Charity Fraud May Be Beginning To Meet Its Match

By Gary Snyder

The leadership of the charitable sector, and others, will not condemn the ever-present fraud that exists. Thousands of incidents and estimates of $51 billion (yes, that is billion) will not encourage those in power of trust to stop this scourge.

Ken Berger, Pres./CEO, Charity Navigator) says:

“My five years at Charity Navigator has only reinforced my impression that the problem of nonprofit fraud as well as questionable activities is significant and the sector has yet to take it as seriously as it should." He further noted "oversight of charities is very weak. We're long overdue to have better transparency and stronger consequences for bad behavior."

and 

Dean Zerbe, a former top aid to the Senate Finance Committee says: 

“The charitable community seems loath to speak ill of anybody any time, anywhere”.

but

The self- anointed leader of the sector and principal advocate of self-regulation, Diana Aviv of Independent Sector says:

“While I do not personally condemn the 50 charities named in the report to be guilty as charged because I have not examined the report..."

and she say why do anything because:

“The chances that they (perpetrators) are going to listen to one of us …is next to zero…what’s likely to happen is they’ll thumb their noses at us…”

So now the top charity regulator in Florida said he would push for sweeping reforms to crack down on charities. Adam Putnam, state commissioner of agriculture and consumer services, said his proposals were prompted by a yearlong investigation by the Tampa Bay Times and the Center for Investigative Reporting. Among them: increased fines, mandatory background checks for telemarketing employees and a requirement that charities spend at least 25 percent of donations on those in need or risk losing their state tax exemption. Putnam said he might also propose giving Florida regulators the power to deny licenses to charities or solicitors banned by other states — something that rarely happens now.

The investigation by the Times and CIR identified the nation's 50 worst charities based on the amount spent on professional solicitors over the past decade. As a group, charities on the Times/CIR list collected about $1.3 billion dollars in donations and spent nearly $1 billion of that — more than 70 percent — paying for-profit solicitors.

The Times/CIR found that Florida was home to 11 of the most wasteful charities, more than any other state.

At the top of the list was Kids Wish Network in Holiday. It raised $127.8 million in cash through its solicitors over the past decade. It paid those solicitors $109.8 million.

The charity, which raises money to provide wishes to dying children, paid companies associated with its founder and former chief executive more than $5 million for fundraising services.

Now Putnam wants to ratchet up the scrutiny on bigger charities and nonprofits that operate multiple subsidiaries.

"We would put greater standards on board members so they can't all be related and drawing salaries," Putnam said. "We'll require an audit if they raise above a certain amount."

He also wants to post charities' and professional fundraisers' filings online so they will be easily accessible to donors. These documents include information about program costs, executive compensation and names of board members. Only limited information is currently available on the state's website.

Too bad that it has come down to this. Obviously self-regulation has failed and with out the wherewithal to demand change, we can be assured that that there will be more regulation on the way.

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: Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog, National Coalition of Homeless Newsletter, Finance and Administration Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)