- Financial transparency
- Financial discrepancies
- Negative press
The only source which publishes Feed the Children's income for more than one year is Charity Navigator. It is noted that the organization was found to have a significant cash flow problem by independent accounting and corporate consultant BDO USA after the firm was hired by Feed the Children for a comprehensive internal review. Scandals and controversies over the last several years have negatively impacted Feed the Children's credibility and ability to raise funds. The following figures represent the organization's total annual revenue for the years 2011-2014 (as reported on IRS form 990):
- 2014: $451,397,943
- 2013: $400,567,500
- 2012: $615,148,323
- 2011: $431,169,865
Feed the Children reports that its administrative expenses for the year ending in June 2015 were equal to 4 percent of its total income. Current salary information for the organization's president and CEO, J.C. Watts, is not available, since he began in the position in January 2016.
The former president and CEO, Kevin Hagan was reported to have a salary of $350,231 by Charity Navigator, which was taking information from the organization's submitted IRS Form 990. Taking information from the published IRS Form 990 on the organization's website, for the same time frame yields a different figure for Mr. Hagan's salary-$375,164. The cause of this discrepancy is unclear.
There is some conflicting information about the actual percentage which is used for program delivery. According to the American Institute of Philanthropy, 21-23 percent of the revenue has been used for the organization's programs during the last several years.
Contrasting this percentage, Charity Navigator, another charity watchdog organization, reports Feed the Children has donated 90-91 percent of its revenue is used in program delivery. Some possible reasons for this discrepancy are different accounting/audit methodology and the definitions of program delivery by different organizations. Some charities include the mailers with free postal labels under their program delivery umbrella as an "educational expense." It appears that Charity Navigator has taken the figures from Feed the Children, and the American Institute of Philanthropy has been more thorough in its analysis. Without access to all documents, it is impossible to determine which of the two reports is more accurate or if there is a percentage used for program delivery that is different from both.
Accessible Financial Information
Feed the Children publishes its latest annual report, consolidated financial statements and IRS Form 990 on its website. At the writing of this review, the information is for the fiscal year end June 2015. The information is somewhat more difficult to find than for other organizations. Also of note is that Feed the Children does not publish past years' information. Financial information is not as transparent or easily found.
In 2009, the American Institute of Philanthropy awarded Feed the Children the "Most Outrageous Charity" award. This dubious recognition was awarded as a result of findings that Feed the Children had grossly misrepresented (overstated) its assistance after the massive earthquake in Haiti earlier in the year.
Feed the Children and the American Institute of Philanthropy, which manages the independent charity watchdog, Charity Watch, have a significant history of conflicts, and have been mutually critical over the last few decades. Charity Watch, via the American Institute of Philanthropy, has given Feed the Children an "F" rating for each of the last 14 years.
Feed the Children responded to these allegations by attempting to discredit the American Institute of Philanthropy and its methods.
An article in the industry publication, Nonprofit Quarterly, in September 2015 with the headline, "Never a Dull or Unsullied Moment at Feed the Children." Feed the Children has experienced several scandals and controversies in the last several years, but only a small sampling is presented below.
Larry Jones and Family
Former basketball player and Reverend, Larry Jones, founded Feed the Children in 1979. For three decades, the organization ran under his leadership. Mr. Jones was removed from his position in 2009 when the board, including his daughter Larri Sue, voted to terminate his connection with the organization.
The allegations by the Board of Directors against Mr. Jones were serious, including mismanagement of funds, storing hardcore pornographic materials at the headquarters, sexual harassment, mismanagement of funds, and nepotism. The organization additionally suffered when evidence of Mr. Jones' son allegedly stealing from the Feed the Children warehouse in Tennessee surfaced. Mr. Jones, in turn, alleged that his daughter had also mismanaged funds, purchasing and living in a home which cost $1 million to purchase.
After the Board of Directors voted to remove Mr. Jones, he received a severance package which included an $800,000 payment in addition to the organization paying an undisclosed amount of his attorney's fees the following year.
Conflict of Interest: For-Profit Trucking Company
Feed the Children came under heavy scrutiny after Larry Jones left and Kevin Hagan became the organization's president and CEO in 2012. There were allegations of an unreported conflict of interest, in that Mr. Hagan also was in charge of the for-profit trucking company which was used to transport goods from the Feed the Children warehouse as the transportation function of the organization's program delivery.
Several charitable organizations have been accused of overstating its figures for positive public relations. In 2009, after the massive earthquake in Haiti, Feed the Children claimed on its website as well as in its emailed newsletters to have created a large camp which had provided medical care for 12,000 people.
CBS News affiliates visited the area which was the stated location for the camp in Carrefour, and found a camp, but learned that it has been set up and was being managed by local monks and nuns. Further investigation found a small crew from Feed the Children who was working in the area, but with administrative personnel and only three physicians, were unable to perform at the claimed level. Feed the Children staff members who were working in Haiti were unaware of the claims and told CBS News investigators that they were helping about 100 people per day with their limited staff and resources. Meanwhile, on its website, Feed the Children inflated its position again, stating that the organization had been the sole entity selected by the United Nations to provide food relief in Haiti. For a complete transcript of communication between Feed the Children and CBS News regarding its involvement, read the article "Feed the Children Scandal: Follow the Money". Feed the Children has been accused of overvaluing in kind donations and the dollar amount which actually is used to provide its program by the American Institute of Philanthropy.
Frequent Turnover of President/CEOs/BDO USA Report
Feed the Children has had three changes of presidents and CEOs, starting in 2009 with Mr. Jones' termination. Kevin Hagan served from 2012 to 2015. He left to work with the American Diabetes Association. The current president and CEO, J.C. Watts, has been serving since January 2016.
As part of an attempt to restructure the organization, the Board of Directors hired the accounting and corporate consulting firm, BDO USA, to examine the inner workings of Feed the Children in 2015. This internal audit included financial health (the specifics of which are undisclosed) as well as policies, practices, and the culture of the organization. The firm found that the frequent turnover and rapid changes in policies and leadership styles put Feed the Children at significant risk. BDO USA found that Feed the Children had a significant need for increased cash flow, which had been steadily declining in the last several years.
Attempted Takeover by Disbarred Texas Attorney
The conflict between Texas and Oklahoma has taken an odd turn with Oklahoma City-based Feed the Children fighting a takeover by Edward Roush, Jr., a disbarred Texas attorney. Mr, Roush was disbarred after allegations of tax fraud and misconduct. Mr. Roush obtained materials for $1 from Feed the Children's Oklahoma City warehouse, stating that these internal documents and videos have an actual value of $200 million, especially with the earlier celebrity endorsements of the charity. He filed suit against Feed the Children, stating that the internal documents illustrate mismanagement of resources and that under his control, Feed the Children could regain its previous status. Legal representatives for Feed the Children maintain that his position is unjustified and that the suit is frivolous. At the writing of this review in August 2016, the courts have not issued a final disposition for the case.