Another cancer charity under investigation; a summarized 2013 income statement

July 8, 2015, 9:43 am

The Wall Street Journal reports an additional Cancer Nonprofit Investigated by Tennessee Secretary of State’s Office.

If you have been following the suit by the FTC and all 50 AGs against a group of four cancer charities, it will be worth checking out the article to learn another charity is under investigation in its home state.

The key leader of this organization has a familial link to the four in the FTC investigation. The article links this charity to those four.

Not much detail in the article about the particulars of this investigation. As to the general direction, you can get some hints from this quote in the article:

“They appear to follow a pattern similar to the groups that were part of the [FTC] claim,” said CharityWatch President Daniel Borochoff.

Read the rest of this entry »

Details on FTC enforcement action against four cancer charities – 2

June 17, 2015, 8:39 am

This is the second in a series of posts diving deep into the detail mentioned in the complaint by the Federal Trade Commission and all Attorneys General against four named cancer charities.

My goal is to highlight some of the information that I think is of particular interest to the wider nonprofit community.

I perceive the attention paid to the complaint is drying up. Before discussing the FTC complaint, want to mention one interesting article of late:

6/1 – Suzanne Perry at Chronicle of Philanthropy – $187-Million Fraud Case Puts Charities on the Defensive – Article has reactions to the FTC and 50+ AGs going after the cancer charities that were so far over the line.

My description of the comments are they range from wondering what took the regulators so long to whether this is just a start.  Article points out there has been regulatory action against some members of this group for a long time (over 20 years with CFOA) but that doesn’t seem to have deterred additional problematic efforts.

One focus on the article is the limited staffing at the AG offices which limits how much they can focus on the charity sector. Various industry sources comment on the limits of self-regulation.

Back to the FTC complaint, which can be found here.  It is a public document. I assert journalist status, so will quote the document at length.

Here is the summary of the organizations’ activities, as interpreted by the FTC: Read the rest of this entry »

Details on FTC enforcement action against four cancer charities – 1

June 12, 2015, 9:53 am

The news coverage has died down about enforcement action taken against four charities by the FTC and every state attorney general. I’ve not seen anything that dives a deep into the accusations. This post is the start of a series of discussions on the case.

Why go into detail?

After having read through the accusation, it is obvious this case contains most of the problematic issues we have seen over the last few years in nonprofit accounting and fundraising. Off the top of my head, I don’t recall any issues under discussion in the charity world that are not present in this case. That makes this set of allegations a good case study.

The complaint can be found here. That is a public document. I claim journalist status, so will quote the document at length.

Here is the opening of the complaint, with a few comments added: Read the rest of this entry »

More followup on FTC action against 4 cancer charities

May 26, 2015, 9:02 am

There is a lot more to say on the FTC and all AGs going after four charities that were way out of line.

5/19 – William P. Barrett at Forbes – Cancer Charities Agree to Dissolve Amid Fraud Claims – Article summarizes the case by the FTC. Two of the four charities have agreed to close their doors. Three of the named individuals have agreed they will not have future involvement with charity management or even fundraising.

We did nothing wrong and we agree not to break the law again

Article points out the irony we seen these kinds of settlements. Even though the three individuals agreed to not be involved in the charity sector again during their lifetime and two of the charities agreed to be taken over by receivers and then liquidated, the charities and individuals involved denied doing anything wrong.

It is as if it’s a normal and everyday thing that individuals agree to be legally barred from involvement in their economic sector and charities agree to corporate suicide when they have done nothing wrong.

But that’s the legal dance that is necessary. Denying wrongdoing is necessary to prevent the consent degree from becoming proof to anyone who later tried to sue the charities or individuals.  Even though I understand the reason, it seems silly to those looking in from the outside.

Contested claims

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Good stuff for the nonprofit world – 5/8

May 8, 2015, 8:20 am

A few articles on the nonprofit sector.

  • Do huge staffing levels in huge foundations have any impact on outcomes?
  • The widespread attitude towards ‘overhead’ that charities have to deal with.
  • How disaster reporting goes sour and what good outcome questions might look like in disaster relief.
  • Charities can now get dot-NGO and dot-ONG addresses.

Why do I mention the first two articles? They show the entire nonprofit world has a long way to go on outcome measures. I’m not sure there is even a tidbit of agreement on the right questions to ask, let alone measuring answers.

5/7 – David Callahan at Inside Philanthropy – Top Philanthropoids Are Paid Over $600 Million a Year. Is That Too Much? – Mr. Callahan is continuing his discussion I’ve mentioned here and here wondering if the humongous staffing levels at the gargantuan foundations makes any difference in the impact of those foundations.

Read the rest of this entry »

More good stuff on impact, outcome measures and overheads – 4/27

April 27, 2015, 10:42 am

A couple of articles on measuring outcomes and some discussion on the high cost of using telemarketers.

4/19 – Nonprofit Chronicles – Foundations, Nonprofits and Performance Anxiety – Marc Gunther describes a theater in Houston that sends an email survey to all customers the next day after a show. Their goal is to “enrich” and “stimulate” their audiences. The surveys ask questions to see if patrons get deeply involved. They want to know more than what the ticket count is.

Those are the kinds of outcome measures that nonprofits ought to be looking for, but aren’t.

Read the rest of this entry »

Does the mere size of the infrastructure in large foundations create an issue in itself?

April 13, 2015, 10:04 am

Here is an issue I’ve not seen before: Is the size of the infrastructure at humongous foundations a problematic issue just by itself?

David Callahan, writing at Inside Philanthropy on April 10, stretches my brain:  Ford Sinks Over $1 Billion a Decade Into Overhead. Is That Money Well Spent? – First, adjust that decade cost figure to annual.  That would be $100M a year.

In 2013, the Ford Foundation spent $146M on G&A out of $685M total expenses, according to the article.  That is 21.3%, which would usually be considered respectable.

The issue, according to the author, is their overall approach of making programmatic grants. That means the foundation chooses this study, that new effort, and another ongoing project. Which in turn means they drive the programs of their grant recipients. That heavy control approach requires a lot of staff.

Therein lies the rub, according to the author. With that approach, foundations gather power and authority unto themselves. At that scale, the agendas of the grant officers are driving the funding of lots of charities.

The author’s perspective: Read the rest of this entry »


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