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Sunday, June 16, 2013

Charity begins in-house

America’s 50 worst charities have paid their professional companies who raise funds nearly $1 billion over the past 10 years that could have gone to charitable works. The 50 worst charities in America devote less than 4% of donations raised to direct cash aid. Some charities gave even less. Over a decade, one diabetes charity raised nearly $14 million and gave about $10,000 to patients. Six spent no cash at all on their cause.

Many operators of the 50 worst charities have lied to donors about where their money goes, taken multiple salaries, secretly paid themselves consulting fees or arranged fund-raising 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. 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. Several play off the names of well-known organizations, confusing donors.

Some nonprofits are little more than fronts for fund-raising 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.

Youth Development Fund is a Tennessee charity, which has been around for 30 years. Over the past decade it has raised nearly $30 million from donors by promising to educate children about drug abuse, health and fitness. About 80% of what's donated each year goes directly to solicitation companies. Most of what's left pays for one thing: scuba-diving videos starring the charity's founder and president, Rick Bowen. Bowen's charity pays his own for-profit production company about $200,000 a year to make the videos. Then the charity pays to air Rick Bowen Deep-Sea Diving on a local Knoxville station. The program makes no mention of Youth Development Fund. In its IRS tax filings, the charity reports that its programming reaches "an estimated audience of 1.3 million." But, according to the station manager, the show attracts about 3,600 viewers a week.

For eight years, American Breast Cancer Foundation paid Joseph Wolf's telemarketing company to generate donations. His mother, Phyllis Wolf, had founded the Baltimore-based charity and was its president until she was forced to resign in 2010. While she ran the charity, her son's company, Non Profit Promotions, collected $18 million in telemarketing fees.

The worst charity in America  Kids Wish Network has been deemed America’s worst charity. It 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 fundraisers. An additional $4.8 million has gone to pay the charity's founder and his own consulting firms.

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