by Felicity Blaze Noodleman,
Los Angeles, CA
When giving to any charitable it is best to give by check to verify your contribution
at income tax time. Also be sure to get the charity's IRS tax number!
at income tax time. Also be sure to get the charity's IRS tax number!
* Special thanks to "Google Images", "The Tampa Bay Times",
The Better Business Bureau, The IRS and The Center for Investigative
Reporting for their assistance in the preparation of this article.
From time to time many of us make charitable donations to support our favorite charities. Soliciting for charitable causes is not exactly what is called big business but fund raising nets some very large dollar amounts so needless to say there are a lot of organizations and people out there doing just exactly that . . . soliciting for our donations.
From cash to used cars organizations of every sort are seeking support where ever they can find it. Many of these organizations are completely legitimate but there are large numbers of “fraudulent” schemers who try to appear legitimate and are fundraising for themselves! Beware and know about the organizations you are giving to. If you suspect you are being approached by a fraudulent solicitor and you are able to do so, report them to the proper authority’s to be prosecuted under the law. This kind of fraud carries a very heavy penalty when convicted. You can learn more @ http://www.ehow.com/how_6719295_report-charitable-fraud-irs.html.
Giving large sums of cash can be risky - get a receipt for your donation and
also get the charity's IRS tax number.
How can we protect ourselves and our charitable gifts from these con artists? The first rule is to be familiar with the organization we are making a donation to. Beware of telephone solicitors and letters coming Thur the mail. It’s not so hard as you might think to uncover the unscrupulous solicitors who are asking for our cash. With a little checking on the Internet we can learn much about the charity we are being approached by.
Older Charity's have a proven "Track Record" with assisting in their particular fields of help in times of need. The American Red Cross for example has been in existence since 1881 and has many national chapters around the world. The scope of their mission is very large and always seem to be there to aid victims in time of war and during natural disasters with so many essentials and are truly a life saving organization.
We do not want to make a list of worthy Charity's for your selection but would like to mention one other organization which has an honorable mission to educate as well as entertain. PBS enriches all who only need to take the time to view their programming. For other philanthropic organizations with can be found on line with a Google search.
Unscrupulous operators collect hundreds of millions of dollars each year while fooling donors. When they get caught, they have little to fear even if regulators try to shut them down.
(Photo - "Tampa Bay Times")
Something to keep in mind when giving is to know that a percentage of your contribution will be used for the overhead and operating expenses of the particular cause you are supporting. When giving to a third party who is collecting donations to be forwarded to the actual charity you wish to support those expenses and double and less of your money will actually get to cause you wish to support. Shocking isn't it! In reality when you make a donation like this, all you are really doing is supporting collection agencies.
Another fact which you should know: many charities are set up for the express purpose of collecting funds in the name of what may seem is a worthy cause, but in reality these organizations make large donations to a political party such as the DNC (Democratic Nation Committee) for example to lobby in Washington DC on behalf of the stated cause for which they have collected funds.
Organizations like these have a very large overhead which includes advertising in print and on television. Again very little of the money has gone to help any one except these "Fat Cats" in government. From there the money flows like a river supporting political campaigns from the Local level to State and Federal elections. These organizations are the so called political "straw dogs" and exist primarily for the so called "political action groups". These schemers claim to represent causes only to net donors who will give money to their fictitious causes.
This week’s article deals with the basic information we all should be aware of when giving to a charitable cause. To begin our research into verifying the good from the bad fund raisers consider the following tips from the Better Business Bureau:
Basic Giving Tips
1. Get the charity’s exact name. With so many charities in existence, mistaken identity is a common problem. Thousands of charities have “cancer” in their name, for example, but no connection with one another.
2. Resist pressure to give on the spot, whether from a telemarketer or door-to-door solicitor.
3. Be wary of heart-wrenching appeals. What matters is what the charity is doing to help.
4. Press for specifics. If the charity says it’s helping the homeless, for example, ask how and where it’s working.
5. Check websites for basics. A charity’s mission, program and finances should be available on its site. If not, check for a report at www.give.org.
6. Check with state charity officials. In many states, charities are required to register, usually with the office of the attorney general, before soliciting. Click http://www.nasconet.org/documents/u-s-charity-offices/ for the relevant office in your state.
7. Don’t assume that every soliciting organization is tax exempt as a charity. You can readily check an organization’s tax status atwww.irs.gov/app/eos.
We may have many questions as we go about with our lives from day to day. Are the donation boxes at our restaurants, stores and so forth legitimate? In most cases the answer would be probably so. No business wants the stigma of collecting for an illegitimate organization and they certainly to keep your return business. Should we give to a solicitor on the street? The answer here is probably not because many “Look alike” fund raisers are trying to pass themselves off as a legitimate Charity. Don’t give to these solicitors unless you are familiar with their organizations!
The IRS recognises charitable donations to be written off when filing your income tax statement.
These donations need to be properly documented to receive a credit.
These donations need to be properly documented to receive a credit.
The IRS can help us in making our decisions on giving. Our charitable donations whatever they may be from monetary to house hold items, automobiles and food items are all detectable from our annual tax returns provided we have obtained a legitimate receipt and the tax number of the charity to which we claiming on our tax return. The IRS will even allow a small amount for cash donations to be deducted against our tax. A very good rule here to follow is to make plans for our charitable giving so the proper documentation can be assembled and presented to the IRS on April the fifteenth! We are also printing an article from the IRS on this subject and is as follows"
IRS Warns Donors About Charity Scams
Following Recent Tragedies in Boston and Texas
IRS Special Edition Tax Tip 2013-09, April 19, 2013
It’s sad but true. Following major disasters and tragedies, scam artists impersonate charities to steal money or get private information from well-intentioned taxpayers. Fraudulent schemes involve solicitations by phone, social media, email or in-person.
Scam artists use a variety of tactics. Some operate bogus charities that contact people by telephone to solicit money or financial information. Others use emails to steer people to bogus websites to solicit funds, allegedly for the benefit of tragedy victims. The fraudulent websites often mimic the sites of legitimate charities or use names similar to legitimate charities. They may claim affiliation with legitimate charities to persuade members of the public to send money or provide personal financial information. Scammers then use that information to steal the identities or money of their victims.
The IRS offers the following tips to help taxpayers who wish to donate to victims of the recent tragedies at the Boston Marathon and a Texas fertilizer plant:
· Use the Exempt Organizations Select Check tool at IRS.gov to find qualified charities. Only donations to qualified charitable organizations are tax-deductible. You can also find legitimate charities on the Federal Emergency Management Agency (FEMA) Web site at fema.gov.
· Some phony charities use names that are similar to familiar or nationally known organizations. They may use names or websites that sound or look like those of legitimate organizations.
· Do not give your Social Security number, credit card and bank account numbers and passwords to anyone who solicits a contribution from you. Scam artists use this information to steal your identity and money.
· For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the donation.
· Taxpayers suspecting tax or charity-related fraud should visit IRS.gov and perform a search using the keywords “Report Phishing.”
More information about tax scams and schemes is available at IRS.gov using the keywords “scams and schemes.”
This week we are including an articles from "The Center for Investigative Reporting" and “Tampa Bay Times” entitled “Americas worst Charities”. These articles could be considered a case study into how fraudulent fund raising works and how these con artists try to dupe us into giving our precious charitable dollars for their own personal gain. Although this is quite a long and detailed piece, we think it will give all an insight as to how these unscrupulous people work. This has been Felicity for the Noodleman Group.
Special Report: America’s 50
Worst Charities Named
A collaboration between the Tampa Bay Times, CNN, and The Center for Investigative Reporting has resulted in a list of “America’s Worst Charities.” In addition to producing a list of the 50 worst charities, the report analyzes the activities of the charities.
The report found that $1.4 billion in donations went to the 50 worst charities over the past 10 years. Of that, $970.6 million went to paid solicitors while $380.3 million went to charities. However, a scant $49.1 million went to direct aid.
In other words, the investigation found that just 3.5 percent of donations to the 50 worst charities went to services fulfilling charitable mission.
Watchdog groups say that no more than 35 percent of donations should go to fundraising expenses. Among the 50 worst charities, 69 percent of donations were spent on professional solicitation companies alone!
The report accuses some of the 50 worst charities of lying to donors about how their donations will be used, employing executives who take multiple salaries and/or who are also paid as consultants, contracting with outside fundraising companies owned by friends, family members, or the executives themselves. The report even accuses some of the 50 worst charities of using “accounting tricks” to inflate the value of the charitable work they are doing.
The 50 worst charities contract with a variety of professional solicitation companies. The report provides a list of these companies. Some on the list actually created the charity that they raise money for. Others on the list are fundraising companies that have enjoyed good reputations despite working for some clients who have made the 50 worst charities list.
I encourage all ethical development professionals to join me in applauding the report and denouncing the so-called charities that have been identified. In addition, ethical nonprofit organizations should think twice before agreeing to contract with any professional solicitation company that serves a charity on the list.
Furthermore, I call on my fellow consultants and professional solicitors to stop working for unethical nonprofit organizations. Yes, there are times when a fundraising campaign may yield little or no immediate net return to the charity. However, when that is consistently the case, there is a problem. Like it or not, the reputations of professional fundraising companies can and should be linked to reputations of the clients they choose to serve.
As a profession, we must do more to self-regulate. If we do not, we can expect others to fill the vacuum. The investigative report is one example of how those outside the nonprofit arena are filling that vacuum. It’s only a matter of time before government regulators become even more engaged.
[Publisher's Note: "Special Reports" are posted from time-to-time as a benefit for subscribers and frequent visitors to this blog. "Special Reports" are not widely promoted. To be notified of all new posts, including "Special Reports," please take a moment to subscribe in the right-hand column.]
Rake In Nearly $1 Billion For
By Kris Hundley and Kendall Taggart, Times/CIR special report
“The Tampa Bay Times”
Thursday, June 6, 2013 1:30pm
The 50 worst have raised more than $1 billion in the past 10 years, but only a fraction went to anyone other than the charities’ operators and professional solicitors.
(Photo - "Tampa Bay Times")
The worst charity in America operates from a metal warehouse behind a gas station in Holiday.
Every year, Kids Wish Network raises millions of dollars in donations in the name of dying children and their families.
Every year, it spends less than 3 cents on the dollar helping kids.
Most of the rest gets diverted to enrich the charity's operators and the for-profit companies Kids Wish hires to drum up donations.
In the past decade alone, Kids Wish has channeled nearly $110 million donated for sick children to its corporate solicitors. An additional $4.8 million has gone to pay the charity's founder and his own consulting firms.
No charity in the nation has siphoned more money away from the needy over a longer period of time.
But Kids Wish is not an isolated case, a yearlong investigation by the Tampa Bay Times and The Center for Investigative Reporting has found.
Using state and federal records, the Times and CIR identified nearly 6,000 charities that have chosen to pay for-profit companies to raise their donations.
Then reporters took an unprecedented look back to zero in on the 50 worst — based on the money they diverted to boiler room operators and other solicitors over a decade.
These nonprofits adopt popular causes or mimic well-known charity names that fool donors. Then they rake in cash, year after year.
The nation's 50 worst charities have paid their solicitors nearly $1 billion over the past 10 years that could have gone to charitable works.
Until today, no one had tallied the cost of this parasitic segment of the nonprofit industry or traced the long history of its worst offenders.
Among the findings:
• The 50 worst charities in America devote less than 4 percent of donations raised to direct cash aid. Some charities give even less. Over a decade, one diabetes charity raised nearly $14 million and gave about $10,000 to patients. Six spent nothing at all on direct cash aid.
• Even as they plead for financial support, operators at many of the 50 worst charities have lied to donors about where their money goes, taken multiple salaries, secretly paid themselves consulting fees or arranged fundraising contracts with friends. One cancer charity paid a company owned by the president's son nearly $18 million over eight years to solicit funds. A medical charity paid its biggest research grant to its president's own for-profit company.
• Some nonprofits are little more than fronts for fundraising companies, which bankroll their startup costs, lock them into exclusive contracts at exorbitant rates and even drive the charities into debt. Florida-based Project Cure has raised more than $65 million since 1998, but every year has wound up owing its fundraiser more than what was raised. According to its latest financial filing, the nonprofit is $3 million in debt.
• To disguise the meager amount of money that reaches those in need, charities use accounting tricks and inflate the value of donated dollar-store cast-offs — snack cakes and air fresheners — that they give to dying cancer patients and homeless veterans.
Over the past six months, the Times and CIR called or mailed certified letters to the leaders of Kids Wish Network and the 49 other charities that have paid the most to solicitors.
Nearly half declined to answer questions about their programs or would speak only through an attorney.
Approached in person, one charity manager threatened to call the police; another refused to open the door. A third charity's president took off in his truck at the sight of a reporter with a camera.
Kids Wish has hired Melissa Schwartz, a crisis management specialist in New York City who previously worked for the federal government after the 2010 BP oil spill.
Schwartz said Kids Wish hires solicitors so its staff can focus on working with children, not on raising donations. According to its 2011 IRS filing, the charity has 51 employees. Schwartz also said donors who give directly to the charity instead of in response to solicitations ensure that 100 percent of their pledge will be spent granting wishes.
She declined to answer additional questions about Kids Wish's fundraising operations, saying the charity "is focused on the future."
Charity operators who would talk defended their work, saying raising money is expensive especially in tough economic times.
"No parent has ever turned me down for assistance because we got our money from a telemarketer," said David Thelen, who runs the Committee for Missing Children in Lawrenceville, Ga. The charity is No. 13 on the Times/CIR list.
Over the past decade, the charity paid its solicitors nearly 90 percent of the $27 million it raised. It spent about $21,000 each year on its cause, most often buying plane tickets to reunite families.
The charity's efforts primarily consist of giving advice to families whose children have been abducted. Thelen said his group has worked with about 300 parents since 1997.
But he publicly claims credit for reuniting as many as 1,600 children with their families, even if his charity's involvement was as minimal as posting the child's picture on the charity website.
Doug White is one of the nation's foremost experts on the ethics of charity fundraising. A consultant to nonprofits for more than 30 years, White teaches in Columbia University's fundraising management master's degree program.
He said charities with high fundraising expenses often rationalize that such costs are inevitable in the early years. But White said the Times/CIR findings, based on a decade of data, show that the nation's worst charities can't use that excuse.
White also criticized reputable nonprofits that refuse to condemn bottom-tier charities.
"When you start a charity, you have a sacred compact with society," said White, one of 30 charity experts interviewed for this series. "They are ripping off the public under the guise of an organization that's supposed to do good for society."
What happened to Gina Brown's mother-in-law is a classic case.
Brown said the 72-year-old woman was struggling with dementia when the phone calls started.
From 2008 to 2011, telemarketers representing some of the worst charities in the nation persuaded her to write checks and charge donations to her credit card for a total of nearly $15,000.
Among those on the Times/CIR list that got multiple donations, sometimes only months apart, were Cancer Fund of America, Children's Cancer Fund of America and the Committee for Missing Children.
"She was such a vulnerable person, she must have been on the 'A' list," Brown said.
The Minnesota woman discovered the donations, which ranged from $10 to nearly $1,000, only after her mother-in-law was placed in an Alzheimer's facility.
"It's hard to come to grips with the thought of her as a victim because she had been such a bright woman," Brown said. "This can happen to anyone."
How the list was made
To identify America's 50 worst charities, the Times and CIR pieced together tens of thousands of pages of public records collected by the federal government and 36 states. Reporters started in California, Florida and New York, where regulators require charities to report results of individual fundraising campaigns.
The Times and CIR used those records to flag a specific kind of charity: those that pay for-profit corporations to raise the vast majority of their donations year in and year out.
The effort identified hundreds of charities that run donation drives across the country and regularly give their solicitors at least two-thirds of the take. Experts say good charities should spend about half that much — no more than 35 cents to raise a dollar.
For the worst charities, writing big checks to telemarketers isn't an anomaly. It's a way of life.
The Times and CIR charted each charity's performance over the past decade and ranked it based on the total donations diverted to fundraisers, arriving at the 50 worst charities. By this measure, Kids Wish tops the list.
Tracking donations diverted to fundraising is just one way to rate a charity's performance. But experts called the rating fair and said it would provide a unique resource to help donors avoid bad charities.
White, the Columbia University professor, dismisses the argument made by charities that without telemarketers they would have no money.
"When you weigh that in terms of values, of what the charity is supposed to be doing and what the donor is being told in the process, the house comes tumbling down," White said.
Collectively the 50 worst charities raised more than $1.3 billion over the past decade and paid nearly $1 billion of that directly to the companies that raise their donations.
If that money had gone to charity, it would have been enough to build 20,000 Habitat for Humanity homes, buy 7 million wheelchairs or pay for mammograms for nearly 10 million uninsured women.
Instead it funded charities like Youth Development Fund.
The Tennessee charity, which came in at No. 12, has been around for 30 years. Over the past decade it has raised nearly $30 million from donors by promising to educate children about drug abuse, health and fitness.
About 80 percent of what's donated each year goes directly to solicitation companies.
Most of what's left pays for one thing: scuba-diving videos starring the charity's founder and president, Rick Bowen.
Bowen's charity pays his own for-profit production company about $200,000 a year to make the videos. Then the charity pays to air Rick Bowen Deep-Sea Diving on a local Knoxville station. The program makes no mention of Youth Development Fund.
In its IRS tax filings, the charity reports that its programming reaches "an estimated audience of 1.3 million."
But, according to the station manager, the show attracts about 3,600 viewers a week.
Bowen, who runs the charity out of his Knoxville condo, declined to be interviewed. He defended the practice of hiring his own company with the public's donations.
"We just happened to be the low bidder," he said.
America's worst charities look nothing like Habitat for Humanity, Boys and Girls Clubs or thousands of other charities, large and small, that are dedicated to helping the sick and needy.
Well-run charities rely on their own staff to raise money from a variety of sources. They spend most of their donations on easy-to-verify activities, whether it's running soup kitchens, supporting cancer research, raising awareness about drunken driving or building homes for veterans.
The Times/CIR list of worst charities, meanwhile, is littered with organizations that exhibit red flags for fraud, waste and mismanagement.
Thirty-nine have been disciplined by state regulators, some as many as seven times.
Eight of the charities have been banned in one state.
One was shut down by regulators but reopened under a new name.
A third of the charities' founders and executives have put relatives on the payroll or the board of directors.
For eight years, American Breast Cancer Foundation paid Joseph Wolf's telemarketing company to generate donations.
His mother, Phyllis Wolf, had founded the Baltimore-based charity and was its president until she was forced to resign in 2010.
While she ran the charity, her son's company, Non Profit Promotions, collected $18 million in telemarketing fees.
Phyllis Wolf left the charity after the payments to her son attracted media attention in 2010. The charity has since stopped using telemarketers, including Joseph Wolf's.
Phyllis and Joseph Wolf did not respond to several calls seeking comment.
The nation's worst charities are large and small. Some are one-person outfits operating from run-down apartments. Others claim hundreds of employees and a half-dozen locations around the country. One lists a UPS mail box as its headquarters address.
Several play off the names of well-known organizations, confusing donors.
Among those on the Times/CIR list are Kids Wish Network, Children's Wish Foundation International and Wishing Well Foundation. All of the names sound like the original, Make-A-Wish Foundation, which does not hire professional telemarketers.
Make-a-Wish officials say they've spent years fielding complaints from people who were solicited by sound-alike charities.
"While some of the donations go elsewhere, all the bad public relations that comes with telemarketing seems to come to us," said Make-A-Wish spokesman Paul Allvin.
Donors who answer calls from the 50 worst charities hear professionally honed messages, designed to leverage popular causes and hide one crucial fact: Almost nothing goes to charity.
When telemarketers for Kids Wish call potential donors, they open with a name you think you've heard before.
Then they ask potential donors to "imagine the heartbreak of losing a child to a terminal illness," according to scripts filed with North Carolina regulators in 2010.
Kids Wish, the callers say, wants to fulfill their wishes "while they are still healthy enough to enjoy them."
They leave out the fact that most of the charity's good deeds involve handing out gift cards to hospitalized children and donated coloring books and board games to healthy kids around the country. And they don't mention the millions of dollars spent on salaries and fundraising every year.
The biggest difference between good charities and the nation's worst is the bottom line.
Every charity has salary, overhead and fundraising costs.
But several watchdog organizations say charities should spend no more than 35 percent of the money they raise on fundraising expenses.
The Make-A-Wish Foundation of Central and North Florida is one of dozens of Make-A-Wish chapters across the country.
Last year, it reported raising $3.1 million cash and spent about 60 percent of that, $1.8 million, granting wishes.
The same year, Kids Wish raised $18.6 million, its tax filing shows. It spent just $240,000 granting wishes — 1 percent of the cash raised.
The path chosen by Jacqueline Gray shows exactly how a worthy cause can be turned into one of the nation's worst charities.
In 2007, Gray and her husband, Kevin, started Woman to Woman Breast Cancer Foundation in Lauderdale Lakes.
For a year the couple struggled to raise money by hosting golf tournaments and by making phone calls to potential donors themselves.
Then they met Mark Gelvan, a New Jersey consultant who has spent two decades transforming fledgling charities into money-making machines.
"He said he had the best dialers on the market," Jacqueline Gray recalled.
Gelvan introduced the Grays to what sounded like a winning formula.
He would help the charity expand if it signed a contract with telemarketer Community Support Inc.
The staff at Community Support would handle everything. They would create the marketing materials and run the call centers.
The telemarketer even gave the Grays $30,000 in seed money to cover bills related to the expansion. All the Grays had to do was agree to let Community Support keep the majority of every dollar raised, then sit back and wait.
The transformation was immediate.
From donations of less than $15,000 in fiscal 2008, contributions to Woman to Woman through its professional solicitor increased to $1.5 million in 2009, then leaped to $6.3 million in 2010 and $6.7 million in its most recent filing.
What the charity got to keep was far more modest. It netted about $50,000 its first year with Community Support and $544,000 in 2011.
That was still enough for Gray, her husband and her daughter to start taking salaries. In the latest year, the trio received $84,000 in total compensation. Each member of the family also has a vehicle provided by the charity.
The Grays' decision to sign on with professional fundraisers transformed Woman to Woman into one of the nation's worst. It falls at No. 22 on the Times/CIR list.
Woman to Woman raised $14.5 million in donations from 2009 to 2011, tax filings show.
It paid nearly 95 percent of that to its for-profit fundraiser and spent about $700,000 on overhead and salaries.
That left an average of less than $20,000 a year to provide mammograms and other diagnostic services for women with breast cancer.
Jacqueline Gray, herself a breast cancer survivor, said she is as shocked as anyone by how much money has been raised in her charity's name and how little of it has reached patients. She said she is angry that phone solicitors take more than 90 percent of the revenue.
But she vehemently denies that she's to blame.
"Why would I be to blame for a system that's dysfunctional?" Gray asked. "We are doing what we're supposed to be doing."
She showed a reporter several emails she has sent Gelvan in the past year, trying to renegotiate Woman to Woman's contracts for better returns.
His response, according to Gray: If they didn't like 10 percent, Gelvan would replace Woman to Woman with another charity.
"In the tele-funding business sector, it is common for nonprofit organizations to renew PFR (professional fundraising) contracts under the same terms and provisions of the previous contract," Gelvan wrote in an email that Gray shared with Times/CIR reporters. "This is part of the 'if it's not broken, don't fix it' principle."
Instead of giving the charity a better return, Gelvan introduced the Grays to the next piece of the formula — gifts-in-kind.
Gifts-in-kind are donated items like generic drugs and medical supplies. Getting them to the sick and poor in developing countries can be an important role for a charity.
But for charities that spend most of their money on for-profit solicitors, gifts-in-kind can function as an accounting gimmick.
The value of these shipments is often highly inflated, with pills that sell for pennies priced at $10 each on paper.
Several charities also can pitch in to pay the overseas transportation costs of the same shipment of medical supplies.
Under accounting rules, each charity is then allowed to take credit for the entire value of the shipment as if it alone provided the supplies to those in need.
The result: A charity's revenues and good deeds are boosted and fundraising costs look smaller.
That makes donated items especially useful for charities that fear being criticized for having excessive fundraising costs on their public IRS filings.
Kevin Gray, the charity's chief financial officer, said Gelvan made no pretenses when he suggested the charity start shipping goods overseas.
"Mark said it was a way to make our 990 (IRS filing) look better," Kevin Gray said.
Gelvan told them to hire a company that rounds up donated goods and ships them overseas for charities, according to the Grays.
He handed them a binder laying out options like a Sears catalog.
They could send blood pressure monitors to Ghana. Or maternity ward equipment to the Philippines. Or surgical supplies to Guatemala.
The Grays rejected the idea.
"I can't figure out why I'd pay to ship medicines out of the country while people need the stuff right here," Kevin Gray said. "Why would I want to spend money that way?"
But the Grays say their charity would have no money if not for professional fundraisers, so they have continued paying them.
Reaping the benefits
The fundraising formula that raised millions of dollars for the Grays' charity has been adopted by hundreds of charities.
They use it to deceive donors and turn their causes into profit centers.
Few have been more successful than Mark Breiner, the founder and one-time president of Kids Wish Network.
Breiner relied on professional fundraisers and donated items to build his charity into a nearly $20 million annual operation.
He is among the beneficiaries. The charity he founded has paid him or his companies nearly $4.8 million in the past 10 years — $1.5 million more than what the charity spent on direct cash to children, according to tax filings.
While 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. The charity's IRS filings do not specify how much it netted on these early sweepstakes.
Breiner continued making money after he retired from Kids Wish in mid-2010 and left his mother-in-law on the seven-member 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's companies.
The charity first reported the payments in amended tax filings last year after an employee took her concerns about insider dealings to the charity's board.
Meanda Dubay, who had been a wish coordinator for six months, told Kids Wish's directors she was seeking protection under the charity's whistle-blower policy.
She was fired immediately after she raised her concerns.
Kids Wish officials accused Dubay of stealing proprietary information from the company's database and said they had been preparing to dismiss her prior to her appearance before the board.
The charity asked the FBI to investigate Dubay. The FBI found no wrongdoing.
Kids Wish then sued Dubay for breach of contract and defamation. Dubay, who declined to talk to reporters, has denied all allegations in the civil case, which is pending.
Kids Wish officials said in an email that the omissions in the IRS filings resulted from "inadvertent errors made by the former accounting firm."
Officials at the Tampa accounting firm, Guida & Jimenez, did not return calls seeking comment.
Breiner declined to answer questions about his fundraising and consulting businesses, which received an additional $1.26 million from Kids Wish for a car giveaway in 2012.
But he said in an email that the charity recently completed an IRS audit that included a review of its contracts with his companies.
"They found no indication of private inurement or conflict of interest with founders or board members," Breiner said.
An IRS spokesman said federal law prohibits the agency from commenting on a specific individual or organization's tax issues.
Breiner has cashed in on other close relationships in the charity industry as well.
His consulting business was paid nearly $1 million over two years by a charity founded by a former Kids Wish board member. And when Kids Wish's longtime telemarketer started a charity so his son could have a job, he turned to Breiner for fundraising help.
"Mark's a genius," said Robert Preston, who paid Breiner's companies more than $375,000 in 2011 to run a Porsche giveaway for the charity, WorldCause Foundation.
Breiner's consulting arrangements may be perfectly legal, but such relationships are bright red flags to charity experts. They create the appearance of a conflict of interest and make it easy to turn charitable donations into personal profit, experts say.
Putnam Barber at the University of Washington, who has been writing and teaching about nonprofits for more than 20 years, said, "That kind of arrangement makes me fume."
Kendall Taggart is a reporter for The Center for Investigative Reporting. Times researcher Caryn Baird, computer-assisted reporting specialist Connie Humburg, and web developer Bill Higgins contributed to this report, along with CNN senior producer David Fitzpatrick. Times staff writer Kris Hundley can be reached at email@example.com.
Totals from the latest 10 years of available federal tax filings
Total raised by solicitors
Paid to solicitors
% spent on direct cash aid
Kids Wish Network
Cancer Fund of America
Children's Wish Foundation International
American Breast Cancer Foundation
Firefighters Charitable Foundation
Breast Cancer Relief Foundation
International Union of Police Associations, AFL-CIO
National Veterans Service Fund
American Association of State Troopers
Children's Cancer Fund of America
Children's Cancer Recovery Foundation
Youth Development Fund
Committee For Missing Children
Association for Firefighters and Paramedics
Project Cure (Bradenton, FL)
National Caregiving Foundation
Operation Lookout National Center for Missing Youth
United States Deputy Sheriffs' Association
Vietnow National Headquarters
Police Protective Fund
National Cancer Coalition
Woman To Woman Breast Cancer Foundation
American Foundation For Disabled Children
The Veterans Fund
Heart Support of America
Veterans Assistance Foundation
Children's Charity Fund
Wishing Well Foundation USA
Defeat Diabetes Foundation
Disabled Police Officers of America Inc.
National Police Defense Foundation
American Association of the Deaf & Blind
Reserve Police Officers Association
Optimal Medical Foundation
Disabled Police and Sheriffs Foundation
Disabled Police Officers Counseling Center
Children's Leukemia Research Association
United Breast Cancer Foundation
Shiloh International Ministries
Circle of Friends For American Veterans
Find the Children
Survivors and Victims Empowered
Firefighters Assistance Fund
Caring for Our Children Foundation
National Narcotic Officers Associations Coalition
American Foundation for Children With AIDS
Our American Veterans
Roger Wyburn-Mason & Jack M Blount Foundation For Eradication of Rheumatoid Disease
Firefighters Burn Fund
Hope Cancer Fund
America's 50 worst charities rake in nearly $1 billion for corporate fundraisers 06/06/13 [Last modified: Friday, June 7, 2013 12:12pm]© 2013 Tampa Bay Times
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