The only thing necessary for the triumph of evil is for good men to do nothing -- Edmund Burke

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The Fleecing Of America - III:
Uncharitable Charities

David A. Young

David A. Young

dyoung@americasvoices.org         
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September 1, 2004


I was thrilled to see in a recent newspaper article that the IRS is launching an in-depth investigation into more than two thousand 501(c)(3) charities.  It is long overdue and I cannot understand why it has taken so long for the Congress or the IRS to see what many of us have known for years.1  As a CEO and Director of two major health charities for 38 years2, I have written many articles exposing the misleading tactics employed by charities.  Those articles provided ample reason for the IRS and Congress to reign in the free-wheeling charity executives.3  The article also enumerated yet another charity and executive who misused millions of dollars and enriched himself by violating the contributors' and taxpayers' trust.

Charitable organizations in America have grown like an out of control virus during the past 50 years.4  Locally controlled charities and associations have emulated for-profit corporations, by growing, merging and reincorporating until today they resemble our largest for-profit corporations -- except they pay no taxes.  They also provide a convenient mechanism for large donors and corporations to avoid paying income taxes.

Locally organized and managed charitable agencies that originally provided meaningful services to the handicapped, mentally disabled, persons with a host of diseases, or suffer from life's problems, have merged.  They have joined to form state associations, who then have formed national associations to give both greater exposure to their special appeals, and to exert a greater lobbying force in the state and national capitals.  Associations of associations, and associations of association executives now exist, supported by membership dues (usually assessed by a percentage each associations' annual revenue) that would otherwise be used to support services to the individuals they purport to serve or to meet their primary mission.

With the growth of charity, its numerous ever increasing layers of bureaucratic organization, and the infusion and co-mingling of government tax funds into their tax exempt operations, there has also come corruption, abuse and a diminution of direct meaningful services to the individuals the charities purport to serve.5  Activities classified as "services" often consist of nothing more than vapid platitudes and PR generated slogans geared to scare and impress potential donors &/or patients.  It also increases their particular disease's, affliction's or syndrome's visibility which most importantly helps them raise even more money -- all exempt from local, state and federal taxes, and with little or no meaningful financial oversight.6

When I first entered the charitable world, most agency or association executives were called Executive Directors and "rose through the ranks", beginning as therapists, nurses, social workers, teachers and a host of other helping professions.  In the mid to late 60's, a new breed of professional began to infest the charitable arena; individuals whose sole interest was to be a CEO or executive, with all the perks, lavish salaries and life styles enjoyed by those executives in the for-profit world.  The titles of President, Executive Vice President and Chairman of the Board, previously reserved for the voluntary board officers, were now bestowed on this new breed of charity executive.  Fundraising became the foremost priority and "success" was measured by comparing the increased gross monies raised from year to year.  The focus of attention was on competing with other similar charities and their relative status in the fund raising wars as delineated monthly in such publications as the Chronicle of Philanthropy.  Fund raising at any cost simply took priority over providing meaningful services.7

Vapid slogans and cutesy phrases such as "Diabetes is a Serious Disease", "Smoking Kills" and "Every 53 Minutes" are now considered and classified as Public Education and Information.  Funds transferred to subsidiary non-profit research foundations were extolled as major contributions to find cures, (although this represents moving assets from one pocket to another) though I cannot recall any disease that has been cured as a result of a charity's research efforts.  Charity learned its lesson the hard way in the 50's, when Jonas Salk, a researcher at the University of Pittsburgh, discovered a cure for polio and when Albert Sabin at the University of Cincinnati developed an oral polio vaccine.  It put the National Polio Foundation out of business -- a mistake never again to be repeated because big charity learned there is no future or profit in cures.8

We are constantly bombarded with messages that tell us how many people have a disease, or are at risk, or will get one disease or another.  It is good business for the charity and for the medical-pharmaceutical industry as well.  The Boards of Directors of many health charities are well populated with pharmaceutical, medical and research representatives; all having vested interests that would be seriously impacted if a cure were miraculously found.  To illustrate this fact, about 14 years ago, a relatively small research grant was given by the American Diabetes Association to a company who was developing and perfecting a non-invasive blood glucose monitor that would eliminate the need for finger pricking, glucose meters and meter testing strips.  We were told by Richard Kahn, PhD, the Research and Scientific Executive, that a prototype had already been built and that a small device for patient use was just around the corner.  Unfortunately, we never got to the corner, because shortly thereafter, the American Diabetes Association's Board of Directors approved a policy forbidding the awarding of any research grants for the development of diabetes equipment and supplies.

Federal, State and Local tax monies, in the form of grants and purchase of service agreements, are being used to provide many, and in some cases nearly all the meaningful direct services to persons with the diseases our major health and disease charities purport to represent.  Yet, the national health charities continue to appeal for more and more funds.  Although the National Institutes of Health (NIH)9 actually conducts the bulk of the medical research, slick charity PR and pronouncements take the credit for what we taxpayers and the government actually support.

Each year we are inundated with a plethora of Walks, Rides, Golf tournaments, Swims, Marathons, Black Tie Dinners, Concerts, Telethons and other glitzy events; one of newest varieties being sponsoring week long trips to extremely expensive resort locations to "raise funds".  We are told of the tremendous sums of money raised in gross dollars, but never how much was actually available to provide the basic services to people after all the direct and indirect expenses were paid .i.e the net dollars.  Most people would be shocked to learn that only 30Ę or less of each dollar raised remains after expenses to provide direct services.10,11

The elected and appointed volunteer Boards of Directors, who should be looking out for the contributors and persons with the diseases represented by the various charities, have failed to do their jobs.  They are often housewives, nurses, businessmen or other common folk from Smallville, USA.  They are thrilled to be elected or appointed to a Board of Directors of a national charity.  They become swept up in the news releases to their hometown papers, with being flown to major cities for meetings and conferences, picked up in limousines and billeted in first class hotels.  They are wined and dined on fine foods and booze often denied the consumers who have the diseases they represent, such as diabetes, heart and cancer.  These well meaning but naÔve volunteers are loath to offend the executive who has elevated them to such a favored position and therefore allow him free reign, which also maintains their seat on the "gravy train" as well.  There are also those board members who are the physicians, nurses and pharmaceutical representatives who have the most to gain by having a national charity to tout and lobby for the disease from which they or their corporation makes their profits.12

All this is fertile ground for an ambitious charity executive who plays the cast and the circumstances, and the lack of meaningful financial oversight, like a well-tuned violin.  Most national charity executives make generous, often lavish, six figure salaries, have generous retirement and insurance plans in addition to expense accounts and other perks.  Some double-dip by taking a second salary from a charity's subsidiary research or education foundation.  Salaries for national charity executives exceed and are often double or triple the salaries of our elected members of Congress and the President of the United States.  After these executives milk the current charity cash cow dry, they like fleas, jump to yet another warm dog (another charity); leaving their eggs (junior executive cadre) to infect the next generation of charity executives with the culture of fund raising at any cost instead of service as a measure of their success.

Yes, it is time for the IRS and Congress to investigate and reign in America's 501(c)(3) charities.  It is time that monies naively contributed to charities, that continue to bypass the national treasury, be returned.  It is also time that the tax exempt status of charities be redefined and limited to assure that we as taxpayers are not picking up the slack for those who live tax free.  It is time for Congress to establish a Charity Czar,13 whose only function is to promulgate new rules, monitor, and regulate America's 501(c)(3) charities.

1. http://www.americasvoices.org/archives2003/YoungD/YoungD_111303.htm

2. http://www.americasvoices.org/bios/YoungD/YoungD_bio.htm

3. http://www.americasvoices.org/avarc2001/archives2001/YoungD/YoungD_031801.htm

4. http://www.americasvoices.org/avarc2001/archives2001/YoungD/YoungD_031401.htm

5. http://www.americasvoices.org/avarc2002/archives2002/YoungD/YoungD_020502.htm

6. http://www.americasvoices.org/avarc2001/archives2001/YoungD/YoungD_031901.htm

7. http://www.americasvoices.org/avarc2002/archives2002/YoungD/YoungD_062002.htm

8. http://www.americasvoices.org/avarc2001/archives2001/YoungD/YoungD_031901.htm

9. http://www.americasvoices.org/avarc2001/archives2001/YoungD/YoungD_090701.htm

10. http://www.americasvoices.org/avarc2001/archives2001/YoungD/YoungD_073101.htm

11. http://www.americasvoices.org/avarc2001/archives2001/YoungD/YoungD_103101.htm

12. http://www.americasvoices.org/avarc2001/archives2001/YoungD/YoungD_080201.htm

13. http://www.americasvoices.org/avarc2001/archives2001/YoungD/YoungD_110801.htm

 

Copyright © Copyright © 2020 by David A. Young & America's Voices, Inc.  All rights reserved.
David A. Young is a former major national charity Executive.  From 1962 until 1988, he was Executive Vice President of United Cerebral Palsy Associations in Ohio and St. Louis, MO.  From April 1988 to July 1998 he served as Executive Vice President of American Diabetes Association-Ohio Affiliate, Inc.  As the CEO of the Ohio ADA, he was an outspoken critic of the (National) American Diabetes Associationís fundraising practices and overall inefficiencies.  When the two ADA organizations effected a merger on July 1, 1998, he was appointed Regional Executive Vice President for a five state area.  He was terminated three weeks later.  E-mail David at dyoung@americasvoices.org.

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