America's worst charities, The worst charity in America operates from a metal warehouse behind a gas station in Holiday, Florida.
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% of donations raised to direct
cash aid. Some charities gave even less. Over a decade, one diabetes
charity raised nearly $14 million and gave about $10,000 to patients.
Six spent no cash at all on their cause.
-- 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 fund-raising
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 fund-raising 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.
Most 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% of their pledge
will be spent granting wishes.
She declined to answer
additional questions about Kids Wish's fund-raising 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, Georgia. The charity is No. 13 on the Times/CIR list.
Identifying the 50 worst
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
fund-raising 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 them
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 fund-raising 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.
Doug White, one of the nation's foremost experts on the ethics of charity fund-raising, 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,"
said White, who teaches in Columbia University's fund-raising management
master's degree program.
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% 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.
Good vs. bad charities
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 at least 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, which does not hire professional telemarketers.
Make-A-Wish officials say they've spent years fielding complaints from people who were solicited by sound-a-like 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 fund-raising every year.
The biggest difference between good charities and the nation's worst is the bottom line.
Every charity has salary, overhead and fund-raising costs.
But several watchdog organizations say charities should spend no more than 35% of the money they raise on fund-raising 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% 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% of the cash raised.
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