In Las Vegas, a cold call from a brand new faux charity?

brand new faux charityIn this space I’ve been writing about what I call “faux charities.” These are outfits that cold-call me on the telephone at the New To Las Vegas world headquarters asking for donations for what seem like charitable causes for health care or first responders. In reality, they aren’t charities at all. They are political action committees, or PACs, purportedly raising money to give to favored candidates for public office. Except that these faux charities spend almost all the money raised for fundraising and very little in political contributions, ostensibly the raison d’être for the organization in the first place.

PACs are very thinly regulated by the Federal Election Commission and the Internal Revenue Service (a PAC can be registered with either agency), and basically not at all by most state charity regulators. This may be the reason why operators of some sketchy charities have moved into the “faux charity” PAC business. There simply is a lot less scrutiny and legal risk.

All this is background for a call I received recently from “Anna.” I put her name in quote because Anna wasn’t a real person, but a computer-generated voice likely monitored by a real human. “Anna” said she was soliciting a contribution for something called the U.S. Breast Cancer and Women’s Health Initiative. I asked where her organization was located. She said Washington, D.C.

In my considerable experience, asking too many questions of the computer leads to a quick hangup. So I told “Anna” I would consider a $35.00 donation. Great, she said, adding that I would be connected with the “records department” to confirm my name and address so I could be sent a pledge card.

I was quickly connected to a real person, who also had a female voice and whom I will call “the Closer.” Now I know that initial solicitations on the phone are often not done in the name of the outfit listed on the formal filings. So I asked “the Closer” for the legal name of the organization responsible for the pitch. United Women’s Health Alliance PAC, she told me, also in Washington, D.C. I asked how long it had been around. “The Closer” didn’t know.

It didn’t take much research on my part to answer my own question. As a political action committee, UWHA is an infant. Its Statement of Organization was just filed with the Federal Election Commission on August 19. The FEC filing listed an address for UWHA on L St NW in Washington that is well known as a UPS Store mail drop. Its website domain was registered a month earlier on July 15. The picture at the top of the home page is a stock photograph of several women easily found elsewhere on the Internet.

UWHA is so new it hasn’t yet had to file any periodic reports that might show how donations have been spent. But the FEC filing revealed that the person behind UWHA is one Stephanie Mastroianni.

This was not the first time I received a cold call from one of her enterprises.

Mastroianni–her full name is Audrey Stephanie Mastroianni–is executive director of something called the United Breast Cancer Foundation, located on Long Island in Huntington, N.Y. Unlike her newly minted PAC, United Breast Cancer Foundation is a registered 501(c)(3) charity that has been around for 20 years. Contributions can be tax-deductible (unlike those to PACs, which aren’t.) The foundation, in other words, has a record.

In early 2018 I received a call from a similar computer voice going by the name “Alice” seeking a donation for the United Breast Cancer Foundation. You can read my account by clicking here. Suffice it to say the financial efficiencies based on its latest filings from 2016 were terrible. Her foundation had a poor rating from Charity Navigator, and the dishonor of being ranked No. 38 a few years earlier on the Tampa Bay Times‘s famous one-shot list of America’s Worst Charities. Then and now, there are more than 1 million nonprofits in the U.S., so that’s saying something.

How is Mastroianni’s foundation doing now? The most recent filings I can find are for the year ending December 31, 2018. My conclusion: still grim.

As I read the filings, United Breast Cancer Foundation received $13.5 million in cash donations, mainly from telemarketing and net proceeds from a car-donation program. Of that amount, $10.8 million–a full 80%–went for fundraising and what accounting rules call “joint costs from a combined educational campaign and fundraising solicitation.” This means the fundraising appeal also suggested something obvious like get a mammogram. I imagine most would-be cash donors would not be happy to know this ratio.

Again by my review, of that $13.5 million in cash donations, at most $1.4 million was spent in direct furtherance of the stated mission, which is, of course, to fight breast cancer. That’s all of 10%. I imagine most would-be cash donors would not be happy to know this ratio, either.

United Breast Cancer Foundation tried to burnish its financial efficiency ratios by reporting receipt of more than $7 million in donated clothing and household goods, or gift-in-kind, from “several major retailers.” GIK is a valid form of charitable largess, but such donations can raise accounting problems.

There usually is no fundraising cost attached to this, so GIK can make a charity seem especially efficient. And because cash is not involved, these donations can be valued at almost anything. By common sense, the value should be something approximating wholesale cost, or what the donor originally paid for the goods. But a footnote to the United Breast Cancer Foundation financial statement said the GIF was valued at the much-higher “retail value provided by the retailer,” less an allowance for deterioration or damage of up to 10%. This is extremely generous accounting for the charity (and the donor), and unusual since most reputable charities commission their own valuations and are accountable for them.

United Breast Cancer Foundation also listed as a charitable donation received and direct-mission expense some $3.8 million in “donated advertising services,” likely free time for TV spots. This also ginned up the financial efficiencies with little real impact.

As for “the Closer” and my possible $35 pledge to UWHA, I had a number of additional questions. She answered them all by saying, “We can send you the envelope.” Since that seems to be conditioned by my committing to a pledge, the call soon came to an end.

I emailed a request for comment to Mastroianni, who was paid $349,000 for her United Breast Cancer Foundation duties that year, and will update this post if I hear back (I got no response after a similar request in 2018).

Sooner or later, UWHA will have to report its donations and expenditures–under oath–to the FEC. I’ll be waiting.

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