This story has been updated with comments from the charity’s founder and president.
The cold caller on the telephone yesterday said he worked for AC Services of Southfield, Mich., was soliciting on behalf of Cancer Support Fund and wanted me to pledge money. He said Cancer Support Fund was based in Seattle. I’ve only been New To Seattle for two years, but I never had heard of Cancer Support Fund. That in itself wasn’t surprising. Across the country there are thousands of charities in this country containing “cancer” in their name.
But I knew something about AC Services, or Associated Community Services as its name is more fully rendered. So do some other journalists and the attorneys general of Michigan and Iowa. In fact, if you regularly visit this space, you might, too. To refresh your memory, just click here, here or here.
As it turned out, Associated Community Services is one of several paid charity telemarketers for Cancer Support Fund that collectively kept for themselves almost all the money raised from direct mail and calls like the one I got. By my review of the charity’s own publicly filed financial documents for last year, a full $88.10 of every $100 raised in cash was spent on fundraising.
How much of those cash donations was spent directly on, say, cash grants? Of each $100 dollars, a mere 14 cents–not dollars, cents–or one-seventh of 1%. That’s really zero percent. And it’s a little hard to square with this language on the charity’s web homepage: “The Official Cancer Relief Nonprofit Organization … Because we care, we share.”
And also as it turned out, Cancer Support Fund, which is only two years old and whose legal name is American Association for Cancer Support (AACS), is not based anywhere in the Pacific Northwest, let alone Seattle, like my cold caller said. Rather, it’s located in far-away Knoxville, Tenn. I wrung this little correction out of my cold caller’s supervisor, who came on the line to field my increasing barrage of questions.
However, you wouldn’t know any of these dismal numbers just by looking at the website of the Washington State Secretary of State’s Office, which is supposed to keep us knowledgeably informed in these matters. The folks in Olympia calculated AACS’s charitable commitment ratio at a lot higher 61%. That ain’t so hot, either–the watchdog Better Business Bureau Wise Giving Alliance faults anything under 65%.
Why the discrepancy? I’m counting where the cash donations went (essentially, nowhere). But AACS was able to include in its financials receipt and distribution of a large amount of donated goods, or gift-in-kind. GIK costs almost nothing to procure, is prone to wild exaggeration in true value, and thus can make a charity seem a lot more financially efficient than it really is. In the case of AACS, there’s also a question of whether the purported GIK was off-point to the charity’s stated mission of, well, cancer support.
Sit back and let me explain.
For my analysis, I largely used AACS’s IRS Form 990 tax return and audited financial statement for the year ended December 31, 2012. I obtained them not from Washington State regulators–they’re sort of MIA on this stuff–but from the website of the New York State Attorney General.
For the calendar year ending December 31, 2013, AACS reported raising $898,360 in cash-like donations. Of this amount, exactly $1,279 went out in cash grants. Do the math–$1,279/$898,360–and you’ll see where I got the 0.14% in charitable commitment.
Some $78,556 was spent in office, postage/freight, management and overhead expenses, some of this classified as charitable expense. Still, that sum is 61 times the amount of cash grants handed out.
Then a whopping $791,437 of that $898,360 in collected cash was spent in fundraising expenses. The inputs to calculate fundraising efficiency–the amount of donations remaining after the cost of raising them–is [($898,360 – $791,437)/$898,360]. That works out to 11.9%. Subtract that from 100%, and you’ll discover how 88.1% of what came in went right back out, mostly to those who brought it.
Ah, but AACS also reported receiving donated goods–that GIK–valued at $1,238,605 and distributing essentially the same amount. That pushed the reported charitable commitment ratio up to the aforementioned 61% and the fundraising efficiency up to 63% (which is still below a separate BBB cut-off also of 65%).
Exactly what were these cancer-victim support goods? Said a footnote to the financial statement, “Principally … prescription and non-prescription medications, clothes, medial supplies, medial equipment, hygiene items, and educational materials” serving “cancer patients, the critically ill and impoverished, and to non-profit community service organizations.”
That language clearly stated recipients could include people without cancer and for that matter without any illness at all, as well as causes and institutions that weren’t medical in the slightest.
Disposition of the goods? According to the tax return, almost all the donated material by value were sent to a single recipient … in Central America. The AACS identified it on its website as the Orden Del Malta Charity in Guatemala.
AACS gained Internal Revenue Service tax-exempt status after filing in 2011 an application, also available on the New York State website, projecting that for 2012 its fundraising efficiency would be 80%. Oops!
Responding by phone to my emailed request for comment, AACS’s founder and president, Jula Connatser, a 35-year-old naturalized citizen from Thailand who married a guy from Knoxville, said using paid fundraisers taking a huge cut of donations was not her preference. As a start-up, “I don’t have any other choice than telemarketers,” she said. “I’m trying to do my best.” She said she would look into why I was told AACS is based in Seattle.
Connatser said she has a background working for nonprofits and started her own out of a belief she could do it better and because “people ask me for help.” She said the GIK AACS received came primarily from three sources: Blue Source, World Assist and Cancer Fund of America. The Cancer Fund of America, as I have written here, is another Knoxville-based charity soliciting in Seattle that also uses Associated Community Services and has had its share of bad publicity.
All the GIK, Connatser said, first went into an AACS warehouse–at the time, her garage–before going out to recipients. Besides the charity in Guatemala, she said that included several hundred patients across the U.S.
Connatser said her charity valued GIK uniformly at retail price less 20%. In my judgment, that produces pretty high valuations that could be open to question. Click here, here, here, and here for illuminating examples of valuation abuses involving GIK.
I invite anyone mentioned or interested to post their comments below.
Back to my cold caller yesterday from Associated Community Services on behalf of AACS. He really wanted me to promise to donate a specific amount, which he would put on a pledge card and send me. This is a common coercive tactic among sketchy causes. Assuming the call was being recorded–regulators, are you reading?–I said quite clearly that I would be happy to receive any written materials that he cared to forward, but that I wouldn’t commit to any amount until I reviewed the literature. My lack of upfront commitment was quite unacceptable both to him and his supervisor.
But it was a terrific way to get the call ended.