We typically see charities as morally correct and upstanding. We don’t even bat an eyelash at the idea of giving money to one and often feel guilty when we don’t. Of course, just because a charity is in the business of giving money to those in need doesn’t mean they’re giving it all away. It’s understandable that charity employees would need to pay their own salaries (non-profit doesn’t mean no one makes money) but these ones get paid more than the people they claim to help.
Courtesy of a report by TampaBay.com, in a collaboration between the Tampa Bay Times and the Center for Investigative Reporting, here are America’s most corrupt charities. While it’s a general belief in the world of non-profits that no more than 35% of donations should go to fundraising, these groups go above and beyond, sometimes funneling as much as 83% of their cash into the pockets of solicitors.
8. National Veterans Service Fund
National Veterans Service Fund says it offers guidance to veterans to help them qualify for aid they otherwise would go without. It also touts the “limited medical assistance” the charity hands out to needy veterans. Those promises have helped persuade donors contacted over the phone and in mailers to give $70 million over the past decade. The for-profit solicitors paid to raise that money kept more than half. On average, the charity gave assistance it valued at about $500,000 a year to needy vets.
The percent going to professional solicitors has increased over time. In 2011, the charity raised about $9 million and solicitors kept nearly 82 percent of the total. Philip Kraft, president of National Veterans Service Fund, said his charity buys wheelchairs, provides grocery store gift cards and pays rent for needy veterans. But no details of the grants are reported in any of the charity’s annual IRS filings, which only refer to spending on “veterans assistance and relief.”
7. International Union of Police Associations, AFL-CIO
The International Union of Police Associations is headquartered in a glass and concrete mid-rise in downtown Sarasota, Fla. As a trade union and member of the AFLCIO, donations to the group are not tax-deductible. The nonprofit hires professional solicitors to raise most of its money. Telemarketers call people across the country and tell them donations will be spent providing financial aid to the families of fallen police officers who were union members. The group also gives scholarships to students seeking degrees in law enforcement.
But of the $57 million in donations given by the public over the past decade, more than 72 cents of every dollar was spent paying professional solicitors. Less than half of one percent — about $28,000 a year — was spent on survivor benefits. Recent campaigns have been even worse. In 2011, professional fundraisers kept about 92 percent of the $8.1 million raised. IUPA netted about $650,000.The group spent $25,000 on its cause that year, giving $15,000 in scholarships, $5,000 in death benefits and $5,000 to a handicapped children’s foundation outside Sarasota.
6. Breast Cancer Relief Foundation
When Donald G. Tarver formed the charity that would become Breast Cancer Relief Foundation, it was a chance to start over. He had been president of another cancer charity. It was accused by the IRS of paying too much money to its for-profit fundraiser. But when Tarver started over in 1987, he hired the same fundraising company at Breast Cancer Relief Foundation and continued paying the corporation the vast majority of donations raised in his charity’s name. Breast Cancer Relief continued diverting millions away from cancer patients after Tarver’s death in 2002, when his brother and sister-in-law took over.
For the past decade, it has been one of the nation’s most wasteful charities, IRS records show. Over that time, it has raised nearly $64 million through professional fundraisers and allowed those companies to keep 70 percent of donations. Just more than 2 percent of donations raised were given directly to hospitals or to women in need of breast cancer screenings. The charity has also reported shipping medical supplies worth millions of dollars to Africa and Central America over the past four years.
5. Firefighters Charitable Foundation
Firefighters Charitable Foundation was created to provide financial assistance to people who have been affected by a fire or disaster. Over the past decade, its professional solicitors have been the biggest beneficiaries. From 2002 to 2011, it raised $64 million in donations and paid $55 million of that to its solicitors. The charity spent less than 10 cents of every dollar raised on direct financial assistance to those in need.
The charity’s founder, Louis Pelico, left the organization in 2006. He said he couldn’t reduce fundraising costs and decided he had had enough. “I tried for years to get it down. I figured if I hadn’t gotten it down by now that I wasn’t going to,” he said. “It’s a sword that really cuts you. It helps you and then it cuts. It’s doubled-edged.” Frank Tepedino, who became president of the charity after Pelico, told the Milwaukee Journal Sentinelin 2007 that he planned to slowly change the way the charity raised money. That hasn’t happened. Today, the charity pays its for-profit solicitors 90 cents of every dollar raised.
4. American Breast Cancer Foundation
Phyllis Wolf started American Breast Cancer Foundation in 1997 and presided over one of the most wasteful charities in the nation for 13 years. The charity lured donors by promising to pay for breast cancer screenings. Under Wolf, almost nothing made it to sick and dying women. Instead, she signed contracts with more than a half dozen professional fundraisers and paid them nearly 75 cents of every dollar raised.
Her son, Joseph A. Wolf, was among those who profited the most. After serving as the charity’s vice president for three years, Joseph Wolf formed a telemarketing company, Non Profit Promotions. Between 2003 and 2010, his company was paid nearly $18 million to raise donations for his mother’s charity. The relationship was not disclosed on IRS filings until 2006. In June 2010, after negative publicity about the Wolf contract, the charity’s board forced Phyllis Wolf to resign and terminated the contract with her son. Wolf received $126,500 in salary that year; her son’s company got $134,733. Cancer patients got $20,000 in mammogram assistance that year.
3. Children’s Wish Foundation International
Children’s Wish Foundation International is one of several charities that mimic the name and the mission of the well-established Make-A-Wish Foundation in Arizona. Children’s Wish reported that it spent about $600,000 granting wishes to terminally ill children in 2010 and gave them donated goods valued at $3 million. It paid professional fundraisers nearly $6 million for their services that year.
Linda Dozoretz, who founded Children’s Wish with her late husband in 1985, said telemarketing has helped the charity find children in need of its help. “We might not have known of these children unless we had this valuable communication tool,” Dozoretz said. “A human voice communicates caring, compassion and warmth that is more needed at this time than any other.” Still, that doesn’t change the fact that $63 million has gone to paying these solicitors, while less than half of that goes into helping the charity and only $10 million total being used to help children.
2. Cancer Fund of America
Cancer Fund of America, started in 1984, claims in pledge letters that it is on the front lines of the fight against cancer. But its main activity has nothing to do with funding research or paying for cancer treatment. Instead, the charity collects donated goods — including shampoo, DVDs and air fresheners — and ships them across the nation to dying patients and the families who have gone broke trying to save them. Cancer patients get help to make their lives a little easier. But while gift baskets are made up of trinkets and toiletries, for-profit fundraisers take home millions of dollars every year. CFA’s founder and at least a dozen other family members earn a total of $1 million in salaries from CFA and four spin-off charities.
The waste has been going on for decades. Year after year CFA raises millions and sends 82 percent to its for-profit fundraisers. Over the past decade, fundraisers have collected $98 million in donations. Patients have gotten less than $1 million in direct cash aid over those 10 years, IRS records show. As far back as 1991, CFA’s founder, James T. Reynolds Sr., said he intended to reduce the charity’s high-fundraising costs. But more than 20 years later, fundraising still takes more than 83 cents of every dollar raised.
1. Kids Wish Network
Every year, Kids Wish Network raises millions of dollars in donations in the name of dying children and their families. Every year, it squanders almost every penny. The money gets diverted to enrich the charity’s operators and the for-profit companies Kids Wish hires to drum up donations. Sick children wind up with less than3 cents of every dollar raised. That has been the formula for 16 years, ever since Kids Wish mimicked the respected Make-A-Wish Foundation and launched its relentless drive for money. In the past decade alone, Kids Wish has channeled nearly $110 million donated for sick children to its corporate fundraisers. That makes it the worst charity in the nation, according to a Times/CIR review of charities that have steered the most money to professional solicitation companies over time.
In addition to the money paid to for-profit fundraisers, Kids Wish has paid its founder and his own companies at least $4.8 million in salary and fees over the years. While founder Mark Breiner was still president of Kids Wish, earning $130,000 a year, he joined a former employee as a partner in a fundraising company called Dream Giveaway. In 2008 and 2009, Kids Wish paid Dream Giveaway nearly $1.7 million in consulting fees to run automobile give-aways that raised money for the charity. Breiner continued making money after he retired from Kids Wish in mid-2010 and left his mother-in-law on the charity board. In 2010 and 2011, the charity paid two of Breiner’s companies $2.1 million for licensing, consulting and brokerage fees. Kids Wish violated IRS rules by waiting four years to disclose the money it paid Breiner. The charity blamed the delay on a mistake by its accountants.