For once, the cold caller to the New To Las Vegas world headquarters was a real person, as opposed to a computer using voice recognition technology. That made it a little easier to have a meaningful back and forth as she asked for a charitable contribution.
The cause, she said, was something called Veterans Trauma Support Network. I asked for its address, and she said it was based in Orlando, Fla. She described the organization as nationwide in scope, contributions to which would be tax-deductible. I listened patiently to her pitch that the money would help vets cope with PTSD and other ailments.
She said she worked for an outside paid fundraiser named Charitable Resource Foundation. Finally, I asked how much of donations would go to the stated cause as opposed to fundraising expense. Twelve percent, she said somewhat matter of factly.
Oh, I said. So 88% of all the money raised goes to the fundraiser like you?
The caller said coolly she wasn’t going to discuss the terms of her own compensation. As you might imagine, the call ended soon thereafter.
Quick research by me showed that Veterans Trauma Support Network isn’t its own charity at all but a fundraising trade name used by another charity called Crisis Relief Network. According to official websites, CRN’s fundraisers solicit for money under all kinds of evocative, wallet-tugging names. Besides Veterans Trauma Relief Network, they have included Child Watch of North America, Childhood Abuse and Trauma Foundation, Children’s Cancer Relief Foundation and Breast Cancer Relief Network. (The Child Watch department got some bad press in the San Francisco area last year for using pictures of missing children in its fundraising efforts without parental permission.)
That’s an awful lot of causes for a parent organization that according to the first page of its latest tax return had just one paid employee. Nor was that the only surprise.
At my request, CRN’s CEO, Don Wood, emailed me the organization’s latest IRS Form 990 filing, for the year ending December 31, 2016. To put it bluntly, the return raised a whole lot of issues.
A question on the 990 (Schedule G, line 2a, for other 990 junkies out there) asking if CRN had any agreements with professional fundraisers was answered by a check in the “no” box. The line 2b table just below it calling for details concerning the 10 highest paid fundraisers who received at least $5,000 in compensation was left blank.
In an email, I asked Wood how that could be given these facts: Charitable Resource Foundation (also known as CRF Inc.), the employer of the fundraiser calling me, reported in a North Carolina filing covering most of 2016 it raised $130,000 for CRN, sending only $12,000 to the charity (12%, just like what I was told on the phone). And that another paid telemarketer, Outreach Calling of Reno, Nev., told North Carolina that for the period including half of 2016 it raised $704,000 for CRN, with the amount going to CRN just $70,000 (10%, even worse). You can download the reports from here.
“Our attorneys also mentioned this and we pointed it out to the auditors,” Wood replied by email. “I’m assuming there will a revision.” Wood signed the tax return, which was submitted under penalty of perjury. CRN has been checking that box denying paid fundraisers for years.
In my opinion, the 990 filing is a classic example of obfuscation, and not just because of that box. Let me explain.
CRN reported receiving contributions of $2.1 million and spending about as much. But the return declared fundraising expense of just $338,000. Given these state filings, how could the fundraising expense be so low? To me, it appears CRN simply classified a large amount of what I might call fundraising/promotional expense as part of its charitable mission.
As part of that mission, the return called $1.2 million spent “spreading the word about the services offered for free to the public.” But that’s more than double the $515,000 listed for actually delivering those services. It looks to me like that $1.2 million contained a lot of expenses fundraisers charged to the charity.
So by my reckoning, the charity spent no more than $515,000 of its $2.1 million in total expenses on what I would call program support. Given the opaque accounting, it could be less. But even $515,000 produces a charitable commitment ratio–the percent of total expenses spent in direct furtherance of the stated charitable mission–of just 25%. Charity watchdogs such as the Better Business Bureau Wise Giving Alliance say the minimum for a reputable charity should be 65%.
Since CRN left a lot of detail off its tax return or put stuff in what I think is wrong places, it was hard to figure out the charity’s fundraising efficiency, the percent of donations left after payment of all fundraising expenses. But it’s clear the charity over the years has hired a large number of paid fundraisers. According to the Secretary of State’s Office in Washington State (where I lived before becoming New To Las Vegas), CRN also has used Courtesy Call Inc., Corporations for Character LLC, Engage Funding LLC, United Support LLC and Donor Relations LLC.
In light of the North Carolina filings I cited above, I think it reasonable to use the 12% number I was told on the telephone by that CRN fundraiser. The BBB Wise Giving Alliance says anything below 65% is unacceptable. In email, I asked CRN CEO Wood about the accounting, but he did not respond on that point. I’ll update this if I hear more.
Here’s the last surprise: My research uncovered the interesting fact that CRN was not registered to raise money in Nevada, where I live and was called.
Now, when it comes to protecting the public from iffy charities, Nevada is pretty much missing in action. But state law generally does require at least that most charities in or out of state, before they solicit money in Nevada, register with the Secretary of State’s Office in Carson City, the capital. The law even calls for a civil penalty of up to $1,000 for each violation. Minimal financial disclosures are posted on the office’s website.
I called the office. It confirmed what I had found searching its website that CRN had not filed either the required paperwork to be registered or the paperwork seeking an exemption from registration, which would also needed if warranted. My request to Wood for comment on this remains unanswered.
The person who took my call at the Secretary of State’s Office said I could file a formal complaint using the office’s website but that it would take a “couple of months” for anyone to look at it. As I just wrote, Nevada is MIA. Filing a complaint isn’t my style; writing one up is. Perhaps someone in Carson City will read this post and decide to look for the live fundraiser who called, or the charity.