Where Most Needed

Just days after a report on the millions still rolling into spin offs from the Mitch Gold telemarking scams, the Attorney General of Hawaii Mark J. Bennett is bragging about shutting down a solicitor who kept $76,000 out of $95,000 collected from donors. 

From the AG's web site, it look as though he just took over the registration of charity fund raising solicitors last year. 

Many states have such regulations that require registration of all companies who provide marketing services for charities—not just telemarketers, but special events, direct mail, and every other form of fund raising support.  The companies are often required to do extensive reporting on every fund raising contract.  Generally, the effect of these laws is to create a hugh amount of paperwork and a small office to process it, and very little in the way of prosecution of the handful of bad operators. 

Sure enough there is a report on the AG's website for contracts through June 30, 2006 (apparently this is a live document—either that or the AG has more powers than we know about).  On page one, we see that a company called "Contract Communications, Inc." raised $1,956,079 and passed on $391,216—exactly 20%—to a charity called "Cancer Recovery Foundation of America."

Just to show how this works, "Cancer Recovery Foundation of America" actually enjoys a One-Star rating from Charity Navigator (EIN: 33-0418563, Form 990 here).  It gets zero stars for efficiency (46% goes to program expenses—but please read on), but it gets four stars for "capacity," because its income and expenses have grown rapidly over the last four years.  In the Charity Navigator system, the two ratings are combined to give it a one-star rating overall.

But let's go a little further: if you look at the Form 990, page two, you will see that the organization has identified $1,450,627 in "Professional Fundraising Fees" as a "Program Expense."  No way. 

Then on page one, line 1d you see that $1,387,424 is noncash (in-kind) donations, which when distributed would also be included in program expense.  Back on page 14, we see expenses for "program materials and in-kind" ($456,982) and "gift baskets" ($407,351).  If we take these as the in-kind expenses, we are left with a mere $720,566 in cash program expense. 

And that still leaves that "program expense" of $209,370 for "vehicle acquisition costs," a big part of any cancer recovery program ....

So that's what we can find with a few minutes of research on the Internet using readily available material. 

Yet this organization actually earns one star on Charity Navigator and the Hawaii AG brags about bringing some guy to justice for keeping $76,000.

Hanaokolele.