Charity Leader Has Ignored Nonprofit Fraud

By Gary Snyder

Suzanne Perry has written a compelling article (http://philanthropy.com/article/Lack-of-Charity-Oversight/135346/)  in the Chronicle of Philanthropy. I suggest that all read it. 

Diana Aviv of the Independent Sector has discounted that there is a problem and certainly as a charity leader she is not part of the solution.  “The chances that they are going to listen to one of us saying 'You shouldn’t do that’ is zero to none,” she says. “What’s likely to happen is they’ll thumb their noses at us and that the only power to stop them is law enforcement.”



Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

Nonprofit Fraud: Are Breast Cancer Charities Worthy of Your Support?

By Gary Snyder

It’s National Breast Cancer Awareness Month. Shall we happy or sad?

If you cannot trust the National Football League and breast cancer charities whom can you trust? Not plenty of breast cancer charities. A recent probe into the NFL Breast Cancer Awareness fundraising showed that only 5% of each sale goes to the American Cancer Society and less to cancer research. 

Numerous other breast cancer charities have abused their trusted names for the good of a few.

Cancer Fund of America is a controversial group. Both the Better Business Bureau and the nonprofit rating agency Charity Navigator have vilified it for giving less than a penny of every dollar raised to cancer patients. Charity Navigator once listed the Cancer Fund of America Support Services, as one of "10 Non-Profits That Make Ebenezer Proud." In a Georgia Governor's Office of Consumer Affairs document Cancer Fund was accused of making false and misleading claims in its mail solicitations, allegations that the Cancer Fund of America ultimately settled for $50,000

Breast Cancer Society (BCS) claims it raised $50 million in contributions in tax filings but when pressed by Marie Claire magazine the founder said that it raised just $15 million in cash donations in 2009. The other $35 million represented his estimate of medications that the BCS accepted as gifts or bought at a major discount but then listed on its books as having much higher values. He says he gets the meds from other organizations, including the Ontario-based Universal Aide Society, which saw its Canadian charitable status revoked two years ago for malfeasance. In 2009, the leader collected a $223,276 salary.

The United Cancer Council hired a fundraiser netting only $2 million out of the $28 million collected. 

The Making Memories Breast Cancer Foundation raised $1,159,654. Just under 12 percent, less than $137,000, went toward granting wishes for terminally ill breast cancer patients.

The American Cancer Society actually lost money on a program (in 2010), because the telemarketing firm got to keep 100 percent of the $5.3 million in funds it raised, plus $113,006 in fees from the society, government filings showed. No apologies from the agency.

They had more than 20,000 people who helped raise more than $2 million by participating in the national breast cancer organization’s, Y-Me, race and walk. Weeks later the Chicago-based nonprofit, which operated a nationwide hot line offering counseling to breast cancer patients, fired its staff, shut down its website address  and closed its doors. A Y-Me volunteer and founder of the group’s signature fund-raising race, said “incompetence and mismanagement,” especially under previous leadership, led to Y-Me’s downfall. The attorney general is investigating.

The National Breast Cancer Foundation was a family affair. With collections of about $10 million, the founder takes home $200,000, her son $180,000, her husband and another son all share in the largess at the expense of those in need. It even endorses misleading jewelry. About 40% of its revenues were not spent toward its mission.

The Coalition Against Breast Cancer offers virtually nothing to patients after taking in millions. The Coalition is under investigation by New York Attorney General Eric Schneiderman. He called the charity a sham.

Charity Navigator ranks The Breast Cancer Relief Foundation and the John Wayne Cancer Institute with just one star, poorly performing organizations. United Breast Cancer Foundation, Walker Cancer Research Institute and the American Breast Cancer Foundation have zero (0) stars.

This still does not include some of the questionable practices at the flagship breast cancer charity, Susan G. Komen.

It has been estimated that tens of millions of dollars are taken from those to which it was intended. Fewer than 50% of the Charity Navigator breast cancer charities have rated high for their commitment to Accountability and Transparency.

Evidence clearly indicates that both large and small cancer charity organizations are performing poorly. These few examples do not exude confidence.  Unless there is an outside intervention, a fall from grace may be imminent.

Watch out before donating. Make sure that you are confident that the charity that you donate to is honest. Exercise due diligence:

• ·      ensure the charity is effectively governed; is it transparent, accountable and fiscally responsible?
• ·      go to GuideStar, if available; and review the charity’s IRS 990 form; look at other watchdog websites such as Charity Navigator.
• ·      go to the charity’s website and scrutinize the annual report and try to see if there are conflicts of interest (such as family members on the board);
• ·      check the financial statements both at GuideStar and at website;
• ·      examine to see if programs are in sync with organization’s mission;
• ·      ask if the agency has internal financial controls in place to avoid fraud and misapplication of funds.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

Nonprofit Fraud: Should You Give To Haitian Relief Efforts?

by Gary Snyder

  

There is ample evidence to suggest that giving to Haitian Relief efforts may be a waste of money.

At last glance the United Nations reports that only half of all of the funds pledged to rebuild Haiti after the 2010 earthquake that killed 316,000 of its people has been delivered. Among those who have not followed through—Venezuela and the United States, which together pledged $1.8 billion (they have disbursed just 24 percent ($223 million) and 30 percent ($278 million), respectively. Japan and Finland are among the few to have fully paid what they promised—$100 million and $6 million, respectively. The American Red Cross received about $486 million in donations following the earthquake, and has spent and signed agreements to spend $330 million on Haiti earthquake relief and recovery efforts in the first two years. Some of those who have moved slowly point to the lack of infrastructure in Haiti as part of the reason for slow payment of pledges. (link) (link) (link). The protracted humanitarian crisis continues. More recently, the World Bank estimates that few of the $400 million in housing, home repair and infrastructure are completed.

Conflicts have arisen where several have taken advantage of the good cause and the chaotic nature of the Haitian relief effort to collect huge amounts of money and line their own pockets.

Singer Wyclef Jean collected $16 million for his native country, Haiti. Six years after the nonprofit, Yele Haiti, was founded it closed its doors. The hip-hop star is under investigation after multiple charges against him for his questionable expenses. One newspaper suggested that Yele spent just $5.1 million on relief. Another suggested that Jean’s was paid for musical performances at a benefit concert. Another questionable expense was the $30,000 spent on ferrying of Lindsay Lohan to a fundraiser. The $256,580 shared by Jean and the Yele Haiti board is being investigated. The walled estate in which the charity put $600,000 in fix-ups is now deserted. The continuing investigation by the New York attorney general will ferret all of the improprieties. One charity effort down.

In 2010, Mitch Albom, the best selling author and sports columnist, approached Rev. John Heard and his charity, Caring and Sharing Mission, and offered to raise money for Haitian efforts. All has stopped in a legal dispute after Albom and his Hole in the Roof Foundation sunk nearly $500,000 on a school and orphanage project. Heard and his charity are seeking $2.5 million in damages. Two charity efforts down.

The nonprofit organization, Haitian American Foundation Inc., was swirling in allegations when its executive was charged with money laundering and racketeering.  Over $2 million seems to be lost and the agency is now defunct. Three charity efforts down.

A Haitian Clinic is in jeopardy with tens of thousands of dollars taken from the proceeds of fundraisers. The money allowed the group to keep the medical offices open to service the impoverished. The clinic’s future is in question. Four charity efforts down.

Make sure that you are confident that the charity that you donate to is honest. Exercise due diligence:

·      ensure the charity is effectively governed; is it transparent, accountable and fiscally responsible?

·      go to GuideStar, if available; and review the charity’s IRS 990 form; look at other watchdog websites such as Charity Navigator.

·      go to the charity’s website and scrutinize the annual report and try to see if there are conflicts of interest (such as family members on the board);

·      check the financial statements both at GuideStar and at website;

·      examine to see if programs are in sync with organization’s mission;

·      ask if the agency has internal financial controls in place to avoid fraud and misapplication of funds.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

Are Komen and Livestrong Leading Cancer Charities Into Oblivion?

 

by Gary Snyder

It’s National Breast Cancer Awareness Month. Let us stretch it a bit to include a look at both Susan G. Komen and Livestrong. Both are making a lot of noise. I was struck by the remarkable similarities surrounding these two very popular charities

Both Lance Armstrong and Nancy Brinker, Susan G. Komen’s sister, are founders of their respective charities. Both agencies focus on cancer. Both Brinker and Armstrong have suffered from cancer. Both have spent years building a brand that is recognized around the globe. Accordingly, donors and corporate sponsors coveted both of them.

Both leaders have embroiled their agencies in controversy and, as a result, are under unwanted and intense scrutiny.

Susan G. Komen for the Cure is currently the nation’s leading anti-breast cancer charity. It has generated about $360 million in revenue annually. Under the direction of Nancy Brinker, a controversy began when it pulled the plug on funding Planned Parenthood grants for screening and mammogram referrals. That single misstep led to the unveiling of many questionable practices over several decades.

Livestrong is the largest athlete-named charity in the world. It has revenues approximating $42 million. Its founder’s, Lance Armstrong, credibility plummeted when the U.S. Anti-Doping Agency revealed evidence that the cyclist had used performance-enhancing drugs and stripped him of his seven Tour de France titles. He refused to fight the charges, but has denied using such drugs. The inquiry put his charity under the focus of many. Faced with mounting inquiries, Armstrong stepped down as chairman of Livestrong.

As if on queue, both agencies suggested, at the outset of their controversies, fundraising was not hurt. They said that it was enhanced. Brinker proclaimed that on national television. Armstrong’s Livestrong told ESPN that its revenues were up 5.4 percent. After looking into the details, both declarations may be a stretch.

If insider observations are any indication, turnout at Susan G. Komen pink-ribbon fundraising events are substantially down, some by as much as 40%. Some weighty donors have taken flight. From anecdotal observations, corporate sponsorship is significantly depressed.

Komen had a precipitate fall from a number two ranking in a 2011 survey to a number 56 ranking in 2012 between Jan. 31 and Feb. 20, 2012. “Since it was first surveyed in EquiTrend, Susan G. Komen for the Cure has in many ways represented the 'gold standard' among non-profits measured in our study, consistently reporting high scores for quality, the willingness to recommend and, most importantly, trust. Komen finds itself near the bottom of the pack on all of these items.” Some have suggested that the reason for Komen’s poor performance is, in part, because its lack of commitment to finding a cure. Many fellow breast-cancer organizations feel that the Komen self-adoration has overtaken any interest in cure research with its research funding being cut in half in the past couple of years.

According to tax records the Livestrong foundation saw contributions and grants drop by 23% ($41 million in 2009 to $30 million in 2010) as the doping controversy started to unfold. Its revenues have bounced back a bit. Observers, however, are saying that Livestrong, the charity inextricably linked with the Armstrong and built on the doping fraud, will see an adverse effect on raising funds. In addition, another proxy measure of commitment to the Livestrong cause---riders at events--- has diminished substantially.

While neither Nancy Brinker nor Lance Armstrong has suffered financially personally yet, both have become lightning rods that may inhibit the growth and even the survival of their respective charities. Nancy Brinker receives over $430,000 annually from Komen (for various positions) which seems to be a good reason to ignore incessant cries for her to step down. She has a booking agent for celebrity appearances, speaking engagements, endorsements and autograph signings in which she receives upwards of $45,000 or more in fees to show up.

Armstrong is worth over $100 million and commands $50,000 for speaking engagements. But his sound financial station may be changing. Nike, Giro Helmets, Trek Bicycles, FRS energy drink company, Anheuser-Busch and Radio Shack ended their contracts with Lance Armstrong. Their endorsement deals once earned the embattled cycling star millions of dollars. In addition, another hurtle for Armstrong to overcome may be the London's Sunday Times. The newspaper is considering legal action against the cyclist to recover the money spent on a libel suit brought by Armstrong, which he won. One senior source at the newspaper said that the case cost it about $1 million.

Both founders have been embroiled in questionable dealings. A tempest started when the Armstrong received shares of stock in an initial public offering that Livestrong was a part. When the media criticized it, Armstrong donated the proceeds---roughly $1.2 million---to the foundation.

Nancy Brinker has had a list of conflicts-of-interest. Over vehement objections by other breast cancer groups, Komen (Brinker) endorsed a cancer treatment with troubling links to uterine cancer. Its maker had been a long supporter of Komen. She caused controversy by sitting on the board of a for-profit chain (with her $500,000 investment) of cancer treatment centers. She had Susan G. Komen invest over $150,000 in her husband’s company.  She used Komen stock portfolio coupled with her cozy political relationships to her own advantage while omitting such in the Susan G. Komen for the Cure literature, Web site and public statements.  

Another storm has spilled over both agencies is the large amount of donor dollars spent by both organizations to protect their trademarks.  In 2009, Livestrong spent over a million dollars. Meanwhile, Susan G. Komen for the Cure has identified and filed legal trademark oppositions against more than a hundred charities that used any variation of “for the cure”. In the past, this effort had cost SGK almost a million dollars a year in donor funds. In some instances Komen demanded that agencies never use the color pink in conjunction with their fundraising. Some of the smaller targeted agencies have raised funds for Komen competitors such as the National Breast Cancer Foundation. 

There are significant contrasts in the governance of the respective agencies. To date, records show that Lance Armstrong has been seemingly scrupulous in his dealings with Livestrong. Nancy Brinker has not.

The board at Komen has been a repository for Brinker’s friends, family and business associates. Faced with outrage, board members have left en masse. Nevertheless, Brinker continues to fortify her position by adding many beholden to her such as vendors or employees. At times, she has been both a board member and a staff member. As a staff member she recommends to a board that she totally controls. This is an arrangement that no well-informed board member should accept.

In addition to the conflicts-of-interest that we have seen, internal conflicts proliferate at Susan G. Komen for the Cure. Brinker has had her fingerprints on every decision at the agency. There has been virtually a total turnover in the administration of the organization with over $1 million paid as a result of personnel transitioning out of the agency. In the past, there were charges that Brinker used agency funds to defray personal expenses that she has incurred while employed elsewhere.  This is a thorn that she has declined to address but continues to surface as outsiders monitor the operations of the organization.

Controversies abound elsewhere in the cancer charity world with a denigration of the cancer charity brand. Beside the two aforementioned cancer charities numerous other cancer charity efforts have put a blemish on their hard-won trust.

First, contributions are not going to where the donor has intended.  A probe into the NFL Breast Cancer Awareness fundraising showed that only 5% of each sale goes to the American Cancer Society. Donor contributions have morphed into public relations awareness huge campaigns to promote an agency and the cause, but not a cure.

Second, dubious practices, if continued, will destroy good charity efforts. Numerous cancer charities have abused their trusted names for the good of a few. For example, the Coalition Against Breast Cancer offers virtually nothing to patients after taking in millions. The Coalition is under investigation by New York Attorney General Eric Schneiderman. He called the charity a sham.

The United Cancer Council hired a fundraiser netting only $2 million out of the $28 million collected. The Making Memories Breast Cancer Foundation raised $1,159,654. Just under 12 percent, less than $137,000, went toward granting wishes for terminally ill breast cancer patients.

Both the Better Business Bureau and the nonprofit rating agency Charity Navigator has vilify Cancer Fund of America for giving less than a penny of every dollar raised to cancer patients.

Breast Cancer Society (BCS) claims it raised $50 million in contributions in tax filings but when pressed by Marie Claire magazine the founder said that it raised just $15 million in cash donations in 2009. The other $35 million represented mere estimates of medications that the BCS accepted as gifts or bought at a major discount. The Ontario-based Universal Aide Society revoked its Canadian charitable status for malfeasance.

Charity Navigator ranks The Breast Cancer Relief Foundation and the John Wayne Cancer Institute with just one star, poorly performing organizations. United Breast Cancer Foundation, Walker Cancer Research Institute and the American Breast Cancer Foundation have zero (0) stars.

It has been estimated that tens of millions of dollars are taken from those to which it was intended. Fewer than 50% of the Charity Navigator breast cancer charities have rated high for their commitment to Accountability and Transparency.

Evidence clearly indicates that both large and small cancer charity organizations are performing poorly. Unless there is an outside intervention, a fall from grace is imminent.

Gary Snyder is founder of Nonprofit Imperative. He can be reached at gary.r.snyder@gmail.com.

   

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

Failed Nonprofit Leadership

I was taken aback by the recommendation of the Independent Sector’s new $1 million report, Beyond the Cause. It seeks to form a single organization and be furnished $20-million over the next four years for direct lobbying efforts to fend off unfavorable federal policies and legislative proposals, many of which IS has advocated for over the years.

Quite simply, this is an unashamed admission that Independent Sector has failed in its meeting the recommendations of its own $4 million Panel on the Nonprofit Sector Report and subsequent Principles for Good Governance and Ethical Practice. The issues that IS is charging the new agency to address have been part of its own mandate and seeded in those and other documents for more than a decade.

The Independent Sector report may be a result of the huge backlash from its campaign it waged against proposals to limit the charitable deduction for wealthy people. Ultimately, as a result of its divisive stance, it backed away from its initial posture. Apparently it has been recently resurrected in a speech by its executive. But, in any event, it now apparently wants another agency to run with its vacillating stands.

IS now wants the new organization to look into revisions to the Internal Revenue Service disclosure forms (and burdensome paperwork) that could hamper nonprofit operations. This flip-flop on its own recommendations in its report to the Senate Finance Committee “to increase resources to the IRS for oversight and enforcement of charitable organizations and also for overall tax enforcement.” Despite this, it unabashedly continues to publicly advocate self-regulation.

In my view, there is little doubt that the funding for the report’s recommendations is already lined up. There is also little doubt that the funding will go the way of so many other reports and studies on the charitable sector. For decades, a myriad of other organizations have spent millions of dollars to addressed every imaginable aspect of the nonprofit sector and have met the same fate: no execution.

It is curious that Independent Sector wants to establish a new multi-million agency to address the very issues that IS has failed to effectively address even after spending tens of millions of charitable dollars.


Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)

Grant Money Goes Into Popular Officials Pocket

by Gary Snyder

Leon Dingle was a member of the Illinois Medical District. For nearly two decades, he sat on the public board, while running a private for-profit health-care business that afforded him a lifestyle that included private clubs and vacation homes. Dingle had access to grants desperately needed by nonprofit health agencies in the African-American community.

The money that was to serve low-income or working-class people constantly battle to stay afloat, ended in his pocket according to an indictment. The federal government allege that Dingle used $3 million of state grant money to buy three Mercedes-Benz cars and to make renovations on vacation homes in Savannah, Ga., and Hilton Head, S.C. They also claim Dingle used money that was supposed to go to nonprofit health organizations to pay expenses at the Chicago Yacht Club and the Mid-America Club, and spent about $29,000 to pay for tickets to the 2007 and 2008 Chicago Classic, an annual football contest at Soldier Field between two historically black colleges.

The federal investigators allege that Dingle used “straw grantees” to obtain the grants, then funneled the money to a for-profit company controlled by him. One of the alleged “straw grantees” is the Broadcast Ministers Alliance, a group of several prominent South Side ministers, including the Rev. Clay Evans, founding pastor of the Fellowship Missionary Baptist Church of Chicago; Bishop Lucius Hall, pastor of the First Church of Love and Faith, and the Rev. Stephen John Thurston, pastor of New Covenant Missionary Baptist Church. According to the indictment, the Broadcast Ministers Alliance was among the groups that won more than $11 million in grants between 2004 and 2010. About $3.7 million of that money was allegedly transferred to a for-profit business controlled by Dingle. In most instances the designated grantees were unaware of the fraud being perpetrated. (link)

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)