But, you might think reasonably, a labor union acts naturally in the self-interest of its own members and is not charitable as the phrase is commonly understood. So how can it be considered a charity, let alone one potentially deemed stupid?
The short answer is the union’s ongoing involvement in a telemarketing campaign that looks like a charitable fundraising effort concerning child safety but which appears to me at least as much a ploy to enrich the union’s coffers and those of the telemarketer.
The stupidity part comes from my definition of stupidity: an organization that solicit money from the New To Seattle world headquarters despite being the subject of a previous critical post. How much more stupid can stupid be?
There also are some other interesting issues floating around. Among them: use of the name of a nonexistent cop organization–the King County Police Union–by a labor group most of whose members are not cops; a false claim of tax deductibility and what I would call rather loose assertions of high financial efficiency.
The money pitch came in a telephone call I recently received from a fellow identifying himself as a representative of the King County Police Union, quickly adding–he was a very fast talker–that was part of Public Safety Employees Union 519. He asked for an oral pledge of $20 in support of the My ID Club project, which he described as an effort to issue identification cards to children that can help resolve emergency situations. Each dollar donated would allow issuance of one card, he said.
My caller said that 89% of the money raised went toward the project and only 11% went to fundraising. I asked if a contribution would be tax-deductible. Yes, he replied.
The telemarketer said once I made a pledge, I would be sent materials by mail to return with payment. I said I would be happy to review any literature sent me, but that I could not commit immediately until I did that and also undertook some more research.
I don’t think the caller was too happy with my position, especially my unwillingness to pledge on the spot. The call soon came to an end.
King County Police Union is a trade name that Public Safety Employees Union 519 has used for decades in various outreach efforts. The evocative d/b/a also is, in my opinion, deceptive, since judging from the bargaining units the union says it represents, only a handful of the 500 members are cops. The units include Superior Court clerks, folks operating the King County TV system broadcasting public meetings, and various other non-commissioned professional employees working for the parts of the King County government. The only police contracts I saw listed on the union’s web site covered police captains in suburban Bothell (all of four, according to that department’s latest annual report) and police lieutenants in suburban Kirkland, which can’t be a very large number, either.
Then there was the claim to me on the phone that contributions to the union for the My ID Club project would be tax-deductible. Public Safety Employees Union 519 is not a 501(c)(3) organization, which would make contributions to it deductible by the donor, but a 501(c)(5) organization, better known as a labor union. A donation to a union isn’t deductible, despite what a fast-talking person on the phone might say. (The numbers, by the way, refer to sections of the Internal Revenue Code governing exempt organizations.)
In an email, I raised this issue with the union, which is independent and not affiliated with any of the big national labor organizations like the AFL-CIO or AFSCME. Long-time Business Manager Dustin Frederick wrote back that such a claim by his representatives would be in error and that he had taken steps to see it didn’t happen again.
Still, he added, “Any citizen who wants to research our fundraising problem has ample opportunity and information to make a reasoned decision whether or not they want to participate.” Indeed, upon my request Frederick quickly sent me his union’s latest tax returns, as the law requires.
I have no idea whether or not from a public policy standpoint the My ID Club project is worthwhile or adequately meets its stated purpose. But I have a big problem with the union’s claims on the phone to me of extraordinary financial efficiency, that 89% of the money raised went to the My ID Club project. That number seems to be in sharp conflict with available documentation, my knowledge of charitable fundraising, and simple common sense.
On its federal tax return for 2013, the latest available year, the union said it raised $392,397 for the My ID Club project. Of that, $318,201, or 81% of the money raised, was listed as fundraising expense, leaving a profit for the union of $74,196, or 19% of the money raised. And it was a profit–the union was required to report the numbers on an IRS form 990-T for unrelated business income and pay $9,996 in federal income tax.
Still, the My ID Club profits covered about one-fifth of the overall expenses of the union, which says on its Web page that its main purpose for its members is “ensuring ongoing improvement to their wages and working conditions.” Such self-interest for members is hardly charity. Left unsaid, of course, is that that taxpayers would have to foot the bill.
According to its filings with the Washington State Secretary of State’s office, the union outsourced fundraising to a paid telemarketing outfit called Support Services Inc. of suburban Burien. Support Services Inc. lists a street address, post office box and phone number that happen to be identical with the registered owner of the MyIDClub.org Internet domain, Guardian ID Systems Inc., which certainly sounds like the maker of the My ID Club cards. Moreover, according to state corporation records online, Support Services Inc. and Guardian ID Systems Inc. also have the same president.
I think it fair to conclude the two corporations are affiliates, meaning there is common ownership. That would explain why Support Services Inc. said in effect in its state charity filing that it shouldered not only the fundraising cost, but the expense of running the My ID Club program.
Support Services Inc. said in the filing that its client–the union–kept 20% of what was raised. That’s roughly what the union said in its tax filing, too. But that means the other 80% covered fundraising, the cost of producing My ID Club cards and whatever profit accrued to the Support Services Inc./Guardian ID Systems Inc. enterprise. That makes mathematically impossible the claim to me that 89% of the money donated went for the cards and not for fundraising.
I am not privy to the way money was accounted for on the books of Support Services Inc. and Guardian ID Systems Inc., except that the situation seems like two pockets of the same pair of pants; the money all belongs to a single wearer. I have written about charitable fundraising practices for many years, and know that fundraisers plying their trade via telephone and direct mail rarely keep less than 65% of the money raised, and often upwards of 80%. And it seems clear from looking around the Internet that laminated ID cards can be produced in bulk for just a few cents per card once the equipment is acquired. The unusual thing here is that the outside paid fundraiser also provided the claimed charitable product.
So here’s how I see it: Of every dollar given to the union for the My ID Club project in 2013, the union kept 20 cents as its cut for allowing use of the King County Police Union name. The card itself and associated overhead accounted for 15 cents. Guardian ID Systems Inc./Support Services Inc. used the other 65 cents for fundraising expense and profit.
This is dead reckoning by me. But I’d say no more than 15%–not 89%–really went to the My ID Club project. Using a slightly different methodology that yields the same result, charity watchdogs like the Better Business Bureau Wise Giving Alliance frown greatly on anything under 65%. I invite comment on this point, or any other issued raised, in the form of a post below.
There’s one other thing. I was told on the phone that every dollar donated generates one card. Using the King County Police Union name over the latest three reported years (2011 to 2013), Public Safety Employees Union 519 raised $1.26 million for the My ID Club project. At a buck a card, that means there should be 1.26 million cards out there in King County, of which Seattle is a part.
Yet even the My ID Club website says only about 400,000 cards have been issued in the entire 18 years the program has been around, and that includes involvement of real police organizations in several other Washington State counties. For what it’s worth, the 2010 federal census listed just 413,000 children–including babes in arms–in all of King County.
In a follow-up query, I asked Frederick asking how many My ID Club cards were issued in 2013 for that $392,327 raised. So far, no response.