May 28, 2009

Public Perception Or Public Deception

Regular Sam + Pursing an Accurate Public Awareness of the Nonprofit Sector = Happy Sam

Now, let's move on. From PhilanthroMedia yesterday:

Last Wednesday, the FTC and 48 states announced a nationwide sweep targeting scam artists who claimed to be raising money for military veterans, firefighters, and police officers. In reality, almost all of the money went to the fundraisers themselves. How can you, as a donor, guard against such scams, and discriminate between an honest, and a bogus charity?

Don't get me wrong, I love quality transparency and accountability as much as the next guy - but it is these "task forces" and "nationwide sweeps" that scare the average donor away from giving to nonprofits altogether.

Here in Phoenix, a 5-day series ran in our daily paper detailing the conquests of a 22-organization network that embezzled, laundered, and otherwise stole millions of dollars. No mention about the fact that those 22 organizations represent less than one-tenth of one percent of the nonprofit agencies in Arizona alone. Or that the sector is the third largest source for employment in the state. But that didn't stop the Pulitzer-hungry reporter from painting with the proverbial broad brush:

An Arizona Republic investigation found that charities can use a kind of title transfer of gifts in kind that inflate their finances, making their operations appear larger than they are. That improves the financial profile they present to donors in the federal charity drive and may attract more cash donations. The charities then spend most of the cash on salaries and expenses and pass the cash to other charities operated by relatives, co-workers or associates.

And again:

Donors to charities often have little say in how their cash contributions will be spent — and almost no way to find out. Despite rules that require non-profits to disclose their finances, their operators and their missions, federal tax forms give only a limited picture of a charity's operation. At the same time, the Internal Revenue Service doesn't have the staff to investigate more than a fraction of the nation's 1.2 million charities. An Arizona Republic investigation shows charities can use their donated cash and goods in ways that can be misleading and controversial, and in ways donors may never know.

I feel like creepy music from a horror movie should start playing through your speakers now. Yes, there are going to be bad apples. Always. But there are responsible ways to react, and setting up a website through the Federal Trade Commission entitled, "Avoid Charity Fraud" seems a little dramatic to me.

Maybe I'm alone in this thought. What say you out there, Nonprofit Community? And you, Mr. or Ms. Donor?

"The world and life have been mighty good to me. I want to put something back."
Ted Turner


Kim J said...

Well, I hope that potential donors take the Republic and other "pulitzer hungry" sources with a grain of salt. But in the mean time, your response is the key to changing those opinions, and encouraging people to hear the other side of this controversy. Way to get back on the blogging horse! (Oh and I love you)

Aaron said...

Sam, are we even sure that "a 22-organization network that embezzled, laundered, and otherwise stole millions of dollars." The charity "accused" by the paper would say otherwise, not sure the paper even said that, and, as far as I know, the charity is still in good standing with the CFC (Combined Federal Campaign). "Stole millions of dollars" is a big statement.

Second, there are many, many ways that donors can become educated consumers (in fact, I have some ideas about that which I will be helping implement through our Advancing Philanthropy programs). While the FTC site is a little over the top, it does bring up some good points and is there to fight fraud.

The problem isn't that a donor would use information from the FTC Charity Fraud website, rather the problem would be if a donor used that as their single source of information. A donor needs to use multiple channels and sources of information if they hope to be an informed consumer making valuable social investments with their personal resources.

Sparkplug said...

I think part of the reason for the creepy music feeling is the semantics of the site. I mean "Avoid Charity Fraud" on a Federal site sends me a message that fraud is something I have to worry about when I want to donate. There are other ways the Feds can try to responsibly prevent fraud. Give a pile of money to a nice, friendly site called Guidestar (well-played, Guidestar namer) for example, and have them investigate or at least mention proven fraud in one section. But they wouldn't have to make the section title so negative. And in the same section they could have lots of information about how important, necessary, (at times) unexpectedly awesome we are as a force for good.

Sam said... is a pretty cool site. I know there are others like it. I totally agree with you. I spent the last 6 months talking about fundraising for non-profit. It's hard enough as it is right now. Articles like that are meant to do one thing: scare readers into trusting the writer enough to be a loyal reader. so sad and another reason I'm affraid of the news. haha. Keep blogging pal. I'll be back in AZ soon to help with the crusades. I have a lot to talk to you and Kim about.