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Private Groups Pocket Vet Donations

Image has not been found. URL: /wp-content/uploads/2008/09/met-iwo-2003.jpgThe Marine Corps. War Memorial (WDCpix)

The charitable organization, American Veterans Coalition, places in the center of its Web site an eye-catching statistic — 33 percent of the homeless are veterans. A few sentences later comes the fund-raising pitch: a “simple donation” from “patriotic citizens like yourself” to a veteran in need would amount to a “heroic effort.”

The problem is that if this donation were made, whether over the phone or through the mail, only 14 percent of would go to American Veterans Coalition. The rest would go to the for-profit firms paid by the veterans’ charity to raise money on their behalf — primarily through telemarketing and direct-mail solicitation.

Records made public in The Los Angeles Times this week from the California attorney general’s office document the national fund-raising campaigns of non-profits who registered with the state of California. These range from veterans’ charities to international relief organizations, like the American Red Cross, to advocacy groups, like Planned Parenthood.

Of the more than 5,000 national fund-raising campaigns registered in California between 1997 and 2006, about $2 billion was raised on behalf of charities. But only around 50 percent of the money taken from donors actually went to the charities. The rest stays with the commercial fundraiser.

To anyone that has given to charity through a solicitation, the data is likely disconcerting. Some of the most emotionally appealing charitable organizations seem to have some of the most inefficient fund-raising practices. These include groups that promote animal welfare and also police and firefighter associations. It also includes a set of veterans’ charities that have already faced scrutiny from a Congressional committee and a philanthropy watchdog group.

“Too many veterans groups spend most of their money on direct mail and telemarketing solicitations,” said Daniel Borochoff, president of the American Philanthropy Institute, a watchdog group that tracks the fund-raising and spending practices of non-profits. “They are not very discriminating about who they solicit, because they know that their cause is so widely popular.”

Each year, the American Philanthropy Institute releases a report on charities’ spending habits. Borochoff said that last year their list showed that several veterans and military charities, as well as crime and fire prevention groups, didn’t spend the majority of their organization’s budget on their stated mission. Instead, money was directed toward salaries, overhead costs– and fund-raising.

The California data on charity fund-raising from 1997 to 2006 confirms the watchdog group’s projections.

“Professional for-profit fund-raising companies like to work with veterans and police and firefighter charities,” said Borochoff in testimony last December before the House Committee on Oversight and Government Reform. “They know that people are more likely to respond to solicitations from these charities than just about any other type of group.”

At the time of Borochoff’s testimony, the House oversight committee was examining the financial practices of four veterans groups — American Veterans Coalition, Disabled Veterans Assn., American Veterans Relief Foundation and Help Hospitalized Veterans.

Each of these charities uses firms that make phone or direct mail solicitations. In asking for money, these firms are not required to reveal their identity — which leads to the mistaken belief that the telemarketer or mailing directly represents the charity. “The majority of people think it’s a call from the non-profit,” said Pablo Eisenberg, senior fellow at Georgetown Public Policy Institute and a philanthropy scholar.

In fact, for the aforementioned four veterans groups, outside firms are both raising and pocketing a large portion of the donations.

According to the California data, donors gave the American Veterans Coalition $47,000 but the organization saw just $7,000, or 15 percent.

The telemarketing firm Civic Development Group generated $2.3 million for the Disabled Veterans Assn. All but $293,000 or 12.9 percent stayed with Civic Development. Campaign Center Inc. raised $47,000 for American Veterans’ Relief Foundation, and kept everything except $7,000 or 15 percent.

Meanwhile, Help Hospitalized Veterans actually owes commercial firms $24,960 in outstanding fees.

“I think both the charities and commercial firms are crooks,” said Eisenberg “They’re good at not letting the donor know they’re dealing with professional fund-raisers.”

None of these veterans groups or commercial fundraisers responded to phone calls and emails. Help Hospitalized Veterans, however, did release a lengthy statement through the public-relations firm, Burson Marsteller. It noted that Help Hospitalized Veterans is IRS compliant. It also described the organization’s accomplishments in funding both nursing homes and an entertainment troop that performs for veterans.

In testimony before Congress this January, Roger Chapin, president of Help Hospitalized Veterans, gave the perspective of one top veterans’ charity official. “If we disclose [where donation money goes] which I’m more than happy to do, we’d be all out of business,” Chapin told the House oversight committee. “Nobody would donate. It would dry up.”

There are categories of charities with comparable fund-raising practices to veterans’ charities, according to the California data.

On average, animal-welfare groups see about 26 percent of the money raised on their behalf. Organizations that had millions raised for them, but saw relatively little of it, also include the World Wildlife Fund and Humane Society.

The data also bears out the contention of Borochoff of the American Philanthropy Institute that police and firefighter organizations are ineffective fund-raisers. Firefighter groups collected 15 percent of the money raised for them. All but 20 percent of the money raised for police groups stayed with the commercial fund-raiser.

Borochoff suspects that the popularity of the cause could correlate to the quality of the fund-raising.

“Regardless of their politics, people want to do something to give back to the plight of the veteran,” said Borochoff. “These highly popular causes are easy targets for the solicitation companies.”

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