WWP cautionary tale for charities

american purple heart medal

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via Moak: WWP cautionary tale for charities, clarionledger.com

Last week, the other shoe finally dropped. It had been hanging in the air for what like seemed like eternity, and it seemed inevitable the Wounded Warrior Project would soon be seeking new leadership. It’s hard to believe it had been only a few weeks since a bruising series of revelations had hit the airwaves. CBS News broke the story in January, weaving a tale of a charity that had started out well, but somewhere along the line, seemed to have lost its moorings.

Stories began to leak out about elaborate spending on things like letting its CEO rappel down a wall to an employee meeting, riding in to meetings on horses and Segways, spending hundreds of thousands on meetings and allegedly discouraging current and former employees from criticizing wasteful spending of the more than $300 million given by donors. Much of the controversy arose over what some charity watchdogs considered an unhealthy “overhead ratio” (the amount spent on overhead, vs. actual programs for veterans.)

Last week, though, it all came to a head. Wounded Warrior Project (WWP) Chairman Anthony Odierno announced that CEO Steven Nardizzi and Chief Operating Officer Al Giordano had been summarily fired, pledging to get the organization back on the right track. Odierno (himself a decorated Iraq War veteran and former WWP client) promised to take the reins himself to get the organization back on track. It will certainly be a herculean task; practically overnight, this well-regarded charity went from being the darling of the philanthropic community to a cautionary tale of what can happen when an organization gets really big, really fast.

A couple of weeks ago, after reading my take on the developing WWP story, a WWP donor named Kaylin emailed me.  “Do you think it’s still a reliable charity?” she asked. “I’ve chosen it as my charity of choice and donated whenever I can so I’m concerned.” My best response at the time was that, while the jury was still out on the issue, and there was much to learn, it was crucial that this (or any organization that takes donor dollars) take seriously her concerns, and those of millions of other donors. I thanked her for her heartfelt concern, and suggested it might be a good idea to reach out to local veterans’ groups.

Charities would do well to think about something while pondering what’s become of this organization, which started with the best of intentions, but whose reputation now lies scattered on the battlefield of public opinion: People like Kaylin, who donate their hard-earned money to a charity, are making an investment.

No, contrary to what you might think, it’s not just an investment of money. Theirs is an investment of the heart. From somewhere deep in their convictions, people want to help. Some give for selfish reasons, it’s true; getting tax advantages or public recognition can motivate some to open their wallets. But the majority of charitable gifts in this nation come from people on the lower end of the economic scale, with little economic incentive to give. Whether driven by religious convictions, altruism or just plain old compassion, it’s the $5, $25 and $50 donations that add up to support a plethora of worthy causes.

Here in Mississippi, we know a thing or two about generosity. The Magnolia State might be perennially looking at the Bottom Five when it comes to teen pregnancy rates, per-capita income or Body-Mass Index, but when it comes to giving, we’re always on the medal stand. Mississippi’s generosity has been studied, pored over, and gives headaches to statisticians. But in the end, we all know lots of Kaylins.

Last year, I watched as some of our Boy Scouts stood in front of local grocery stores, raising money for a pancake breakfast to help send boys to summer camp. More often than not, people would just pull a $5 or $20 from their pockets, no questions asked; many didn’t even want the tickets. They ran the gamut, from the well-dressed to people who’d obviously just rolled out of bed; black, white, Asian, Hispanic; young, middle-aged and older folks as well. It was obvious that many of them didn’t have a vast pool of resources from which to draw, but (like the widow in the parable of the Widow’s Mite), they gave substantially and without expectation of return.

Their generosity, while profoundly touching, also gave me pause; it would be easy for someone to take advantage. Every year, criminals or even well-intentioned, but poorly organized charities misuse or misdirect millions of donated dollars. A charity that exists to help a group who have themselves sacrificed life and limb in the service of our country is going to draw donors at a time when patriotism is a deeply emotional thing, and those donors deserve to know their dollars will be spent properly — and if not, returned.

But this is not just a tale of paid staff who appeared to have spent from an open checkbook to indulge their every whim. Somewhere along the line, it’s also possibly the story of a board of directors that could have done something, but failed. When the agenda is damage control instead of mission, it’s a signal of systemic failure. It was only when confronted with a blistering critique from a national news organization that the organization took a harder look.

Firing the top leadership is a predictable response, which is often the first thing a board does when confronted with a reality such as this one. Sometimes (but not always), such action is necessary. But usually, if top leadership has failed, quite often the board has also failed.

When you get an invitation to serve on an organization’s board of directors, it’s often seen as a compliment. And in some ways, it is. But the other side of that coin is that being a board member carries with it a lot of responsibility. A key duty of a nonprofit board is something called fiduciary duty. The nonprofit consulting organizationBoardsource defines fiduciary duty as requiring board members to “stay objective, unselfish, responsible, honest, trustworthy, and efficient. Board members, as stewards of public trust, must always act for the good of the organization, rather than for the benefit of themselves. They need to exercise reasonable care in all decision making, without placing the organization under unnecessary risk.”

Often, a board might start out in the right direction, but over time, becomes dangerously comfortable. A key tendency many boards share is they hire great paid staff, then reduce their involvement as they grow confident in top leaders. In some cases, they fail to give help and assistance when it is most needed, or to take responsibility. At the other extreme, some boards take a dictatorial approach, stifling the CEO. Both approaches can lead to trouble; many experts suggest the optimal path is usually somewhere in the middle. But it’s been demonstrated time and again that an effective board asks questions, expects good answers and takes responsibility. In a well-run organization, the board is truly part of a team with top paid staff.

It’s still not clear exactly what happened here; perhaps we’ll know more down the road.WWP’s own internal review concluded that — although it continues to dispute some of the media’s allegations and defended many of the allegedly-wasteful practices — the organization needs to strengthen “some policies, procedures and controls.” Odierno has pledged to guide WWP back to what it was designed to do: help wounded veterans.

As they do so, however, they should keep in mind the stakes are high, and they owe Kaylin (and thousands like her) no less than the best as they use the resources entrusted to them.

SOS shuts down coast cancer retreat


 

Charity money jar

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via Moak: Coast cancer retreat shuttered, clarionledger.com, 3/16/2016

Mississippi Secretary of State Delbert Hosemann has ordered that an Ocean Springs cancer retreat be shut down and fined, citing the organization for failing to comply with Mississippi charitable solicitation laws.

MS Gulf Coast Bluebird Cancer Retreat was the subject of Hosemann’s Feb. 29 “cease and desist” order that ordered the organization be dissolved. Hosemann’s office noted in a news release that the charity had failed to comply with numerous state laws, including failing to produce required exam records, failing to notify his office within 30 days of making changes, and failing to produce required records, including documentation of board meetings during 2014.

The camp is identified as an “adult cancer camp” in Ocean Springs. According to a listing by the United Way of South Mississippi, Camp Bluebird “is the only cancer camp for men and women over the age of 18 on the Mississippi Gulf Coast. The camp is non-denominational, and open to adults, men and women over the age of 18 who have been diagnosed or treated for cancer. It doesn’t matter if the cancer is in remission or if you are newly diagnosed. We also have the Youth Bluebirds for people 13-17.”

“According to the documents filed with the Secretary of State’s office,” Hosemann noted in the news release, “MS Gulf Coast Bluebird is an adult cancer camp; however, its expenses include personal expenses, auto expenses, food purchases which appeared to be personal, personal clothing and cash withdrawals with no documentation.” That would violate Mississippi’s charity laws. Hosemann added that the organization “failed to produce any records showing that it conducted any board meetings in 2014 and also failed to produce a copy of an agreement outlining the terms and services for which it owed any payment to Gloria Skillestad, executive director of MS Gulf Coast Bluebird, thus violating Miss. Code Ann. §79-11-525.”

In addition to the penalty, Hosemann’s office imposed a $2,000 fine, and is revoking the organization’s license to operate and solicit in Mississippi.

According to Hosemann’s website, the charity last reported earnings in 2013 of $16,848 and expenses of $10,510, of which $8,184 was reportedly spent on programs. Contact information listed on the secretary of state’s website included a phone number that was not in service, and a deactivated Web address.

Wounded Warrior project faces scrutiny

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via Moak: Wounded Warrior project faces scrutiny, clarionledger.com, 2/10/2013

PDF: WWP

It started with a great idea. A wounded veteran named John Melia, who had been seriously injured in a helicopter crash during military operations in Somalia in the early 1990s, wanted to do something to help his fellow veterans who had suffered injuries during their service. In 2003, Melia and some friends began collecting simple items such as toiletries, socks and playing cards and stuffing them into backpacks. The group (which soon became known as the Wounded Warrior Project) distributed the backpacks to veterans at VA hospitals, helping provide much-needed help to people who had risked life and limb for our country.

As the fledgling organization began to grow, it found itself meeting a crucial need during protracted military operations in the Middle East, and the money began pouring in. Americans rallied, because most Americans consider supporting veterans to be a patriotic duty. The organization adopted the slogan, “The greatest casualty is being forgotten” and received endorsements from high-profile celebrities such as Trace Adkins and Gary Sinise. According to Charity Navigator, the organization raised more than $342 million in 2014. Programs have expanded to include helping veterans reintegrate into society and find work.

But recently, the organization has come under fire for what some have called lavish spending. WWP has reportedly hosted pricey fundraisers and company meetings and has been accused of spending only six of every 10 donated dollars on programs that actually help veterans. As the New York Times and CBS News broke stories about alleged misuse of donated money, other media jumped in, and whistleblowers began coming out of the woodwork, alleging various questionable practices and a corporate culture that discouraged employees from asking too many questions.

Initially, the WWP appeared defiant, demanding a retraction from CBS in a fiery letter refuting the charges. But then the organization’s board of directors promised a full accounting of WWP’s finances and governance. “The Board takes very seriously the concerns that have been raised in recent days and is in the process of retaining independent advisors to conduct a thorough financial and policy review of the concerns,” the letter noted. “We remain steadfast in our commitment to our warriors and supporters and will ensure that the organization is effectively fulfilling this important mission.”

Any nonprofit  that receives public donations to carry out its work is expected to be accountable for how that money is spent. The public demands that. Many charity rating watchdogs, such as the BBB Wise Giving Alliance and Charity Navigator, use a broad-based approach to rating a charity and consider factors such as how the organization is led and governed, their commitment to transparency, their focus on the mission, how much money is actually spent on the cause to which they’re committed, how well they treat their donors and other factors. There is much more to assessing a charity than just a number, but that number (called the overhead ratio) is often given more weight that it should be in the minds of donors. Most donors understand a charity has to keep its lights on, its employees paid and to take care of the many “overhead” costs involved in providing help. As a general rule, though, donors also expect their dollars will go toward helping a group of people, rather than lining the pockets of highly paid staff, consultants and fundraisers.

With all the news breaking about this one organization, it would be easy to jump on the bandwagon of condemnation. Many have begun to get nervous about sending their money to this or other large organizations. It’s important to note such condemnationmay be deserved, but all the facts aren’t in yet.

In this column, we have always tried to encourage people to give, but give wisely. If you’re sending in your donation to any organization, they should do everything in their power to give the maximum they can to help the people and causes they’re committed to helping. That means balancing their support of the “cause” with the need to provide that support in a responsible and ethical way. Never should they lose sight of the understanding they are stewards of a valuable commodity — not money, but trust. Once that’s been lost, it’s gone forever. WWP’s response to this crisis will have a lot to do with whether it survives, or just becomes another cautionary tale in the history of American charity work.

States, feds shut down cancer charities

Originally published in the Clarion-Ledger on 5/20/2015.

PDF: Feds all 50 states shut down cancer charities

Mississippi has joined with the other 49 states and the District of Columbia in charging four national cancer charities with defrauding consumers of more than $187 million.

The action, announced in a Tuesday news conference, is one of the most sweeping charity-fraud enforcement actions ever announced. The complaint was filed in a U.S. District Court in Arizona. And several settlements were filed concurrently with the complaint in which defendants agreed to pay a combined more than $135 million with another more than $100 million suspended if penalties are paid.

The organizations included: Cancer Fund of America Inc.; Cancer Support Services Inc., Children’s Cancer Fund of America Inc. and The Breast Cancer Society Inc. Officials also singled out several individuals associated with each of the four organizations.

The organizations and key officials are accused of preying on the sympathies of potential donors to raise money to help cancer patients, but instead using most of the money to benefit charity staff, families and friends, and fundraisers.

“Defendants, four sham charities and the individuals who run them, have engaged in a massive, nationwide fraud, telling generous Americans that their contributions will help people suffering from cancer, but instead, spending the overwhelming majority of donated funds supporting the Individual Defendants, their families and friends, and their fundraisers,” wrote the officials in the scathing introduction of their court case.

“Mississippians are the most generous in the nation,” Mississippi Secretary of State Delbert Hosemann said in response to the filing. “We deserve to have our contributions utilized correctly by any entity who is representing themselves as a charity.”

Noted Virginia Attorney General Mark Herring in a news release: “The allegations of fundraising for personal gain in the name of children with cancer and women battling breast cancer are simply shameful. This is the first time the FTC, all 50 states, and the District of Columbia have filed a joint enforcement action alleging deceptive solicitations by charities, and I hope it serves as a strong warning for anyone trying to exploit the kindness and generosity of others.”

According to the FTC, the defendants used telemarketing calls, direct mail, websites and materials distributed by the Combined Federal Campaign, which raises money from federal employees for nonprofit organizations, to portray themselves as legitimate charities with substantial programs that provided direct support to cancer patients in the United States, such as pain medication, transportation to chemotherapy and hospice care. In fact, the complaint alleges these claims were deceptive and that the charities “operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation, with none of the financial and governance controls that any bona fide charity would have adopted.”

The organizations are accused of providing “lucrative employment for family members and friends,” as well as spending donations on cars, trips, cruises, college tuition, gym memberships and other perks. Professional fundraisers were said to have kept as much as 85 cents on the donated dollar, and to have used deceptive fundraising materials provided by the organizations, running afoul of several laws that regulate fundraising and telemarketing activities.

“When charities lie to donors, it is our duty to step in to protect them,” South Carolina Secretary of State Mark Hammond said in the news release. “At the same time, however, this historic action should remind everyone to be vigilant when giving to charity. This case is an unfortunate example of why I always tell my constituents to give from the heart, but give smart.”

The proposed final orders include a variety of penalties, including steep fines, liquidation of assets and bans against the individuals’ future association with charity organizations. In some cases, some operations will be spun off to existing charitable organizations.

“Cancer is a debilitating disease that impacts millions of Americans and their families every year. The defendants’ egregious scheme effectively deprived legitimate cancer charities and cancer patients of much-needed funds and support,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in the news release.

For more on the action, including an informative infographic, visit http://www.ftc.gov.

Originally published in the Clarion-Ledger on 5/19/2015.

Hosemann: Give, but give wisely

via Hosemann: Give, but give wisely, on clarionledger.com, 12/3/2014.

A few weeks back, national charity watchdog groups warned donors to think carefully when choosing charities to support with their hard-earned dollars. And now that the holiday giving season is upon us, Mississippi Secretary of State Delbert Hosemann is taking the message directly to donors: Be careful.

“Mississippians are some of the most generous givers in the nation,” Hosemann noted in a news release on Monday. “Over 1,300 Mississippi charities raised over $1 Billion in our state last year. That number does not include contributions to religious institutions. We want everyone donating this holiday season to feel certain their money is going to a good cause.”

The Magnolia State’s reputation for being generous is well-documented, and isn’t a new phenomenon. It was recently reinforced: in October, the highly-respected Chronicle of Philanthropy published its annual index of states’ giving habits, noting that Mississippi is second only to Utah in per-capita giving to charity (followed closely by our nearby states of Alabama, Tennessee, Georgia and South Carolina). To get their numbers, the organization analyzed data from tax returns, weighing adjusted gross income against reported donations.

Those numbers are impressive, especially considering that Mississippians live in the state with the smallest amounts to give. It says a lot about the people here, and what they consider important. And as a Mississippian, it’s something to be proud of when most nationwide rankings only bring bad news.

You and I know it’s true. Just look at how communities will rally to the cause when a firefighter or police officer is injured, or word gets out that a family’s finances have been consumed by their child’s life-threatening illness, or a soldier’s family gets the devastating news that they’ll have to continue on without a dad. People want to help.

Unfortunately, Mississippians’ reputation for generosity is also known to people looking to cash in, or those who don’t know what they’re doing. Every year, people give untold millions that ultimately go to line the pockets of scammers, or to poorly-run charities. Many well-meaning people jump into charity management without realizing that it’s a big and complicated job. Every time you see one of those collection jars with a picture of a sick child or the name of some cause,someone is collecting that money and spending it. Donors, who give from the heart, usually have no way of knowing what the money is actually being used for; it could go toward feeding the homeless on the streets of Jackson or buying a vacation home in Fiji.

And donors are confused, too. The famous “overhead” rule (generally, it states that no less than 65 percent of donated dollars should go to the actual cause) is one factor to consider. But many experts now warn that over-reliance on that one number can actually mislead donors into thinking the charity is doing a good job, when they’re actually doing very little to move the needle on their particular cause.

Fortunately, Mississippi law requires charities to register with Hosemann if they want to solicit funds in Mississippi. Each year, Hosemann’s office publishes a Report on Charitable Organizations in Mississippi.

The report outlines the financial information of charities registered in the State, in addition to the percentage of charitable funds actually spent by a charity for its charitable purpose.

“Mississippians work hard for the money they earn. It is imperative you Check your Charity before you give this holiday season,” Hosemann noted.

Even armed with the facts, though, it’s hard to know whether you’re making a good decision when you give; there’s got to be faith involved. I remember a lesson I learned many years ago which helps to illustrate that point: I was talking one evening in the parking lot of our church with the Rev. Steve Stone, one of the pastors from our church. A wreck of car pulled up, filling the air with exhaust fumes. A haggard man got out. “Mister, I’ve run out of money and need some money for gas,” he said to Steve. Without hesitation, Steve reached into his pocket and pulled out several bills, handing it to the man. “This is all I’ve got on me now, but hope it will help.” With a smile and a nod, the man pocketed the money and drove away. “How do you know he wasn’t just looking for money to buy a drink?” asked the much-younger and more cynical me. “I don’t,” Steve replied with calm wisdom. “But that’s not up to me. I just have to obey and let God handle the rest.”

Perhaps that’s why Mississippians are near the top of the charity index every year; they’re giving from the heart, and from deeper motivations, and it’s one of the reasons I love this place so much.

Choosing a charity’s not just about the numbers

via Choosing a charity’s not just about the numbers, on clarionledger.com, 10/22/2014.

All across America, nonprofit employees and volunteers are busy.

They’re writing letters, collecting stories, designing pamphlets and getting call scripts ready, because the holiday giving season is almost here. As Americans, we do about a quarter of our annual giving in the month between Thanksgiving and Christmas. And here in Mississippi – perennially among the most-generous states, despite our low per-capita income – we are fortunate to have lots of really good organizations serving us. But as we consider the appeals from charities of all stripes, it’s important to make decisions based on the right information.

About this time last year, I wrote about what has become known as the “Overhead Myth”: the notion that you can tell whether a charity is worthy of your support by looking at how much of the donated dollars they spend on programs vs. the amount they spend on “overhead” (the costs of operation, plus fundraising).

For example, each year, Charity “A” takes in $1 million in donations to meet its goal of feeding homeless people. Of that, they might spend $800,000 of that money actually buying food, paying for gas to deliver meals, and other expenses directly related to that cause. The remaining $200,000 will go toward paying a staff, handling the light bill, making the rent payment and myriad other things that help keep the doors open and the charity operating. In that example, Charity “A” would garner a ratio of 80/20; generally considered an excellent investment of the donated dollar. But the conventional wisdom underlying that assumption has been called into question in recent years, and rightfully so; if Charity “A” isn’t paying livable wages to its 10 overworked employees, has a board that never meets, or can’t afford to have its books audited, that 20 percent quickly becomes a liability.

Some of the nation’s largest charity “watchdogs” have begun to raise the alarm that we’ve become way too dependent on such simple measures when deciding whether a charity is worthy of our support. This over-emphasis on this one factor has led to what they call the “nonprofit starvation cycle”, in which charities cut their overhead costs in an effort to please donors, in the process destroying or at least damaging their capacity to provide their services in the first place. If the charity can’t manage itself, it may have to close or cut back, and thus be unable to help make the world a better place.

For years, the use of the overhead ratio has been considered a key factor in whether a charity can be counted on to take good care of the hard-earned money given by consumers. In the eyes of many charity watchdogs, it’s still a good measure of one specific characteristic; but — they emphasize — it’s just one of many that you and I should consider.

This week, three of the biggest charity organizations (the BBB Wise Giving Alliance, Guidestar.org, and Charity Navigator) issued their second joint communique in as many years on the topic. In a letter to nonprofits, the organizations urged nonprofit officials and their governing boards to demonstrate ethical practices, understand the “true costs” of what it takes to get their jobs done and to educate funding sources on the “real costs of results.”

“Based on the overwhelming response to our first letter to the donors of America, we know that the nonprofit sector is hungry to dispel the Overhead Myth,” said Jacob Harold, President and CEO of GuideStar. “Our second letter, addressed directly to nonprofits, builds on that momentum by providing actionable steps so nonprofit leaders can focus on meaningful and measurable results rather than misleading, simplistic overhead ratios.”

In reality, how well a charity is run goes far beyond the simple overhead number. For example, many experts caution donors that a truly healthy organization needs to spend a sizable chunk of its resources on developing systems to evaluate their effectiveness, on developing their leadership, on being financially transparent, and on ensuring they are solidly-governed. And while that may cut in to the number of meals Charity “A” could actually serve this year, it’s a better investment in the long-run, as the charity can grow and become more effective in future years.

“For many years BBB Wise Giving Alliance has encouraged donors to verify their trust in charities by considering the full picture of an organization’s performance and not just financial ratios,” said Art Taylor, President & CEO, BBB Wise Giving Alliance. “We also believe that charities have a responsibility to steer donors towards a better understanding of their activities and accomplishments and look forward to helping them share that message.”

So here are a few things to consider when evaluating a charity:

How are they governed? A charity should have a governing board that meets regularly, has bylaws that are regularly reviewed and followed, and is free of conflicts of interest. There should be robust policies in place to stop potential collusion or to prevent members from taking financial advantage. And many experts recommend that the charity has a written policy on how the President or Executive Director is recruited, compensated and evaluated.

Are they transparent? A charity should make its books available easily to anyone, and should ensure that the annual tax forms are reviewed by the board before being filed. Having the 990 tax form and other financial documents available on its website is a good place to start.

Are they accountable? A charity should have its books reviewed by an independent auditor on a regular basis, and donors and the public should be regularly advised of how well the organization is meeting its stated goals.

To help you dig a little deeper, here are three great sources of information.

The BBB Wise Giving Alliance (give.org) has a set of 20 standards which include the overhead ratio, but also probes into the charity’s governance and oversight, measures of effectiveness, other financial indicators and transparency for more than 11,000 organizations nationwide.

Guidestar (Guidestar.org) collects and makes available tax forms and other crucial information from 1.8 million nonprofits.

Charity Navigator (charitynavigator.org) is geared toward helping guide “intelligent giving”. Its platform allows you to perform “side-by-side” analysis of more than 8,000 charities, as well as allowing you to keep an eye on your favorite organizations.

“Everyone involved in the (nonprofit) sector must join together to do whatever it takes to become adaptive and learning organizations that build the capacity to manage and measure toward better results and to then share that information with the donors of America,” said Ken Berger, president & CEO of Charity Navigator.

Hosemann asks stores to verify charities are legitimate before allowing them to solicit

hosemannMississippi Secretary of State Delbert Hosemann today called on Mississippi retail stores to be extra-vigilant when approached by groups wanting to solicit funds in front of their stores. Harried shoppers looking for last-minute deals before Christmas are likely to face a gauntlet of charities, ranging from the well-established Salvation Army bell-ringers to groups trying to raise money for a myriad of causes.

“Every year, during the holiday season, shoppers are solicited for donations outside retail outlets across the State. The Secretary of State’s Office is calling on retailers to protect their customers by helping protect their donations not only during the holidays, but [also] throughout the year,” Hosemann said in a release issued today.

Many stores have severely curtailed these activities in recent years, in an effort to protect consumers, avoid obstacles that may slow shopper traffic patterns, and deal with large numbers of requests from charities. Stores are, of course, an ideal place to raise funds: shoppers have money on hand, must pass by a specific point, and are probably feeling generous around the holidays. I’ve participated in many such activities through the years, with mixed success. But the looks on the faces of people coming through often tells the tale; some people are getting tired of being diverted from their shopping trip. Others are only to happy to give, as long as they know it’s for a good cause. (But herein lies the problem…)

Earlier this year, a Washington state autism charity was slapped with a judgment from the Washington attorney general, alleging violations of the state’s charity laws. The charity allegedly had paid a fundraising company to solicit in front of stores and pretend to be volunteers, despite the fact that the fundraising company was not registered to solicit in the state.

Wal-mart is a leading example of a retailer which helps protect its customers by putting steps in place to review every organization wishing to solicit funds outside of its stores in Mississippi,” Hosemann noted in the release, adding, “Wal-mart reviews organizations with the Secretary of State’s Office to ensure the charity is registered with our Agency. The discount retailer also has requirements for organizations soliciting funds in front of its stores to provide a copy of their charity registration or exemption certificate. State law only allows organizations registered as a charity with the Secretary of State’s Office to solicit funds in the State of Mississippi.”

A really good summary of this issue was published recently by Consumer Reports. For more information on charities operating in the State of Mississippi, contact the Secretary of State’s Office at 601-359-1371.

(This was originally posted in the Clarion-Ledger on 12/23/2013.)

Typhoon Haiyan: give, but give smartly

The Federal Trade Commission warned Americans yesterday to be careful when considering how to help victims of Typhoon Haiyan in the Philippines. This is just one of many agencies and organizations seeking to help maximize the value of donations and minimize fraud and ineffectiveness.

Having seen many disaster operations firsthand and trying to help educate donors, there are a few things I’ve learned:

First, remember that while disasters may tug on your heartstrings, there a predators out there, seeking to take advantage of the legendary generosity of Americans. Mississippians, being the most generous Americans per capita year after year, are not immune. So remember:

* Donate to charities you know and trust. Be alert for charities that seem to have sprung up overnight.
* Ask if a caller is a paid fundraiser, for whom they work, and what percentage of your donation goes to the charity and to the fundraiser. “If you don’t get a clear answer — or if you don’t like the answer you get — consider donating to a different organization,” notes the FTC.
* Keep in mind that while it may seem like a good idea to clean out your closet to donate used stuff, such things often hamper operations. Every major disaster has spawned stories of truckloads of used clothes being buried in landfills or sitting for months in warehouses, unused. Give cash instead.
* While I remember truckload after truckload of needed items coming to Mississippi on trucks after Hurricane Katrina, it is a lot easier to give relevant donations when you’re in the U.S., with its advanced infrastructure. But, as we discovered after the Haiti earthquake, local governments in an under-developed country can be easily overwhelmed by well-meant shipments of goods. Try to support local organizations that are already established in The Philippines.
* While donating small amounts via texting is fast and easy, be sure to find out what it actually costs — both for you and the charity. PC World published some helpful tips at http://www.pcworld.com/article/197698/donating_by_text_message.htm.
* Donors have access to lots of information on charities. Mississippi consumers can go to the Secretary of State’s office at sos.ms.gov. Another excellent resource is the BBB Wise Giving Alliance at http://www.give.org.

(Originally published by the Clarion-Ledger on 11/14/2013).

Charity watchdogs seek to explode “overhead myth”

via Charity watchdogs seek to explode “overhead myth” | Consumer Watch, clarionledger.com, 6/7/2013.

Three of the nation’s biggest names in charity evaluation today issued a call for nonprofit donors to widen the scope of factors they consider when determining what charities to support, and cease putting so much emphasis on a charity’s “overhead” expenses.

“We ask you to pay attention to other factors of nonprofit performance: transparency, governance, leadership, and results,” says a letter issued today by the leaders of Guidestar, the BBB Wise Giving Alliance and Charity Navigator. “For years, each of our organizations has been working to increase the depth and breadth of the information we provide to donors in these areas so as to provide a much fuller picture of a charity’s performance.”

The letter, entitled “The Overhead Myth” (www.overheadmyth.com), complains that the overhead ratio, if considered more prominently than other factors — such as how engaged is the governing board, or whether a charity is actually advancing its stated cause — can paint a misleading picture of effectiveness.

The three groups complain that the intense focus on this single factor ignores other elements that are as important, and can be dangerous because it discourages charities from necessary spending that might be seen as taking money out of the programs (but which build long-term capabilities).

In turn, this could lead to what the Stanford Social Innovation Review calls “The Nonprofit Starvation Cycle,” creating charities which are focused heavily on controlling spending, rather than actually trying to achieve the goals for which they were founded in the first place. “The people and communities served by charities don’t need low overhead, they need high performance,” concludes the letter.

For years, pundits and writers (including Yours Truly) have pointed to the need to examine a charity’s overall spending on costs as a fraction of its total spending, when assessing a charity’s worthiness to handle your hard-earned dollars.

For example, a local charity that spends 10 cents of each donated dollar on personnel, rent and keeping the lights on would therefore have 90 cents of that dollar to spend on helping feed the homeless. This is not an unimportant number, and may be the easiest single factor to assess; however, point taken in that it is just one of many to be considered and could be misleading if considered alone. If the charity fails to spend money on security for its volunteers, for example, or fails to background check those working with children, that would spell danger for the organization, its supporters and its mission. Those are things which would not be revealed by an overhead ratio.

The upshot of all this? For donors looking for a place to put their money to work helping others, there is no substitute for good old-fashioned detective work. Don’t respond mindlessly to TV, telephone or mail appeals, no matter their emotional content. Take your time. See who’s on the board and in management. Ask them for their 990 tax form. Google it, and use the organizations mentioned above to paint a complete picture. Choose charities that help make things better in your community.

In the final analysis, the most important factor is trust. Good charities earn it every day; the hard part is determining which ones they are.

Giving for the Sake of Giving: Teaching Your Kids the Joy of Helping Others

via Giving for the Sake of Giving: Teaching Your Kids the Joy of Helping Others, Parents & Kids, 2/19/2013.

In January 2010, Charlie Simpson was living his life happily as would any seven-year-old. But when he saw the devastation brought by the Haiti earthquake, Charlie was moved to do something more than just watch. The London youngster posted an appeal on a charity fundraising site, and offers began to pour in to sponsor him as he rode his bike around a London park. His efforts netted nearly $500,000 in donations.

Charlie has a lot of company. While the explosion of worldwide media has highlighted needs around the globe, the Internet has empowered kids to get more involved. So how can you teach your kids to be like Charlie? Well, experts say that while some kids may be more generous than others, most kids learn from what they see their parents do.

There are many possible motivations for giving. Some people are motivated to give for selfish reasons—perhaps to gain prestige or a tax write-off. Others have begun giving because their lives have been positively impacted by a particular cause, or they have been blessed with a lot and they want to give back. Still others give because they were “brought up that way.” Whatever the motivation, giving is something that runs counter to our society’s demand for instant gratification and a “what’s in it for me” mentality.

The opposite of this mentality is altruism, defined as “the principle or practice of unselfish concern for or devotion to the welfare of others” (www.dictionary.com). In other words, altruism is the act of giving without regard for the personal benefits you may gain from doing so.

Instilling the value of giving to our kids isn’t easy, because there is a lot of competition for their time and attention. Schoolwork, sports, and other extracurricular activities tend to consume most of our kids’ available time. Also, many organizations find that while there is often plenty of help around the holidays, they face day-to-day challenges for survival in tough economic times.

In times of disaster, the floodgates of generosity usually open wide, even in a tough economy. After Hurricane Katrina, for example, people in the Deep South experienced firsthand the generosity of strangers from around the world. And many kids mobilized to help, sending everything from spare change to bottled water and helping clean up neighborhoods along the Gulf Coast.

“We encourage people to get their families or children involved in giving themselves to the missions experience,” says Tommy Jarrett, care and missions pastor at Broadmoor Baptist Church in Madison. Through its G3 (Grow, Go, Give) campaign started this year, Broadmoor has encouraged its members to get beyond the walls of the church to help in taking care of the community.

Often, he says, families will participate together in various missions activities, helping in places ranging from the metro Jackson area to countries around the world. These include everything from cleaning up local schools and feeding the homeless to setting up backyard Vacation Bible Schools for disadvantaged youth. In his years as a pastor and parent, Jarrett notes that he has witnessed a shift in churches becoming more missions-minded. “That’s what Jesus taught us to do,” he notes.

Jarrett notes that instilling a habit of giving—rather than concentrating on infrequent or one-time acts of service—is what makes the idea of giving “stick” in the minds of kids, as they see their parents emphasize the act of giving.

“I think what you do is get your children involved in practicing it on a regular basis,” he says. “Just once or twice every so often is not going to make it happen. When your family does it on a regular basis, it’s significant.” He points to several families who have adopted local families throughout the year, spending their Christmas money on others, rather than on accumulating gifts for themselves.

“It’s really important to maintain a consistency,” he adds. “In the living of life, you don’t always pay attention to that kind of thing. There is a joy that comes with giving.”

Here are a few points to remember about teaching charity to our kids:

  • Charity doesn’t always mean money. Things like cutting the lawn for an elderly neighbor or volunteering at a local animal shelter can reap big benefits for both the giver and the recipient.
  • Children model what they see at home. If kids see their parents giving, they will want to help, too. Make sure your kids “catch” you in acts of kindness. Every once in a while, pay the tab for the person behind you in the drive-through, or buy a cup of coffee for a homeless person. You don’t have to make a big show of it, but your kids will see and observe.
  • Don’t assume that kids won’t want to help, just because they don’t have taxes to worry about or don’t have vast sums to donate. Many kids are naturally empathetic to others; this quality is worth nurturing.
  • Remind your kids how lucky and blessed they are. If you volunteer in places where people need help or are disadvantaged, take your kids with you. Remind them that they are blessed to be living in a place where things such as clean drinking water and basic sanitation are taken for granted. People in much of the world do not enjoy those things, and we tend to ignore them.
  • Even small things make a big difference. For example, setting up a change jar designated for a local charity will bring a big smile to your kid’s face when he delivers it personally.

Resources:

Network for Good: Kids’ Guide to Giving: http://bit.ly/zsjKr

10 Great Kid Philanthropists: http://bit.ly/gKBqxm