- - Thursday, April 2, 2015

ANALYSIS/OPINION:

Tax Day approaches. Americans are initiating the ritual of rummaging through file cabinets and desk drawers to find the receipt required for their deductions. And if you are one of the estimated 80 percent of Americans who donated to a charity, you may want to take a second glance at those groups to see how your money was spent. A little research on many of America’s popular and virtuously named charities reveals that not all philanthropic institutions are created equal.

The military charity “Foundation for American Veterans” will clearly appeal to your sense of patriotic responsibility. However, a donation to this organization does next to nothing to support the troops. Charity Watch reports that nine cents out of every dollar donated to this group is spent on program services. This figure is especially alarming because this foundation took in more than $8 million during tax year 2013. Much of the donated money is eaten up in salaries and overhead.

Charity Watch grades a program that spends 60 percent or more on program services as “satisfactory,” with highly efficient charities (translation: good stewards of your money) spending around 75 percent or more on providing services. Charity Watch has given this veterans foundation “charity” an F rating. It is essentially a fundraising mill that uses American warriors as a hook.

Military veterans are not the only victims of phony charities. The Childhood Disease Research Foundation has also earned an “F” rating, spending 11 percent on programs. The American Association of State Troopers spends between 18 percent and 20 percent on providing services, while the Firefighters Support Foundation spends 6 percent on its program. Both of these charities have earned “F” ratings from Charity Watch.

An egregious example of wasted doggie dollars comes from the Humane Society of the United States (HSUS). While many Americans view the HSUS as an umbrella organization for pet shelters across the country, they only donate 1 percent of their millions to the local groups caring for abused and abandoned pets. Incredibly, HSUS puts more into its executive pension plan each year than it gives to shelters, while sticking many millions more in offshore Caribbean tax shelters. Last year, Charity Navigator stripped the Humane Society of the United States of its already-low rating and issued a “Donor Advisory” due to a multimillion dollar settlement paid after a racketeering and bribery lawsuit was filed against the organization. HSUS donors probably didn’t intend for their contributions to be used to pay for lawyer fees and RICO settlements.

Of course, most every group will do some good for those in need. As the expression goes even a broken clock is right twice a day. But there are objectively more efficient charities to donate to. The Semper Fi Fund, Homes for Our Troops, and JDRF International, which supports diabetes research, all get “A” grades.

States haven’t had much luck under consumer fraud statutes in cleaning up these charities or forcing them to spend money efficiently. It’s been up to independent watchdogs to educate the public.

Unfortunately, at least one of these high-profile watchdogs is more of a lapdog. The Better Business Bureau (BBB) allows a charity to classify fundraising expenses as program expenses making the charity look like it’s doing more to help the intended beneficiaries than is real. The BBB also licenses its seal to “accredited” charities for up to $15,000. When your revenue depends on licensing your brand, you may not be as critical of groups who have big check books.

Charities raise more than $335 billion a year, with an untold amount of waste. Every group that is serious about abandoned pets, war veterans or medical research has to fight not only to accomplish their mission but also compete for donations with phonies who have found a way to make money in the emotion business. Just because a celebrity endorses a charity doesn’t mean they did their homework. Help the good guys by doing yours. Don’t take a write-off for bad charities — write them off entirely.

Richard Berman is president of Berman and Co., a Washington public affairs firm.

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