Five regional charities are finding themselves on the defensive after being named in a report as among the worst in the nation.
The report, released last month by the Center for Investigative Reporting, the Tampa Bay Timesand CNN, found that the charities spend most of their money on telemarketing and administrative costs instead of the children, cancer survivors, veterans and police they receive tax-exempt status to help.
More than a billion dollars has been wasted in the last decade, the report said, because charities have allowed corporate telemarketers to keep up to 90 percent of collected donations.
Several of the charities claim they were unfairly maligned and voiced concern that it will cripple their efforts to do good.
The report, "America's Worst Charities," cited four groups from Pennsylvania: the Harrisburg-based American Foundation for Children with AIDS, Hershey-based Children's Cancer Recovery Fund, Lancaster-based Survivors and Victims Empowered, and the Port Treverton-based Veterans Fund. It also included the National Police Defense Fund of Morganville, N.J.
Weaver (pictured left), who was preparing to depart for Zimbabwe for her annual visit to inspect African humanitarian programs, worried that the designation would damage her organization's credibility. But what she fears most is the effect the report could have on her programs in sub-Saharan Africa.
"It's my kids over there that are going to get affected," she said. "We don't do this to get rich. We do it because of the children who have been forgotten." Weaver’s salary was $58,000 in 2011, according to AFCA’s tax filings.
The report examined 6,000 American charities and ranked each on the percentage of fund-raising dollars going to telemarketers.
The Veterans Fund (ranked No. 24) collected $15.7 million between 2002 and 2011 but returned 82 cents of every dollar raised to telemarketers: $12.9 million. It also spent an additional $1 million on salaries.
Survivors and Victims Empowered (ranked No. 42), which publishes the online-only Child Protection Guide, collected $7.7 million via telemarketers between 2002 and 2011. The telemarketers kept nearly $4.8 million of that and $1.4 million was paid out in salaries.
American Foundation for Children with AIDS (ranked No. 46) raised $5.2 million between its founding in 2004 and 2011, and handed over $3 million of that to its for-profit fund-raiser and spent $82,000 on salaries. In 2012, it dropped the fund-raiser and pursued other ways of drumming up cash and equipment.
But CharityWatch founder Daniel Borochoff said organizations do manage to improve their grades and move to the head of the class.
Case in point: The American Foundation for Children with AIDS.
"They're actually pretty good," Borochoff told Philly.com. "Since they got rid of their fund-raising company they now get a B+."
Weaver, AFCA’s executive director, said the group severed its links to professional fundraisers last year and created new programs to fill the funding gap. She said AFCA, which had also been probed by Forbes magazine, had hired the pros reluctantly.
“We used them because as a brand new organization we didn’t have a track record and could not get a loan from a bank. We needed to build a reputation so we could get grants,” she told Philly.com. “We were able to save a heck of a lot of lives by doing so.”
AFCA never gives cash directly to its beneficiaries.
“Direct dollars would get ‘lost’ along the way,” Weaver said. Instead, she said she travels to Africa where she buys medicine and livestock in-country. She checks to see whether children are gaining weight from drinking milk and eating eggs. Other money goes to train midwives and doctors, pay for school supplies and greenhouses, and ship donations of equipment from hospitals to African clinics,” she said.
“We actually help the kids," she said. "So they can have a life.”
Weaver said she hoped AFCA would be removed from the list after reassessment by the "Worst Charities" reporters.
She may not have to worry about any negative impact. According to a professor at the University of Pennsylvania, even the worst ranking or grade may have little effect on generating donations for dubious charities.
"Unless you donate large sums, most donors do not check reports from watch dog organizations," said Ram A. Cnaan, director of the Program for Religion and Social Policy Research at Penn's School of Social Policy and Practice. Cnaan was one of four authors of "Nonprofit Watchdogs: Do They Serve the Donor?"
Cnaan believes small donors aren't concerned about their money being misdirected. They're looking for the "warm glow" that comes from making the gift.
"So I am not surprised that poorly rated nonprofits are still in business," Cnaan said. "Donors don't care. Furthermore, If donors are confronted with data, they feel stupid and cheated, and no one wants to feel that way."
In February, the Chronicle of Philanthropy took the Children’s Cancer Recovery Foundation to task in a lengthy story that determined less than 15 percent of the money raised from its donors went to children and questioned if the donations it claimed it made were ever received by humanitarian agencies in Africa and Central America.
Children's Cancer founder and president Greg Anderson presides over a network of related cancer charities. In a rebuttal to the Chronicle story, Anderson he said that “fundraising is often incidental to the educational objective” and implied the reporter had an “agenda” and had “a history of writing stories that are not only critical of charities but at times appear to border on defamation.”
Following its appearance on the “America’s Worst Charities” list, Anderson (pictured right)_took to his website to say his organizations follow industry standards and had done nothing illegal. He again attacked the reporters, stating they had used “fictional” standards and had produced “one of the worst examples ever” of bad journalism.
But it's not just newspaper exposés that have targeted Children's Cancer Recovery Foundation.
CharityWatch, run by the American Institute of Philanthropy, also holds Anderson’s nonprofit in low regard.
"We've been giving them Fs for quite a long time," Borochoff said. Children's Cancer Recover Foundation belonged to a group "so awful because there's a disconnect between what they ask for and how they spend the money," he said.
Anderson would not respond to questions from Philly.com. The day after inquiring, Philly.comreceived a photo of Anderson presenting an oversized check for $15,000 for a group of children to attend a summer camp. A publicist declined to comment and referred a reporter to Anderson’s website rebuttals.
Another of the regional "Worst" has gone out of business. The Veterans Fund, founded in 1998 to entertain hospitalized veterans, called it quits after friction with a fundraiser.
Founder Hugh Brooks, 81, told a reporter the telemarketers had taken 82 cents of every dollar raised - a phenomenally high percentage. The operation collapsed after having to pay a $30,000 penalty to settle allegations of wrongdoing against its telemarketer in Oregon, reported the CIR/Times.
Others on the “America’s Worst” list have been probed and reprimanded by state authorities - with little effect.
Founded in 1991 by conservative political activist L. Philip Sheldon Jr. (pictured left), the AG’s office sued SAVE in 1998 and fined it $10,250 for making “misrepresentations which may have confused or misled customers,” according to court documents.
According to the Detroit Free Press, SAVE settled a second suit with the Pennsylvania AG’soffice for $65,000 after it was accused of directing less than 1 percent of its collected donations on direct aid to children. Of $4 million SAVE spent in 1990, 52% went to distribute outdated vegetable seeds to Native Americans and 43% went to fund-raisers and SAVE salaries.
Though it placed on the “Worst” list, CharityWatch’s Borochoff said he doesn’t bother to rate SAVE any longer.
“They’ve just got so small, they’ve fallen off our radar screen,” Borochoff said. SAVE’s founder is now based in Beijing where he counsels wealthy Chinese students seeking admission to American boarding schools and colleges. He did not respond to several requests from Philly.com for comment.
Even in the best of times, some of the “Worst” charities have to look outside the United States for respect.
The persistent drubbing has taken its toll on president Joseph Occhipinti (pictured left).
“Because of the negative publicity, I've advised that we're not going to continue fundraising,” Occhipinti said. “If that means we have to reduce our programs in order to retain our credibility, that’s what we’ll do.”
Exposing bad charities sometimes runs the risk of hurting the good ones, CharityWatch's Borochoff said.
"I'm amazed other charities aren't up in arms," he said. "The money that goes to a dubious charity is money that other legitimate charities wouldn't have."
Yet for the most part, the big foundations remain silent, he said.
The lasting effects of the scrutiny and the resulting bad publicity will likely be mixed.
"There will be some fallout from this report," Borochoff said. "But it's going to be healthy.
"I think some people will get cynical and give up [making donations]. But others will realize that charities play an important role and it's up to each of us to find the good."