Charity telemarketer plaguing Seattle files for bankruptcy

ACS logoBack in January, I started identifying candidates for possible inclusion on my new list of “America’s Stupidest Charities.” The criteria was pretty basic: charities that called the New To Seattle world headquarters asking for money even though they already were the subject of a critical write-up here. That generally was for spending very little on the stated charitable mission thanks to use of outside paid telemarketers.

I quickly garnered three contenders: American Veterans Support Foundation, a trade name of the National Vietnam Veterans FoundationCancer Support Services; and Community Charity Advancement, doing business as Breast Cancer Support and Research Fund.

Then the hunt went cold. The calls stopped coming in. Was it possible charities and their telemarketers were getting a little smarter about who they do and don’t contact?

Maybe. But I’m starting to think the reason also might be the fact that one of the country’s most notorious charity telemarketers filed for bankruptcy-court protection from what seems to be a growing array of debts, liabilities and overall trouble.

Four weeks ago on March 13, Associated Community Services Inc., of Southfield, Mich., sought refuge in the U.S. Bankruptcy Court for the Eastern District of Michigan. It filed papers listing assets of $10 million and liabilities of $21 million. That’s what’s known as being seriously upside-down.

ACS, as the firm is called, was a frequent and repeat visitor to Seattle. Readers of this space might recall some of the company’s, ah, memorable clients (none of which is eligible–yet–for the stupidest charities list, since they haven’t called me since its inauguration). Here’s the quick list:

Vietnam Veterans of Washington State, which spent absolutely none of the money raised on its stated mission of helping Vietnam veterans of Washington State. ACS was its fundraiser, keeping 82% of the amount raised.

Veterans Support Foundation, doing business as United States Armed Forces Association. ACS was its fundraiser, too, and according to filings kept 90% of the money.

American Association for Cancer Support, doing business as Cancer Support Fund. ACS was its main fundraiser. By my review of documents, ACS and its fundraising allies kept 82% of the cash proceeds.

Children’s Cancer Recovery Foundation, which by my reckoning only spent 14% of its cash collections on charity. ACS was its fundraiser, too.

Clearly, ACS had festering issues. Last month, it agreed to pay the Michigan Attorney General’s Office $45,000 to settle allegations it misled senior citizens. (ACS denied doing anything wrong.) Last year, the Tampa Bay Times, which may win a Pulitzer Prize on Monday for its coverage of questionable charities, ran a blistering profile of ACS.

The bad press and hostile regulatory environment clearly took its toll. According to the bankruptcy filing, ACS had gross income of $32 million in 2012 and $36 million in 2013 but only $6 million for the first 2 1/2 months of 2014.

The stated liabilities include $16 million to the Internal Revenue Service, $2 million to various Michigan tax authorities and $500,000 owed employees. Some of them likely monitored the computer-guided interactive voice calls I often got and then came on the line when I started asking questions the computer couldn’t answer, like the street name.

Perhaps more interesting in the filing is the list of charities for which ACS did fundraising. It’s a who’s who of iffy charities. Among them (in addition to the ACS clients I mentioned above): American Veterans Education Foundation, Autism Spectrum Disorder Foundation, Cancer Fund of America, Children With Hair Loss, Children’s Cancer Fund of America, Children’s Leukemia Research Association, Firefighters Assistance Fund, Firefighters Support Services, Law Enforcement Education Program, National Children’s Leukemia Foundation, Paralyzed Veterans of America and Youth Development Fund. Not a one has a clean bill of health from the watchdog Better Business Bureau Wise Giving Alliance.

The BBB, by the way, has standards. A reputable charity should spend no more than 35% of the funds raised in raising those funds (on a cash basis ACS charities were a lot closer to 90%). Spending should be at least 65% of total expenses on the stated charitable mission (ACS charities, as noted above, sometimes were as low as 0%).

Press accounts quote president Richard Cole, who owns half of ACS,  as saying the firm will stay in business: “The reorganization process will result in an improved, more efficient Associated Community Services.”

Does that mean the calls to me will resume? We’ll see.

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Charity telemarketer plaguing Seattle files for bankruptcy — 1 Comment

  1. Owing the IRS 16M means you are in a very deep hole. That is about half a year’s income. They are quite aggressive collectors. Another $2M to state tax authorities puts the tax delinquency at $18M. Keep in mind this is a reorganization, according to published reports, not a liquidation. So they can continue in operations and eventually get back to calling New to Seattle world headquarters.

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