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Bay Area News
Study Faults Charities for Veterans Some Nonprofits
Shortchange Troops, Watchdog Group Says
By Philip Rucker Washington Post Staff Writer
submitted by Jim Nelson
Americans gave millions of dollars in the past year to veterans charities
designed to help troops wounded in Iraq and Afghanistan, but several of the
groups spent relatively little money on the wounded, according to a leading
watchdog organization and federal tax filings.
Eight veterans charities, including some of the nation's largest, gave less
than a third of the money raised to the causes they champion, far below the
recommended standard, the American Institute of Philanthropy says in a
report. One group passed along 1 cent for every dollar raised, the report
says. Another paid its founder and his wife a combined $540,000 in
compensation and benefits last year, a Washington Post analysis of tax
filings showed.
There are no laws regulating the amount of money charities spend on
overhead, fundraising or giving. But the institute's report suggests that 20
of the 29 military charities studied were managing their resources poorly,
paying high overhead costs and direct-mail fundraising fees and, in some
cases, providing their leaders with six-figure salaries.
The 12 charities rated as failing by the institute -- including the Military
Order of the Purple Heart Service Foundation, the AMVETS National Service
Foundation and the Freedom Alliance -- collected at least $266 million in
the past fiscal year.
"They know how to work the system, and they seem pretty good at not going
over the line, although it is pretty outrageous that so little money is
actually winding up benefiting charities," said Daniel Borochoff, president
and founder of the Chicago-based institute.
The charities' practices have sparked outrage among some members of
Congress.
The House Committee on Oversight and Government Reform was scheduled to hold
its first hearing on veterans charities this morning.
"People want to help the veterans," said Rep. Chris Van Hollen (D-Md.), a
member of the oversight committee. "They don't want to enrich organizations
that are cynically exploiting veterans for their own personal gain.
"We need to make sure that the generous contributions of Americans to
veterans will help veterans and not line the pockets of fundraisers and
these organizations."
Richard H. Esau Jr., executive director of the Military Order of the Purple
Heart Service Foundation, based in Annandale, said the cost of fundraising
limits how much his group can spend on charitable causes. "Do you have any
idea how much money it costs to advertise? It's unbelievable the amount of
money it takes to advertise in the print and electronic media," he said.
"I'm very proud of what we do, and we certainly do look after everybody. F
or no F, the point is we do the right thing by veterans."
Borochoff said many veterans charities are "woefully inefficient," spending
large sums on costly direct-mail advertising.
"They oversolicit. They love to send out a lot of trinkets and stickers and
greeting cards and flags and things that waste a lot of money that they get
little return on," said Borochoff, who plans to testify before Congress
today.
The philanthropy institute gave F's to 12 of the 29 military charities
reviewed and D's to eight. Five were awarded A-pluses, including the Fisher
House Foundation in Rockville, which the institute says directs more than 90
percent of its income to charitable causes.
One group received an A, and one received an A-minus.
Jim Weiskopf, spokesman for Fisher House, said the charity does not use
direct-mail advertising. "As soon as you do direct mail, your fundraising
expenses go up astronomically," he said.
One egregious example, Borochoff said, is Help Hospitalized Veterans, which
was founded in 1971 by Roger Chapin, a veteran of the Army Finance Corps and
a San Diego real estate developer. The charity, which provides therapeutic
arts and crafts kits to hospitalized veterans, reported income of $71.3
million last year and spent about one-third of that money on charitable
work, the philanthropy institute said.
In its tax filings, Help Hospitalized Veterans reported paying more than $4
million to direct-mail fundraising consultants. The group also has run
television advertisements featuring actor Sam Waterston, game show host Pat
Sajak and other celebrities.
Chapin, 75, the charity's president, received $426,434 in salary and
benefits in the past fiscal year, according to a filing with the Internal
Revenue Service. His wife, Elizabeth, 73, received $113,623 in salary and
benefits as "newsletter editor," the Post's review of the tax filing showed.
Chapin and other leaders of Help Hospitalized Veterans did not return calls
for comment. But the charity e-mailed a statement stating that it is among
"the finest veterans' charities this nation has to offer." The statement
also said its "fundraising expenses, accounting methods, and executive
salaries are comparable to other nonprofits in this field."
Bennett Weiner, chief operating officer of the Better Business Bureau, said
the agency has 20 standards for reviewing charities, including that a
charity's fundraising and overhead costs not exceed 35 percent of total
contributions.
Weiner, who is scheduled to testify before the House committee today, said
he could not comment specifically on veterans charities until after his
testimony.
Advocates for veterans said they worry that scrutiny could damage military
charities in general.
"In the rush to help, there's a lot of innovative work and good work
happening, but there's also a lot of fraud and waste," said Paul Rieckhoff,
executive director of Iraq and Afghanistan Veterans of America. "There's
never been a greater need for veterans charities in a generation, and I hope
issues like this don't deter people from giving."
Sen. Charles E. Grassley (R-Iowa), one of Congress's leading critics of
charities, said some of the groups are abusing their tax-exempt status.
"Taxpayers are subsidizing that tax exemption," Grassley said through a
spokeswoman. "Sitting on donors' money or spending too much on contracts and
salaries doesn't benefit the public."
Rep. John Sarbanes (D-Md.), a member of the oversight committee, wants
veterans charities to be held accountable.
"I hope there is an explanation, but it seems that most of the funds they
raise never reach the veteran community," Sarbanes said through a
spokeswoman. "Some of the practices being described are simply outrageous."
Rick Cohen, an expert on nonprofit groups and former executive director of
the National Committee for Responsive Philanthropy, called the spending
decisions of some charities "grotesque."
"I think in light of the Iraq war and the Afghanistan war, these veterans
are the people who we should really be protecting and not using as excuses
or avenues for ripping off charity philanthropy," Cohen said.
Staff researcher Meg Smith contributed to this report.
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