More about questionable charities

On December 15th, in one of my regular 'Around The Blogs' segments, I linked to Nicki's post about the Wounded Warrior Project being at best a suspect charity.  I've been following up on that, and have found more information that leaves me deeply disturbed.

First, Veterans Today claims:  'Wounded Warriors Project A Legal Scam'.

If you were thinking about donating to the Wounded Warrior Project, think twice. It would behoove you to get in your car and drive cross-country to deliver the funds to the charity you hope to help. More money would end up in their hands than entrusting it to the WWP for disbursement.

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Sad to say, the Wounded Warrior Project is bled dry by a top heavy, greedy executive structure and the remaining funds are disbursed to multi-tier distribution organizations with similar management structures. By the time the money actually goes to direct benefits for veterans, there is probably less than 10% that reaches them. Below are results of an investigation by a retired USMC Colonel.

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Total 2011 revenues were $154.9 MM with total fundraising expenses of $20.5MM and total administrative expenses, including outsourced services, of $95.5MM. Note that the total administrative expense includes fund raising. Therefore, as a percentage of total revenue, administrative expenses amount to 61.63%, including fundraising expenses of 13.2%. This equates to 38.36% of revenues available to benefit wounded warriors.

As far as I can determine, WWP outsources all major functions, including fundraising, legal, donation processing, donation distribution, etc.

Compensation for the top ten WWP employees runs from $150K to $333K per officer annually.

As far as I can determine, WWP does little, if any, direct support of wounded warriors and wounded warrior programs. Rather, WWP makes grants and contributions to other 501.c.3 organizations which operate wounded warrior programs and/or serve veterans directly ... While many of these organizations provide valuable services to wounded warriors, many more are suspect. As an example, I question an expenditure of $300K for a parade ... I also question the use of funds for lobbying activities.

There's more at the link.

The Veterans Today piece links to another article headlined 'How Low Is Low?'

Several years ago I set out to find out the truth about the collusion or funding quirks that were mentioned. It was obvious that every one of the Big Six (DAV, PVA, VFW. AMLeg, MOPH and VVA) were getting free room and board at VAROs and VAMCs throughout America.

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I also always knew that the government reimbursed all the VSOs for each Power of Attorney they turned in. Many a service officer denied this but I finally squeezed it out of the Office of Veteran Affairs here in Washington. We are one of the few states with no independent State Veterans Representative outfit so they see no reason to hide it. You have to use one of the big six or search for one of the 44 other off-brand VSOs such as the Air Force Sergeants Association or the Red Cross. The lady informed me in no uncertain terms that yes, contrary to what was said, it was an unheralded fact that Veterans Service Organizations pulled in a pretty good income off this.

When combined with the dues and donations they generate, the numbers become staggering. This is where it gets disgusting.

The article goes on to reveal that in 2011, the top 9 office holders of Disabled American Veterans were paid a combined total of $2,403,236, with the top three officers making a combined total of over $1 million.  The top 9 office holders of the Veterans of Foreign Wars made a combined total of $1,656,426, and those of the American Legion, $1,242,828.

Some will argue that charities must pay market-related salaries to attract and retain talented managers and administrators.  I'm not so sure.  I note that some charities performing stellar work pay their managers very little (e.g. The Salvation Army), and sometimes nothing at all (e.g. the Missionaries of Charity, the order founded and made famous by Blessed Teresa of Calcutta).  They demand personal commitment to their cause from their leaders, and it seems to work for them.  On the other hand, if market-related income is necessary, I'd rather see charities pay a relatively low basic salary or wage, and tie additional income to their leaders' effectiveness in furthering their mission.  This should be measured in terms of operational efficiency and effectiveness, particularly in reducing the proportion of funds raised spent on administration and overhead, and maximising the proportion spent on the charity's actual mission.  If leaders manage to do that, let them be paid a bonus (if necessary, a substantial one) based on how much they've been able to apply to the charity's stated purpose.  If they haven't been very good at this, their much smaller bonus (or the absence thereof) should reflect that failure.

It appears to me that a large proportion of veteran service organizations have fallen victim to Jerry Pournelle's "Iron Law of Bureaucracy".  Those running many of them appear to be doing so as a self-perpetuating, personally enriching exercise more than as a service to veterans.  Of course, this is hardly limited to veterans charities.  Last year we examined the monumental abuse perpetrated by many charities across the spectrum;  and only a few days ago we saw yet another example of such abuse.

Again, that problem isn't restricted to veteran service organizations.  Here's a report of how Goodwill Industries appears to have fallen victim to it as well.

All I can say is, check out charities very carefully indeed before deciding to trust them with your money.  My earlier recommendations stand.  In addition, if a charity is spending less than 75% of its income on helping those whose cause it espouses, I automatically put it in the 'suspect' pile, and refuse to donate to it.  (US readers can check the numbers for most charities at Charity Navigator.)

Peter