million headquarters, homes, and sports facilities.

      In May 2016, Minnesota's attorney general filed a lawsuit against Associated Community Services, Inc. for sending false pledge reminders to donors and making other misleading statements in a campaign to solicit contributions for the Foundation for American Veterans. According to the complaint, the company had an extensive history of misconducting solicitations for charities.

      The attorney general of New York announced in November 2016 that the office had settled its case against the National Vietnam Veterans Foundation. According to a statement, nearly all of the funds raised through the Foundation's direct-mail efforts were used to pay its fundraisers. It is said that in 2014, for example, the Foundation devoted $7.7 million of the $8.6 million raised to fundraising. It is further stated that the “fraction” of the money that went to the Foundation “was further reduced by a pattern of abuse, mismanagement, and misspending” by its former president. That individual and the Foundation's vice president are now subject to a “permanent nationwide ban” on access to and decision-making with respect to charitable assets.