When I heard that The Center for Investigative Reporting (CIR), for whom I work part-time, was researching the practices of “America’s Worst Charities” I was skeptical. One-off exposés of bad nonprofit practices are nothing new. Over the years, I have railed against many of them as being unfair. Yet when the series launched on June 7, my eyes were opened and my skepticism disappeared.
Mining ten years of data, 26-year-old novice reporter Kendall Taggart, her editors, and a fellow reporter at the Tampa Bay Times (The Times) revealed corruption on a scale much grander than I could have imagined (more than a billion dollars in donations misappropriated) and exposed the failures in our regulatory systems that allow these practices to continue.
Consider this vignette from the first story in the series:
“The worst charity in America operates from a metal warehouse behind a gas station in Holiday, Fla.
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.”
CIR knew it was on the right track when it learned that in response to its investigation, Kids Wish hired Melissa Schwartz, a crisis management specialist in New York City who previously worked for the federal government after the 2010 BP oil spill.
The methodology behind the series was rigorous. CIR and The Times analyzed tens of thousands of pages of public records collected by the federal government and 36 states and flagged charities that pay for-profit corporations to raise the vast majority of their donations. By analyzing a decade of data, the reporters ensured that they were not focusing on new charities using these services to get “off the ground,” as many do.
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.
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.”
In addition to the reporting, the series includes:
- A database of the 50 worst, with links to their tax returns and snapshots of their practices over the decade;
- A searchable database of disciplinary actions that includes about 8,000 regulatory actions taken by states against all kinds of charities and solicitors;
- A link to share a tip on a charity you suspect needs to be investigated.
- Advice on how not to be fooled by these solicitations.
- A video by CNN’s Anderson Cooper about the charity that received the dubious distinction of being the ranked “worst of the worst.”
I have worked in the nonprofit sector for thirty years and yet I have fallen for scams like this in the past. One solicitor called after my mother-in-law died to ask if I would continue her twenty-year legacy of generosity. Another called one week after a flood in my town to replenish an emergency fund on behalf of my local fire department. Well-timed, well played.
I’d like to think this series could lead to a large chunk being cut out of the profit made by these players. Share it widely if you agree.
Elizabeth Share is the founder of Wise Giving, a consulting firm the helps individuals, foundations and nonprofits maximize their impact through wise philanthropic investments and greater organizational effectiveness. Catalytic Women has been honored to have her serve on our Advisory Board.