Any organization can lose its way and find itself embroiled in corruption and scandal-even charities.
As mentioned in my recent post "7 Signs You Shouldn't Trust a Charity With Your Donation," too many charities fall into dark paths. Some start out with the intent to scam people out of their money tax-free. Others see charitable status as a means to fund their favorite political causes.
Every year, some charities get caught-or are suspected of-doing something wrong and incur the wrath of the public and the media. The year 2015, so far, has been no exception. And, out of all the charities that have found themselves in the bitter spotlight of scandal and shame, none have been quite as controversial as these five charities:
It all started when former First Lady, Senator, and Secretary of State Hillary Clinton announced her presidential run. Political opponents began looking for weak points, and they found the Clinton Foundation, a nonprofit foundation originally founded by former president Bill Clinton but which became a family affair (no pun intended) between Bill, Hillary, and their daughter Chelsea.
For intents and purposes, this charity had flown under the radar for more than a decade until fellow presidential hopeful Carly Fiorina attacked its finances during a Fox News interview. The Clinton Foundation only doles out six percent of its expenses for actually helping people. In reality, the charity, which makes around $150 million a year in revenue, spends six percent of their budget on grants alone. They spend as much as 89% of their budget on performing their services on the ground all over the world. Needless to say, whether intentionally or unintentionally (I tend to believe the former), Fiorina had misused the numbers. But it was enough to start a media furor that didn't stop there.
Clinton's presidential campaign has been plagued by charges of conflict of interest. Perhaps the most famous story involves George Stephanopoulos himself, who, during one of his on-air interviews, grilled a Clinton critic but did not let his audience know that he had donated heavily to and participated in the foundation.
A similar story regarding the New York Times was reported by Alana Goodman of the Washington Free Beacon:
"A little-known private foundation controlled by Bill and Hillary Clinton donated $100,000 to theNew York Times' charitable fund in 2008, the same year the newspaper's editorial page endorsed Clinton in the Democratic presidential primary, according to tax documents reviewed."
These reports have been more than enough to cast doubt in the minds of voters and keep Clinton's charity woes in headlines. Clinton, on the other, remains publicly optimistic:
"I have no plans to say or do anything about the Clinton foundation other than to say how proud I am of it. I think for the good of the world its work should continue."
The American Cancer Society (ACS) is huge, especially since they recently consolidated all of their different organization into one mega-charity. Unfortunately, with this kind of size also comes some shady dealings.
Earlier this year, Charity Watchdog revealed that outgoing ACS executives were receiving Fortune 50-sized retirement packages:
"The total compensation packages for all six of the retiring ACS executives in 2013 is over $7.1 million (including the value of base compensation, supplemental employee retirement benefits, severance, deferred qualified retirement benefits, and non-taxable benefits), for an average of nearly $1.2 million per executive, according to the ACS 2013 tax filing."
According to a 2013 audit, from 2014 50 2018, ACS will be forking out $232.7 million in retirement and post-retirement benefits. If this much money is going to keep their executives comfortable, how much money is going to keep the current executives happy? And then how much actually makes it to people in need?
According to Charity Navigator, ACS brings in almost a billion dollars in revenue every year. Sixty percent of their expenses go to programs to help cancer-sufferers, a tad below the industry average of 65%. The average executive salary is in the $800K to $1.6 million range. So a organization with this much money can stuff their executive's wallets. The question is, as a charitable organization, should they?
The aforementioned charities have been merely questionable. The Cancer Fund of America and its affiliate charities are just plain despicable. Starting in 1978, James Reynolds Sr. opened the charity and began raising funds supposedly to help cancer-sufferers. Unfortunately, the only people he was actually helping were himself, his family, and friends.
One New York Times report on the case said:
"In soliciting donations, the charities said they spent 100 percent of proceeds on services like hospice care, transporting patients to and from chemotherapy sessions and buying pain medication for children... [In truth] the charities spent less than 3 percent of donations on cancer patients."
Knowing where the money actually went just makes it more sickening:
"There were subscriptions to dating websites, meals at Hooters, and purchases at Victoria's Secret - not to mention jet ski joy rides and couples' cruises to the Caribbean... putting money toward personal expenses like carwashes and college tuition, from 2008 to 2012."
This story highlights that special breed of charity that never started with any good intentions in mind. From the beginning, it seems, Cancer Fund of America was a scam.
This charity is controversial less for any kind of misconduct and more for their shocking use of their charitably-funded research. According to a Bloomberg report, the foundation had become involved, through its research, with a Kalydeco, the first drug approved to treat cystic fibrosis. And this is where things got weird:
"The CF Foundation had since the late 1990s given drugmaker Vertex, which developed Kalydeco, around $150 million in exchange for something unusual-a share of the royalties for any treatment Vertex's research yielded. Two weeks before the foundation's December meeting, it sold its royalty rights to an investment company. For $3.3 billion."
While these types of actions would be typical among private pharmaceutical companies, it was unheard-of for a charity. The Cystic Fibrosis Foundation's leadership, of course, insists that their windfall will be used to fund the charity's future initiatives.
Up until this week, the Jared Foundation, started by Subway spokesman Jared Fogle, was a modest charity dedicated to helping kids get healthy through better eating and more activity. Trouble had already begun brewing when, in April of this year, the foundation's executive director was arrested on child pornography charges.
The Jared Foundation's shady history wouldn't be thrust into the national spotlight until the morning of July 7, when police and federal agents raided the home of Fogle in connection to the same child porn investigation. At this point, little is known of the reasons behind the raid or what it means for Fogle and his foundation. His lawyer could only say:
"Jared has been cooperating, and continues to cooperate, with law enforcement in their investigation of unspecified charges and looks forward to its conclusion."
Whether Fogle is guilty of a specific crime or not, this dramatic turn in the life of a minor American celebrity is enough to put the charity's future in jeopardy.
Which charities are worth your donation? Which ones should you avoid? Visit bestcompany.com's charity reviews to find out!
October 21st, 2019
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