You can get a taste of the story on YouTube.
Amongst other tales of malpractice, the Tampa Bay Times discovered a family web connects some of these America’s worst charities. The Reynolds family has their fingers in five different cancer charities. Salaries of these charities in 2011 - at USD$8 million- were thirteen times what were paid out to beneficiaries. One million dollars was paid to Reynolds family members. Altogether of the USD$110 million raised by the charities in 2011, USD$75 million was paid to third party telephone fundraising contractors.
The Tennessee based Cancer Fund of America is the biggest of the five charities. It was founded by family patriarch, James T Reynolds Sr. who quit the American Cancer Society, to avoid being pushed for sloppy and questionable practices. Three of Reynolds’s family sit on the Cancer Fund board. The family’s other charities pay executive salaries to nearly a dozen relatives.
A spokesperson for one of the family’s charities, Kristina Hixson, the wife of Breast Cancer Society president, James Reynolds Jr. says "We have made a difference in the lives of tens of thousands of men and women."
Recipients tell other stories. One received a package for her terminally ill husband - "It was filled with paper plates, cups, napkins and kids' toys … I just threw it in the trash”.
Amongst the tricks of the trade practised by the Reynolds family has been setting up a telemarketing operation as a brand new charity, misleadingly named Cancer Support Services. The US$10 per hour Cancer Support Services telephone fundraisers can say that ninety percent of the funds raised go to the charity. The reality is that the “charity” is no more than an off balance sheet cost centre from which only ten cents per dollar raised actually goes to the Cancer Fund – let alone to those affected by cancer.
Another trick has been to book penny worth donated goods as massively inflated donations to overseas charities. In 2011, the Reynolds charities claimed shipments valued at nearly $61 million were distributed to charities in Africa and Central America. Several of the recipients that Cancer Fund claim to have supported say they got nothing. IRS rulings permit this particular revaluation scam, which enables balance sheets to look very efficient (and thus attractive to donors) and a good deal larger than they really are.
In the full list of “America’s 50 Worst Charities” the Cancer Fund comes second to Kids Wish Network.
Forbes has run stories previously on inflated valuations of donated goods making charities look good.
Could it happen in Australia? Will the new ACNC act as a deterrent? What do you think?
I had a chat with someone at the Lilly School of Philanthropy about this issue, a few weeks ago and his perspective was that it all depends. Sometimes, you need to spend $ 40 to raise $ 140. And without this "investment" no money would be raised. So, this is a trade-off in many ways. I am not a professional fund-raiser, but this argument is compelling!
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