Wise Giving Wednesday: A Breach of Donor Trust
Yesterday I had the honor of representing the BBB Wise Giving Alliance at a press conference about charity fraud hosted by the Federal Trade Commission and state charity regulators. The unprecedented complaint was brought by the FTC and all 50 states as well as the District of Columbia against four cancer charities engaged in deceptive practices.
The fact that three of the charities mentioned in the complaint (Cancer Fund of America, Cancer Support Services and Children’s Cancer Fund of America) chose not to disclose detailed information to BBB WGA after repeated written requests says much about their trustworthiness. Donors coming to our site would have seen a big red exclamation mark giving warning about the lack of transparency of these charities. The fourth charity mentioned in the complaint (Breast Cancer Society) did provide information and was found to not meet several of the BBB Charity Standards, and did not respond to additional questions about their fundraising activities and finances.
I characterized the 147 page complaint as chock-full of allegations of deception.
One deception involved inflating the value of their in-kind donations (which goes against Generally Accepted Accounting Principles). This enabled the charities to deceive donors into believing more money was going to programs than actually was.
The second deception, involving Cancer Support Services, (an entity so closely related to Cancer Fund of America that we included both organizations in the same BBB WGA report), gave donors a false impression of low fundraising at Cancer Fund of America. Cancer Support Services performed fundraising activities on behalf of Cancer Fund of America, which allowed Cancer Fund of America to report lower-than-actual fundraising expenses.
The third deception gave donors false impressions of the nature of the charities’ program activities. Appeals referenced services such as hospice care and the shipment of pain medication, oxygen and other life-saving items to cancer patients. The complaint alleges that none of these services were being provided.
The final deception dealt with significant failures of governance and management. Each entity’s board included family and compensated members who provided little to no oversight. As a result the public’s trust was violated when the boards failed to provide basic controls such as CEO performance reviews, budget approval, and general financial oversight.
What's saddest of all is that this case can have a chilling effect on giving. I hope it won't. As donors, we should not be dissuaded but we should investigate before we do. Let this sad case be a constant reminder.
Finally, remember to let us know by going to https://give.org/ask-us-about-a-charity1/ if you are interested in seeing a report on a charity not on the list and we will do our best to produce one.
H. Art Taylor, President & CEO
BBB Wise Giving Alliance