From the August 2010 Charity Rating Guide &
Jingle Not a Green Light to Donate
For the many people who have heard it,
the catchy Kars4Kids jingle is difficult to forget. The charity
behind the Kars4Kids fundraising campaign, J O Y for Our Youth
(JOY), has spent millions on advertising to ensure the jingle is
heard far and wide. In addition to sponsoring an internet video
jingle contest, JOY runs radio ads like the one we frequently hear
in Chicago enticing potential donors with offers of "maximum"
tax deductions as well as a "free vacation" in return
for car donations. The commercials make car donation seem as easy
as dialing a memorable phone number, but are vague about where the
raised money will go, or how it will benefit kids.
JOY has the same New Jersey address
and the same principal officer, Eliyohu Mintz, as another charity,
Oorah. According to the Attorney General in Pennsylvania,
JOY "has contributed substantially all of the funds it has
raised to Oorah in the past."
According to Oorah's website, "Oorah, which means 'Awaken,'
was founded in 1980 with the goal of awakening Jewish children and
their families to their heritage." The site is full of articles,
stories and testimonials which seem to imply that the physical and
spiritual support and private religious education offered by Oorah
are intended to persuade secular Jewish families to take on a more
Orthodox Jewish lifestyle.
Of course many charities promote religious ideology, but when the
religious mission of a charity is not disclosed in advertisements
to potential donors, ethical and regulatory issues may arise. Legal
settlements in 2009 with regulators in Pennsylvania and Oregon require
JOY and Oorah to be more up front with their Kars4Kids advertising-at
least in those two states.
Pennsylvania's Attorney General accused JOY of publishing "advertisements
that did not limit benefits to any particular group of children
when, in fact, substantially all donations were remitted to Oorah,
whose programs benefit a particular group of children." In
Pennsylvania, JOY was fined $45,000 in restitution to be distributed
to various children's charities in the state plus $20,000 in penalties
and investigative costs. JOY was also required to add detailed disclosures
to all Pennsylvania solicitations revealing the religious nature
of its programs.
In Oregon, the charity was required to pay $65,000 and "change
its misleading solicitation practices." The Oregon Department
of Justice took issue with the charity's vacation voucher incentive,
saying JOY "failed to disclose that its 'free vacation' offer
was designed to recruit people to attend timeshare presentations."
Also at issue was a failure "to disclose that the organization
did not benefit needy children generally, but instead directed its
efforts to a narrow religious purpose." In addition to paying
the fine, JOY is now required "to clearly and conspicuously
disclose that any offers of vacation vouchers are not applicable
in Oregon" and to include disclosure of its religious purpose
in solicitations in that state.
When money passes from one charity to another, typically an additional
layer of overhead cost takes a second bite out of donations, leaving
less cash available to be spent on the programs donors intend to
support. For example, based on these charities' 2008 overhead rates,
a $100 donation to JOY that is then granted to Oorah would result
in $35 left to help children. In its 2008 tax form, JOY reports
spending just over $14.6 million, or 65% of its $22.5 million budget,
on programs-which at face value appears to be a reasonable amount.
However, nearly all of this program spending, $14.5 million, consisted
of a grant to the charity's affiliate organization, Oorah. This
grant made up most of Oorah's funding in 2008, according to that
charity's tax form, on which it reports spending 46% of its budget
on overhead. Donors who only look at JOY's reported program spending
without taking Oorah's overhead expenses into account might get
the impression that more of their charitable donations are going
to benefit kids than is actually the case.
Donors should also be aware that according
to its 2008 tax form and audited financial statements, JOY spent
$118 in fundraising and advertising costs to obtain each donated
car, and the average car was resold for less than $400.
here to read AIP's Tips for Donating a Car to Charity.