Bob Dyer: Turning sour on charity giving

By Bob Dyer
Beacon Journal columnist

Traditionally, this is the time of year when we most feel the spirit of giving.

So why am I feeling a lot less spirited this year?

I’ll tell you why: The more I find out how big charities operate, the more I want to slam my wallet shut.

Unfortunately, the InfoCision scandal might be only the tip of the iceberg.

If you somehow missed that blockbuster story, investigative reporters from Bloomberg Markets magazine dove into public records and discovered that InfoCision, the world’s biggest charity telemarketing firm, based in Bath Township, often keeps 70 to 80 percent of the money it raises.

In other words, people who think they are helping to cure cancer are actually doing a lot more to pump up the bottom line of a private company — a company that pulls in enough loot to pay $10 million to plaster its name on the University of Akron football stadium.

Just as horrifying to me was the response of some of the nation’s biggest charities, which was, essentially, “Whatever.”

When asked about the Bloomberg findings, a vice president for the American Cancer Society responded: “It’s certainly not inconsistent for organizations like ours to invest in some loss-leader strategies to engage people in long-term meaningful relationships.”

And a spokesman for the American Lung Association said: “We have break-even contracts with these telemarketers, so we don’t lose money and sometimes we even make a little.”

Say what?

Some of the most popular charities apparently have even condoned lying for their cause. According to Bloomberg, both the Cancer Society and the American Diabetes Association approved scripts that called for solicitors to say that “at least 70 percent” of the money raised would go directly to the charity.

In 2010, InfoCision rang up $5.3 million in the name of the Cancer Society, but the Cancer Society actually lost money on the deal.

How could that possibly happen? Because InfoCision not only kept everything it raised, but also billed the Cancer Society $113,000 for its efforts.

The ethical bottom line here should be obvious: A little old lady on a suffocatingly small fixed income answers the phone and suddenly feels compelled to scrape together $25, figuring most of her money will be used to help cure some horrible disease, perhaps someday prolonging the life of a grandchild. And what she is really doing is giving five bucks to the cause and $20 to the well-heeled owners of InfoCision.

So Godspeed to the U.S. senators who announced last week that they are seeking an investigation into the company and the relationships between telemarketers and nonprofit organizations.

The trio (two Democrats and a Republican) want the Federal Trade Commission, the Internal Revenue Service and the Justice Department to start poking around to see whether abuses of tax-exempt status are occurring and whether solicitations such as InfoCision’s violate the law.

Now, in many cases, it is important to differentiate between donations raised through telemarketing and those raised directly by the charities, because a much higher percentage of the latter goes to the actual cause. But sometimes, even when you think you’re dealing directly with the charity, you’re not.

As I recently discovered (and reported last Sunday), local residents who donate goods to AMVETS are not really donating to AMVETS.

Yes, the national nonprofit gets a tiny fraction of the money, but most of it goes into the pocket of a for-profit chain of thrift stores called Village Discount Outlet, which has locations in Akron and Cuyahoga Falls.

That comes as a shock to a lot of people whose goods are picked up in vans that boldly display the AMVETS name or who slide their donations into drop boxes emblazoned with the AMVETS logo.

Even worse, as reader Mike Sullivan points out, AMVETS is not an aberration.

The group CharityWatch assigns letter grades to about 600 charities based on the percentage of money that goes to a program’s services and the cost of raising $1. As a member of the group, Sullivan receives the Charity Rating Guide & Watchdog Report three times a year.

He notes that in the December issue, 46 charities are listed under the category “Veterans and Military” and 22 of them earn a grade of “F.” (I contacted CharityWatch and confirmed Sullivan’s math.)

You probably won’t be shocked to hear that AMVETS is among the groups that flunk.

Two charities in the category receive an A+: Fisher House Foundation, which puts 94 percent of the money it collects into its programs, and the Semper Fi Fund, which forwards 93 to 95 percent.

CharityWatch also tracks factors such as asset reserves and the salaries of CEOs.

Worth noting, even though it is a human services organization rather than a veterans’ group: the Salvation Army rating for our region of the country is an “A,” with 82 percent flowing right through.

Wouldn’t it be nice to know these kinds of things before you open up your heart and your pocketbook?

Maybe this Christmas your wish list for Santa should include a one-year membership to CharityWatch ($50). Because Santa would be contributing to a nonprofit that rates nonprofits, he could even claim a tax deduction.

Santa and his elves also should keep in mind that many local charities, too small to be rated by CharityWatch, do an excellent job of getting the money where it is supposed to be going.

Bob Dyer can be reached at 330-996-3580 or bdyer@thebeaconjournal.com.


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