- The Washington Times - Friday, April 5, 2002

Some charities are trying to avoid federal anti-fraud laws by hiring telemarketers based outside the United States to do their fund raising, said Sen. Charles E. Grassley.

The Iowa senator, who is the top Republican on the Senate Finance Committee, has asked the Federal Trade Commission, the Internal Revenue Service and the Department of Justice to examine the practice.

He encouraged the agencies to see how much of the charities' donations were spent on actual charitable activities and to determine what the agencies can do in these matters.

Mr. Grassley singled out the Atlanta-based Children's Wish Foundation International Inc. and its telemarketing fund-raiser, Reese Brothers Inc., for particular scrutiny.

He said the foundation encourages donors to believe they are giving to the popular Make-A-Wish Foundation, which grants the wishes of children with life-threatening illnesses. He also said the smaller CWFI disburses little of its money to granting children's wishes.

"I question whether American citizens are aware that only about 8 cents of every dollar that they donate to CWFI might be used to grant sick children's wishes," he wrote in letters requesting an update on investigations.

Mr. Grassley said CWFI raised $131.9 million over the last decade, but spent only $10.1 million of it on "wish fulfillment."

In contrast, Make-A-Wish spokesman James Maggio said, Make-A-Wish took in $131.2 million in donations and disbursed $122 million, according to preliminary numbers for the last fiscal year.

He said 79 percent of that $96.5 million went directly to services. Fund raising accounted for 13.2 percent of disbursements, and management expenses were slightly less than 8 percent.

Christy Andrews, a spokeswoman for Children's Wish, criticized Mr. Grassley for not contacting the organization before asking for the investigation.

"In fact there are a number of misstatements that now will be repeated with the result of damage to our program of serving seriously ill children," she said. "Where is his sense of fairness when the name of a charity is at issue? This is a sad day for everyone."

She said her group was surprised by the letter, and that charity officials still were reviewing the charges and didn't have numbers available to contest them.

Mr. Maggio and Mr. Grassley said many wish foundations are legitimate. But Mr. Maggio said there are "a handful of organizations who have been creating problems for us for more than a decade" by trying to portray themselves as the real Make-A-Wish foundation.

Mr. Maggio said Make-A-Wish doesn't telemarket at all, partly to distinguish itself from organizations like CWFI.

Mr. Grassley also asked the FTC to investigate telemarketers such as Reese Brothers. He said the company is based in Pittsburgh but is making calls from the Philippines, and that they may be trying to skirt federal anti-fraud laws.

The Iowa Republican last year requested that the General Accounting Office audit the IRS to see whether its investigations of charitable organizations make optimal use of IRS resources, and asked the GAO to investigate charitable giving in general to see how charities disburse the money given.

After September 11, the process for establishing a charity was streamlined to help victims and their families. Mr. Grassley also has asked for a report on charities' disbursements related to the attacks.

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