Saturday, February 26, 2011

Regulators Know About Fraudulent Fundraisers; Do Nothing

by Gary Snyder

At the more than 1,100 employee Associated Community Services offices they raise money for dozens of charities nationwide. But little goes to the charities that the contributors think it is going to. ACS is one of the largest professional fundraisers in the country and is big business. Take the “Children’s Cancer Fund of America.” The Powell, Tennessee charity says it provides aid and financial assistance to children struggling with the disease. They raised over $4 million in 2009 and ACS kept 83% of it. Or take the “Firefighters Assistance Fund,” a charity to help fire departments buy water trucks, high volume nozzles, and other fire fighting gear. The charity, received only 20% of every dollar raised. Or the charity, “Children with Hairloss," which provides wigs for children who have suffered through chemotherapy and radiation. They were able to keep under 20%. All told, Associated Community Services reported taking $17,713,325 in donations, according to a 2009 report by the New York Attorney General. But only $5,966,173 made its way to charities. Imagine how big this fundraising problem is.This is just one company. The high-pressure sales tactics employees are trained to use generates $1 million a month.

State regulators, typically the attorney general, do not have resources to do their job. In some states, student interns are reviewing filings. In the past the attorneys’ general were to enforce the fiduciary duties of charity managers but have fallen short of their stated intentions. Most regulators are inactive, ineffective and overwhelmed. Most do not see any improvement in the foreseeable future with the current budgetary crises.
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