State regulators say holding professional fundraisers accountable can be complicated
By: Jill Riepenhoff, Tess Rowland & Lee Zurik
OMAHA, Neb. (InvestigateTV) – State and federal regulators have cracked down on several charities who collected millions of dollars in the name of veterans, police and firefighters but did little to help them.
These charities deceived donors about how their money was spent and used third-party, for-profit fundraisers to peddle the deceptions in telephone and mail solicitations, government records show.
The fundraisers told donors their contributions would help thousands of men and women in uniform.
But in the end, the donations largely only enriched the paid fundraisers and the charities’ executives.
While regulators have shuttered some of the worst sham charities in the past two years, their hired-gun fundraising companies remain in business.
Today, these fundraisers work for some of the worst-rated charities, nonprofit watchdog reports show.
Some veterans and widows of fallen first responders criticize these companies for profiting off their suffering.
“It’s not right,” said Col. Jim Folsom, who runs the Wounded Warriors Family Support, a top-rated charity that helps help families of veterans.
Folsom’s charity stands in stark contrast to one called Help the Vets. The Federal Trade Commission sued Help the Vets for spending 95% of its $11 million in donations on the charity’s executives and on its fundraisers.
It has since been shuttered. But its professional fundraiser Donor Relations continues to solicit for other veterans and first-responder charities.
Regulators also closed down the VietNow National Headquarters charity for using professional fundraisers to deceive donors about how the organization helped Vietnam veterans.
The organization hired Donor Relations and Midwest Publishing-DN to make those pitches.
Donor Relations couldn’t be reached for comment. Mail sent to the Wilmington, Delaware address the company listed with state regulators was returned as undeliverable.
Midwest Publishing did not respond to multiple requests for comment.
State regulators put Healing Heroes Network out of business for falsely claiming that 100% of donations helped veterans of the wars in the Middle East.
It used professional fundraiser Outreach Calling, which pitched the charity to potential donors. The company did not respond to multiple requests for comment.
These professional fundraising companies today solicit for some veterans and first-responder charities that spend at least 80% of their budgets on raising money.
“It raises red flags, and it’s a bad practice,” said Kevin Scally, chief relationship officer for the watchdog nonprofit Charity Navigator based in New Jersey.
Charities, he said, should not spend more than 20-30% of their budgets on fundraising and administrative costs.
But an InvestigateTV analysis of the most recent IRS tax documents of 30 poorly-rated veterans and first responder-focused charities who hire professional fundraisers show that they aren’t following that golden rule.
Donor Relations collected nearly $9.7 million for the Florida-based International Union of Police Associations and was paid $8.5 million for its services. That represents nearly 88 cents for every dollar raised.
Outreach Calling raised more than $5.8 million for the Firefighters Support Foundation based in Massachusetts. But the professional fundraising company’s fees and expenses exceeded $5.2 million. The charity essentially paid the fundraiser 90 cents of every donated dollar.
And of the more than $600,000 raised by Midwest Publishing for the Center for American Homeless Veterans, 90% covered the fundraiser’s fees and expenses.
Overall, the nonprofit based in Virginia spends 90 cents of every donation on fundraising, according to Charity Watch, a nonprofit watchdog organization.
“The outside fundraising industry that focuses on telephone and certain kinds of mailings are really suspect,” said Iowa Attorney General Tom Miller, who has taken legal action against many third-party fundraisers over three decades. “There just has been so many bad activities in that general arena.”
Calling for patriotism
Veterans, police and firefighters elicit passion from donors because of the life-saving and life-threatening work they perform.
People open their pocketbooks to help a soldier who lost a limb, a widow whose husband was killed on 9/11 or the family of a firefighter debilitated by cancer after toiling in noxious smoke and soot.
But in doing so, they also sometimes unknowingly open their wallets to charities and fundraisers who exploit real needs for personal gain.
“To take our strong and very legitimate concerns with vets and the enormous sacrifice they’ve made for our country and the enormous price that they’ve paid. . . and defraud people into thinking you’re going to help them, when they’re just helping these solicitors, is just outrageous,” Miller said.
He said it’s difficult for regulators to shut down third-party fundraisers, in large part because of a 2003 Supreme Court ruling that essentially says what a charity pays a fundraiser is protected by the First Amendment.
“It’s one of the areas where they’ve gone too far on freedom of speech,” Miller said. “The classic problem is the fundraising group keeping somewhere around 90% of the contributions.”
There are thousands of nonprofits centered on the needs of veterans and first responders, many of which are dedicated to their causes and spending donations responsibly, Charity Navigator’s
“But any time that you have something where it can pull at somebody’s heart strings . . . and there’s money connected to it, you’re going to have some people who take advantage of that,” Scally said.
Fundraising on a shoe-string budget
When retired Marine Col. Jim Folsom created a nonprofit to help the families of wounded military men and women in 2004, he wanted his charity to earn top ratings from watchdog groups.
To achieve that, Wounded Warriors Family Support needed to be transparent and responsible about how it spent donations.
To Folsom, that meant avoiding third-party fundraisers.
“I didn’t want to be one of those charities where 50 cents on the dollar was spent on fundraising,” he said.
Today, the Omaha, Nebraska-based charity has earned the highest ratings. It’s a four-star, A-rated nonprofit. It spends just $1 of every $10 donation on fundraising.
It operates with an annual budget of about $3.5 million. It uses that money to help the families of soldiers, sailors, airmen, Marines and guardsmen killed or wounded in combat.
The organization, which assists families across the country, has bought and modified cars for amputees. It’s paid for child care and respite care for spouses overwhelmed by caring for the wounded. It’s donated vans to Indian reservations so that veterans who live there have reliable transportation to get to hospitals, often hundreds of miles away.
“We pride ourselves on being as efficient as we possibly can with the donor dollars,” Folsom said, a 30-year veteran of the U.S. Marine Corps. “We have a small list of donors we communicate with about six times a year.”
Folsom himself sends them handwritten appeals.
The organization now is embarking on its largest project ever. It is seeking to raise $10 million to build a residential center for veterans with traumatic brain injuries who have no one to care for them.
Right now, the charity has raised $2 million toward that goal.
“The challenge is how do we get our message out without spending a gazillion dollars?” Folsom said.
He said he spreads the word by earning trust with donors, showing them exactly how their donations are spent and pointing to the charity’s top ratings by independent evaluators.
He admits that it’s a challenge to garner attention when there are dozens of veterans’ charities paying thousands – if not millions – of dollars to fundraisers who make unsolicited phone calls and send appeals by mail.
“What it does is it diverts people’s donations – (people) who want to help veterans – away from the good charities,” Folsom said. “I’ve gotten calls myself. It almost felt as if I was being badgered and made to feel guilty. ‘What do you mean? You don’t support the troops?’”
Charity Navigator has examined the finances of more than 100 veterans, police and firefighter-related charities. Nearly 10% have received the watchdog’s lowest ratings, which can serve as a warning to potential donors.
The Military Order of the Purple Heart Service Foundation, for example, has an “F” rating.
Its stated mission, similar to Folsom’s charity, is to “enhance the quality of life of all veterans and their families,” according to its IRS tax filing.
Its most recent tax return shows that the Virginia nonprofit brought in more than $30 million in contributions – eight times what the Wounded Warriors Family Support raised.
But the foundation also spent nearly 75% on fundraising, compared to Wounded Warriors’ 5%.
One of the most recognizable veteran’s charities, the Veteran of Foreign Wars of the United States, also spends money on professional fundraisers.
In 2017, the nonprofit paid Donor Services Group nearly $50,000 to raise money. The fundraiser brought in zero dollars.
In fact, over a three-year period, the VFW paid Donor Services group nearly $218,000 in solicitation campaigns that raised no money for the organization, tax records show.
Charity Watch has given the VFW an F rating.
The VFW declined to comment, saying its decision to use third-party fundraisers is too complicated to explain for a TV news story.
“We are not gouging our clients,” said Thomas Siegel, chief executive officer of Donor Services Group. “We are providing a service which, in the long run, if you look at any of these organizations, is beneficial to them.”
“For me, it’s not right,” Folsom said. “Those dollars ought to be going to a mission that supports what people are told it’s going to support.”
Preying on a loss
Kathleen Vigiano lost her husband Joseph, a detective with the New York Police Department, on Sept. 11, 2001 after he rushed into the burning World Trade Center.
Eileen Rafferty’s husband Patrick and his partner were gunned down by a domestic violence suspect almost three years later – on Sept. 10, 2004.
Both families relied on families and strangers alike to make ends meet, to help with their children, to help them cope.
Both widows received calls from charities they’d never heard of, claiming they help families who lost a loved one in a line-of-duty death.
“I felt like they were predators who preyed on my loss, my children’s loss, our pain,” Vigiano said.
It’s likely that the calls weren’t coming from the actual charities, but fundraisers hired by the nonprofits to solicit donations.
According to fundraising annual reports filed with 18 state regulators, there were eight national law enforcement-related charities that use third-party fundraisers to solicit donations between 2016 and 2018.
They called or sent mail solicitations to potential donors in virtually every state. Charity watchdog groups have given all poor ratings because of how they manage their finances.
Collectively, those eight nonprofits raised more than $31 million in a single year, according to an InvestigateTV analysis of their tax returns. But fundraising costs erased more than 80% of the donations.
For example, the Law Enforcement Officers Relief Fund in Sarasota, Florida says it helps police families who have suffered a loss.
But of the $2.6 million it raised in 2017, nearly 88% was spent on fundraising, the bulk of which went to pay Outreach Calling.
The American Federation of Police and Concerned Citizens in Titusville, Florida, says its mission, among other things, is to help families of law enforcement killed in the line of duty.
In 2017, its professional fundraisers helped the charity raise more than $3.7 million, of which $1.6 million went back to the for-profit companies – 42 cents on every dollar given.
In March 2018, the Iowa Attorney General’s office banned the Florida nonprofit’s sister charity, the National Association of Police Chiefs, from soliciting donations in the state.
The charity used mail solicitations that “gave the false impression that the charity had a big local presence in each Iowa county, providing vital support to disabled officers who had nowhere else to turn,” Miller said. “That makes for an effective fundraising appeal but wasn’t supported by the facts.”
None of the three police-related charities responded to requests for comment.
These organizations that make unwanted solicitations by phone or by mail bother the New York widows.
“Initially I would get very angry and ask, ‘Who are you again? Can you explain where your money goes?’” said Rafferty, who now serves as president of New York City chapter of the Concerns of Police Survivors.
Once she heard enough of their pitch, Rafferty interrupted to ask questions. Then she would tell them, “‘You’re talking to one of those families and I never get anything from you,’ and they would hang up,” she said.
Vigiano, the 9/11 widow, wants charities who use professional fundraisers to face more accountability.
“We have laws, our laws need to be enforced,” she said. “When someone deliberately and selfishly uses another person’s pain for their own gain, they need to be punished harshly.”
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