$25 Million Settlement Leaves Fundraiser Still In Business

by Gary Snyder

The New York attorney general’s office announced that it had won a $25-million settlement in its investigation into fundraising abuses by a veterans charity and its direct-mail vendors, Quadriga Art and Convergence Direct Marketing.

Quadriga Art is to adopt a series of changes to its business practices and the charity to replace its founding board members—represents the largest financial relief ever obtained in the United States for deceptive charitable fundraising. Almost $10-million of it will be directed to programs to help disabled veterans.

Attorney General Eric Schneiderman said the case "shines an unflattering light on some of the most troublesome features" of direct-mail fundraising practices.

"Taking advantage of a popular cause and what was an unsophisticated charity," he said in a statement, "these direct-mail companies used cleverly designed but misleading mailers to raise tens of millions in donations from generous Americans, nearly all of which went to the fundraisers and their agents and left the charity nearly $14-million in debt."

Under the settlement, Quadriga Art, which neither admits nor denies the findings, will pay $9.7-million in damages, forgive $13.8-million owed by the veterans charity, and pay $800,000 to New York State for costs and fees. Convergence Direct Marketing, which advised the charity on its fundraising strategy, will pay $300,000 in damages.

Mark Schulhof, Quadriga Art’s chief executive, said in an interview that the company is taking a "position of contrition" and pledges to make changes. "We’re apologetic not only to the industry that’s been embarrassed, but to everybody who’s had to feel pain because of this." (story)

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