Americans donate more money to charity than people in any other country. Unfortunately, some of our $300 billion in annual donations goes to frauds and swindlers instead of aiding legitimate charity work.
Within hours of the January earthquake in Haiti, for instance, con artists already were posing as relief organizations to bilk donors through bogus e-mails and Web sites. The FBI has logged hundreds of complaints related to Haiti relief scams, and the feds have made a few arrests.
Fly-by-night Web sites that collect cash and disappear may be the most brazen examples of this kind of fraud. They’re also relatively easy to avoid. A trickier problem is seemingly reputable charities that misuse donors’ money in other, more subtle ways.
Name recognition is no guarantee that your donation will help those in need. The United Way is one of the best-known charities in the world, with a century of history and more than $4 billion in annual fundraising. Yet in 2004, the former chief executive of a United Way chapter in Washington pleaded guilty to stealing at least $1.6 million during his 27-year tenure. In one particularly galling episode, he reimbursed himself for more than $20,000 he had donated to his own charity. The eventual investigation revealed a lax bookkeeping culture and uncovered a pattern of corruption that included other United Way managers.
Are audits and watchdogs the answer? Unfortunately, even groups that are supposed to expose unethical practices can’t always be trusted. Many consumers rely on the Better Business Bureau (BBB) to grade businesses and help resolve complaints, but its grading system is a pay-to-play scheme. The only businesses that get A-plus ratings are dues-paying BBB members, so members with a history of bad behavior can get higher scores than honest nonmembers.
Then there are the “charities gone bad” stories, those groups that stay in business by resting on their past laurels and hoping the public doesn’t discover the change. Case in point: Mothers Against Drunk Driving (MADD). Once an organization dedicated to preventing drunk driving, MADD has been criticized by its own founder as having become “very prohibitionist in their philosophy.”
Today’s MADD focuses on prohibiting alcohol consumption, period. It aims to force alcohol-sensing technology into every new car in America, coupling this with a shift in messaging from “Don’t drive drunk” to “Don’t drink and drive.”
With the transition from anti-drunks to anti-drinks, MADD became a bad investment for charity dollars. The American Institute of Philanthropy (AIP) consistently gives MADD a “D” report-card grade because of its poor fundraising practices. According to AIP, most charities should spend $35 or less to raise $100. MADD often spends nearly double that amount.
Like MADD, the Humane Society of the United States (HSUS) exploits its feel-good name to raise money while pushing extremist fringe ideas. HSUS is an extremely wealthy nonprofit, with more than $162 million in assets. But it is not always honest with the public about its mission.
A new national poll shows that 71 percent of Americans, enticed by TV commercials featuring stray cats and dogs, think HSUS is an umbrella group for local humane societies all over the United States. (It isn’t.) Nearly 60 percent of us believe HSUS gives most of its money to needy dog and cat shelters. (It doesn’t.)
In 2008, HSUS gave less than one-half of 1 percent of its operating budget to hands-on pet shelters. And the group doesn’t operate a single pet shelter of its own anywhere.
Where do all those doggie dollars go? Tens of millions are earmarked to support a bloated staff of lawyers and lobbyists, including $2.5 million just for the executive pension fund.
With more than 500 paid employees, HSUS wages expensive animal rights lobbying campaigns - the kind that aim to put meat and dairy farmers out of business, close down zoos and aquariums and allow lab rats to sue cancer researchers.
Charitable giving is one of the most important ways we affirm our collective goodness as a nation. But when ethically challenged groups betray the public’s trust through fraud or misdirection, they risk making us all too cynical to write that next check. Even if the charities we want to help truly deserve it.
Richard Berman is the president of Berman and Co., a Washington-based public affairs and communications firm.