The phone rang at the New To Las Vegas World Headquarters. The cold caller said her name was Grace Miller. She sought a donation by me to the Childhood Leukemia Foundation, headquartered in far-away Brick, N.J., and asked if I would make a pledge.
I said I would be happy to review any literature she could send me. This apparently was not exactly the answer she hoped to hear. We had a back and forth. But after Miller could not get me to commit to a donation–on what likely was a recorded line, which would be used against me should I decline to pay–she terminated the call.
This afforded me the chance to locate online CLF’s latest financial filings, for the year ending December 31, 2017. They might help explain the extreme urgency of Miller–not actually a person but an interactive computer-generated voice monitored by a human–to get a sight-unseen pledge from me. By CLF’s own filings, the charity spent more than 75% of the money donated on fundraising costs, dwarfing the amount left for, say, helping kids fight illness, the stated mission. Indeed, according to the filings, of CLF’s total expenses for the year, just 21% went to the mission.
Since donors usually want the bulk of their gifts to go to the cause, these are terrible financial efficiency ratios for a charity. How terrible? CLF won’t agree to be evaluated by the Better Business Bureau Wise Giving Alliance, a charity watchdog group that says no more than 35% of donations should be spent on fundraising expense, and no less than 65% of the total budget on the mission. Not sending the BBB paperwork is a huge red flag for would-be donors.
On its zero-to-four-stars scale, Charity Navigator, another leading nonprofit watchdog, gives CLF an overall rating of zero stars. It doesn’t come any lower than that. Last year, Consumer Reports magazine listed CLF on the bad side of its “Best and Worst Charities for Your Donation.” Yelp reviews are no kinder.
On top of all this that, CLF was soliciting illegally in Nevada. With a few exceptions not applicable here, a 2013 Nevada law prohibits non-religious charities from seeking donations in the state without first registering with the Nevada Secretary of State’s office and renewing that registration annually. CLF does not come up in the online database on the Secretary of State’s website as ever being registered. I confirmed this by calling the main office in Carson City. Nor, I was told, was an application from CLF being processed but not yet in the system.
After I emailed CLF a request for comment last week about the registration status and its financial efficiencies, its founder and executive director, Barbara Haramis, quickly called back. She adamantly insisted that CLF was properly registered to solicit in Nevada. Before discussing the efficiencies, I suggested she look into the registration issue a little more and get back to me with some proof, like a Nevada registration number. She said she would.
In a later voicemail message, Haramis basically acknowledged that CLF had not been registered to solicit in Nevada. But she blamed that on what she said was a state employee who took the registration information from a CLF representative but left her job without forwarding the data to the proper place. “It was the state of Nevada that dropped the ball,” Haramis said, adding that the situation was in the process of being rectified. She thanked me for bringing this to her attention.
How this situation could have gone on for so long–CLF’s tax returns clearly indicate the charity has been soliciting in Nevada for a number of years–is not clear to me. Whatever. Anyway, here are the latest CLF numbers, which for clarity I rounded:
CLF received $2.7 million in donations. Of that sum, a whopping $2.1 million went right out the door in fundraising costs (most of that to one telemarketing firm, Innovative Teleservices of Port Huron, Mich.). Another $100,000 was spent in management and overhead costs. With some other income, that left only about $600,000 from that $2.7 million for the kids. According to filings, most of that, about $400,000, was for overhead that accounting rules allow to be counted as mission expense, like payroll, insurance and occupancy costs. Only $200,000 was spent on specific items for ill children and their families such as iPads, gift baskets, wigs and organizer binders.
Indeed, the salary that executive director Haramis drew, $176,982, wasn’t much less than the value of all the goods handed out.
One thing CLF probably doesn’t have to worry about much is sanctions from Nevada. The state has extremely weak charitable regulation. It’s so bad the Nevada Secretary of State’s Office itself habitually violates a state law requiring that it post on its website the IRS Form 990 or full financial statement for all registered charities. A would-be Nevada donor has to search elsewhere out-of-state to find most of the numbers I am citing here (I got these from filings on the website of the New York State Attorney General.)
I still haven’t discussed with Haramis CLF’s poor financial efficiencies and reputation with charity watchdogs. Perhaps I’ll ask Grace Miller if she calls me again.