About three months ago I wrote here about a strange pitch I received on the phone from a Harrisburg, Pa., charity calling itself Children’s Cancer Recovery Foundation. Among other things, the charity said my contribution would benefit “Children’s Hospital and Regional Medical Center.” That’s the old name for Seattle Children’s Hospital. Its invocation suggested to me, New To Seattle, that the script being used by the cold-caller–first a computer and then a real human who came on the line after a simple question by me couldn’t be answered–hadn’t been updated in years.
On its website, the charity claimed its charitable commitment ratio–the percentage of all expenses spent in furtherance of the stated mission, as opposed to fundraising and certain overhead expenses–was 81%, above the 65% mark considered the bottom line for respectability. After looking closely at its financial documents, I begged to differ rather considerably. By my reckoning, the charity was using gift-in-kind–donated goods, also called GIK, with questionable values that cost almost nothing to solicit–to pad its numbers and that the true charitable commitment rate was just 15%. Also, Seattle Children’s was unlikely to get more than a few pennies of any donation by me.
I quoted Dashiel Hammet’s memorable line in The Maltese Falcon: “The gaudier the patter, the cheaper the crook.”
By happenchance, The Chronicle of Philanthropy two days later published (behind a paywall) a long article about Children’s Cancer raising all kinds of issues and also coming up with that 15% number.
This morning, another shoe dropped.
The Chronicle posted an online story reporting that Children’s Cancer will restate its financials to remove $4.1 medicine of medicine the charity said it had received from another charity, World Help, and gave to a charity in Ghana.That $4.1 million is more that one-third all the contributions–cash and GIK–that Children’s Cancer claimed to have received. The charity’s brief announcement is on its website at the very bottom of this page.
World Help, which is based in Virginia and was once considered one of the country’s largest charities, is enmeshed in a epic controversy of its own over GIK valuation. In recent months it has been forced–largely as the result of other Chronicle reporting–to lower the amount of GIF received by a whopping 93%, from $239 million to $17 million. This was after other charities denied giving World Help the GIK that World Help had claimed.
That Children’s Cancer reduction included medicine the charity said it got from World Help. My suspicion is that Children’s Cancer never physically touched that medicine at all, but merely shuffled paper in an effort to claim credit for the big gift. Since I all along considered Children’s Cancer’s GIK accounting to be dubious, my 15% estimate still stands.
World Help and Children’s Cancer are hardly alone. In January I wrote a long article for Forbes.com about questionable GIK accounting by Operation Compassion, another large charity. For some earlier accounts by me of other fun and games with GIK accounting, click here and here. For its call to me, Children’s Cancer used the same paid fundraiser, Associated Community Services, whose fees were so high that one Seattle-area charity, Vietnam Veterans of Washington State, spent absolutely nothing raised–not even one dime–on its stated charitable mission.
World Help blamed its reduction on a rogue consultant. According to The Chronicle today, Children’s Cancer’s founder, Greg Anderson, blamed his charity’s reduction on World Help’s “lack of management oversight, internal controls and transparency.”
I’d say it takes one to know one.
A task force of state attorneys general is closely scrutinizing the way charities depict their financial efficiencies to the public. To me, certain charities are going out of their way to make it very easy for the AG’s to make a case.
As always, I invite anyone in this story or interested in the issues to comment below. But hurry. By the time this is all over, the nonprofit scene may look more like the closet floor of Imelda Marcos.