Is The Time To
- published in the May 2008 issue
of the Charity Rating Guide & Watchdog Report
It is ironic that veterans charities, having one of
the most popular causes, are also some of the least efficient with
Americas donated dollars. It is a national disgrace that hundreds
of millions of dollars raised in the name of injured veterans are
not being used to help them. Too many veterans charities are wrapping
the American flag around themselves and hiding behind the First
Amendment to justify their wasteful, over-solicitation of funds.
With the current downturn in the economy and the great needs of
our disabled veterans, it is not acceptable for poorly performing
or inefficient charities to squander our limited charitable resources.
The following are policy recommendations to improve
the odds that contributions intended for veterans will be used primarily
to benefit veterans and not to enrich charity executives and/or
professional fundraising companies. These recommendations also apply
to charities with other popular causes, such as firefighters, police,
disaster relief, sick children and cancer.
Veterans charities should be required to maintain
reasonable annual fundraising costs of 35% or less. Exceptions would
be made for groups that have been in existence for less than 3 years
or with gross revenues of $500,000 or less. Unlike veterans charities,
groups with controversial or unpopular causes should be allowed
to have fundraising costs exceeding 35% per year due to the smaller
number of people willing to support these causes.
Veterans charities should not be allowed to pull the
wool over the eyes of the donating public by asking for contributions
to provide services to veterans when they really plan to use most
of the funds raised for solicitations with educational messages
and thrift shop operations. We need truth in fundraising
laws that require point-of-solicitation disclosure of how money
will actually be spent or was spent in the past year.
Percentage based fundraising contracts need to be
outlawed. These are contracts between a charity and its professional
fundraising company where the charity receives a set portion or
predetermined amount of donations, regardless of the companys
cost to raise these funds. Fundraising professionals need to be
paid on the basis of their time and efforts and not be allowed to
receive windfalls on the backs of charities. A fundraising company
should not be permitted to take money intended for a needy person
or charitable program just because a lazy, incompetent or corrupt
charity allows it. Percentage based fundraising can also lead to
excessive solicitations and place undue pressure on donors.
Past attempts to regulate fundraising costs and disclosure
have failed in the courts due to free speech concerns. A charity
is protected under the First Amendment from having to keep the cost
of raising funds below a particular threshold. The First Amendment
should continue to guarantee that we have the right to raise money
causes even if it is very expensive to do so. However, opportunistic
fundraisers, who purposely pick causes that the public is most likely
to support, should not be allowed to hide behind the First Amendment.
Because charities can receive postal discounts, are
tax-exempt, and have the privilege of giving donors tax deductions
on their contributions, we are all indirectly paying for them. Anyone
can start a charity that conducts its program via its solicitations
and draw a salary from a portion of the donations. All they have
to do is hire a professional fundraising firm, which will do nearly
all of the work, and let them keep most of the money raised. If
the fundraising company raises $1 million and is allowed to keep
85%, there is enough money left over for the charity founder to
have a six figure salary. It is bad enough that the money donors
give to highly inefficient charities does not go toward the purpose
they intended. Its even worse that people who know not to
support poorly performing charities have to indirectly support these
groups and their for-profit vendors through higher taxes and postage
fees. Charities that cannot demonstrate reasonable overhead expenses
should not be allowed to accept tax deductible contributions or
to mail solicitations at discounted nonprofit postal rates.
The misuse of Congressional charter status needs to
be stopped. It is confusing to some donors when veterans charities
prominently state or display their congressionally chartered status.
Many of the major
veterans groups are chartered by acts of the U.S. Congress, including
AMVETS, Blinded Veterans Association, Disabled American Veterans,
Military Order of the Purple Heart of the USA, Paralyzed Veterans
of America and Veterans of Foreign Wars of the United States.
According to a 2004 report by the Congressional Research
Service, Congressional charter status does not mean that the U.S.
government approves these groups activities and provides oversight.
That report also stated that Congress has never pulled a charitys
charter status. Congressman Barney Frank was cited in 1992 in The
Washington Post as calling charters a nuisance,
a meaningless act. Granting charters implied that Congress was exercising
some sort of supervision over the groups and it wasnt.
In order to reduce public confusion, AIP believes charities that
wish to promote their Congressional charter status should be required
to state that this status does not imply endorsement, approval or
recommendation by Congress.
Charities that hire celebrities to endorse them or
accept an award from them ought to be required to disclose that
a payment has been made and its amount. Otherwise, many people will
falsely assume that the celebrity is endorsing the charity on its
merits alone. Until laws exist to require such disclosures, AIP
encourages donors to disregard celebrity endorsements when making
Under present regulations and accountability requirements
too much of the money given to aid our brave veterans is being diverted
to non-charitable purposes. AIP strongly encourages Congress, the
IRS and the states to create and enforce rules that motivate veterans
groups and other charities to better fulfill their vital missions.