The Federal Trade Commission (FTC) announced on May 20 Federal court cases and proposed settlement orders involving
- American Veterans Relief Fund (AVRF),
- Coalition of Police and Sheriffs, Inc. (COPS),
- Disabled Firefighters Fund (DFF) and
- Individual defendants Jeffrey Dean Duncan, William Rose and Kathy Clinkenbeard,
alleging that all three organizations, based at the same address in Santa Ana, CA, were created almost entirely to provide profits for the individual defendants and the for-profit fundraisers they hire. In recognition of their work, we’ve awarded the organizations and individual defendants our not-so-coveted Charity Skunk Award.
The FTC alleges, for example, that telemarketers calling on behalf of AVRF falsely claimed that the money they were raising would support families of soldiers fighting overseas — when virtually no money went to such families; COPS misrepresented its affiliation with law enforcement; and each organization misrepresented that donations would go to a legitimate charity, that they had programs (which did not exist), and that the programs would benefit the local community of the donor.
According to a related Los Angeles Times report, the groups raised $19 million from 2005 to 2008 but turned over only 5% of the money to legitimate charities. The report quotes counsel to the defendants, who said “the groups didn’t pay more to charities because they [the groups] incurred high costs.”
There’s more interesting information to be gleaned from the most recent tax returns (Form 990) of the three organizations,
- In 2007, together they raised more than $4 million. In 2004 through 2007, together they raised more than $18 million.
- In 2007, together they averaged spending a miniscule 5.3% on programs (the leader being AVRF, which spent a whopping 7.3%).
- In 2007, 65% of their spending went to ten outside telemarketing firms – and one firm was common to all three organizations.
If you take a look at the filings by that common firm with the CA Registry of Charitable Trusts, you’ll see that:
- The firm reported that they raised a bit over $2 million for charities, and that only about $300,000 (or 14.5%) of that went to charities. Guess that’s some of what counsel (see above) was talking about.
- COPS, DFF and AVRF aren’t the only groups the firm has worked for here in California.
Kind of makes us wonder whether the FTC has found a whole den of skunks — we hope they’ll keep digging, regardless of the smell!
The FTC website has several helpful documents on avoiding charity fraud. Start with this one. See also our links in the right column.