Congress grills executives of veterans charities
No laws regulate how much charities spend on fundraising and overhead and there are no requirements that nonprofits disclose those figures in solicitations. Lawmakers indicated at a Congressional hearing on Jan. 17 that they may introduce legislation to help donors better understand the finances of nonprofits.
The investigation uncovered new allegations of questionable spending practices at two veterans charities run by Roger Chapin, the Washington Post reported. One, the Coalition to Salute America’s Heroes, paid retired Army Gen. Tommy Franks $100,000 to appear in its solicitation letters, money the nonprofit said it raised to help soldiers returning from Iraq and Afghanistan.
Chapin faced questioning from Congressmen about his management of Help Hospitalized Veterans, which spent hundreds of thousands of dollars on personal expenses for Chapin, executive director Mike Lynch and Richard A. Viguerie, to whom the nonprofit awarded millions of dollars in fundraising contracts.
The charity covered expenses such as $340,000 in meals, hotels and entertainment; a $135,000 loan for a divorce settlement for Lynch’s former wife; a $17,000 country club membership; three tickets to Hawai‘i; and a $1 million loan to Viguerie.
According to House Committee on Government Oversight and Reform Chair Rep. Henry A. Waxman (D-Calif.), Help Hospitalized Veterans raised more than $168 million from 2004 to 2006 and spent only a quarter of that amount on veterans. The rest went to direct-mail fundraising, salaries and other expenses.
When asked what would happen if donors were told how their donations were spent, Chapin said “We’d all be out of business. Nobody would donate. It would dry up.” He said few people know how expensive fundraising can be. “If I could do better, I would,” he said. “I’ve tried everything under the sun to lower our fundraising costs.”
In 2006, Chapin and his wife received a combined $561,971 in salary, bonuses and pension contributions, the committee said. The American Institute of Philanthropy has listed Chapin’s nonprofits among 19 military-oriented charities that manage their resources poorly. Other veterans charities consistently received high marks from the institute and other watchdog groups.
AIP rates charities by category giving them a letter grade from A to F. According to AIP’s testimony to Congress, “The two worst performing categories are Veterans & Military and Crime & Fire Prevention. While most categories have a preponderance of charities with A and B grades, 75 percent of the groups in these two categories earn Ds and Fs.”
“This is a very disappointing performance,” said Daniel Borochoff, AIP president, “since 78 percent of the charities that AIP rates receive a C or higher grade. It is ironic that two of the very most popular causes are the least efficient with America’s donated dollars. It is a national disgrace that hundreds of millions of dollars raised in the name of injured veterans, police and firefighters are being squandered.”
