Fraud Watch: Know Your Charity

It is a fundamental part of our national character for Americans to try to help those who are needy or suffering. Before you give, you should do some basic (but essential) homework to make sure your donation is going to a legitimate and trustworthy organization.

Resources for Giving:

9 Tips for Donating to a Charity >>

How To Tell if a Charity is Legitimate >> (via U.S. News & World Report)

Wise Giving Guide >> (via The Wise Giving Alliance, a service of the Better Business Bureau)


YOU WOULD NOT CALL THIS ONE “SWEET CHARITY"

By Alan Marx

Cancer is a horrible disease.   According to the National Cancer Institute, approximately 39.6 percent of men and women will be diagnosed with cancer at some point during their lifetimes. Cancer research, prevention and treatment are a compelling cause, and donations have made progress possible in some areas. Unfortunately, there are people who view the charitable efforts of their neighbors as an opportunity to steal and enrich themselves.

In May, the Federal Trade Commission and law enforcement officials from every state and the District of Columbia brought a case against individuals who ran four sham cancer charities and the charities they ran.  This case is one of the largest actions ever brought against charity fraud, and it is the first time the FTC, all 50 states, and the District of Columbia have filed a joint enforcement action alleging deceptive solicitations by charities.

The complaint was filed in the U.S. District Court for the District of Arizona against the Cancer Fund of America, Inc. (CFA), Cancer Support Services Inc. (CSS), Children’s Cancer Fund of America Inc. (CCFOA) and The Breast Cancer Society Inc. (BCS).  The Cancer Fund of America is based in Knoxville, Tenn., and the Children's Cancer Fund of America is based in Powell, Tenn.

The defendants reportedly used telemarketing calls, direct mail, websites and materials distributed by the Combined Federal Campaign to portray themselves as charities that provided direct support to cancer patients, such as pain medication, transportation to chemotherapy, and hospice care.  According to the complaint, these charities “operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation, with none of the financial and governance controls that any bona fide charity would have adopted.”  The organizations reportedly provided employment for family members and friends of the defendants.  Donations were spent on cars, trips, luxury cruises, college tuition, gym memberships, Jet Ski outings, sporting events, concert tickets and even dating site memberships.  Professional fundraisers hired by the charities often received 85 percent or more of the donations they raised.

Leaders of these organizations have since agreed to settle the charges filed against them. As a result, they will be banned from fundraising, charity management, and oversight of charitable assets.  CCFOA and BCS will be dissolved.  Litigation will continue against CFA and CSS.

Money judgments also were imposed based in part on the amount consumers donated between 2008 and 2012.  The proposed final order against CCFOA imposed a judgment of $30,079,821.  The judgment against CCFOA will be partially satisfied by liquidation of its assets.

The proposed final orders against BCS imposes a $65,564,360 judgment.  The BCS order provides an option, subject to court approval, for spinning off its Hope Supply Warehouses program to a legitimate, qualified charity.  BCS’s remaining assets will be liquidated and used to partially satisfy the judgment. The full judgment amounts against the individual leadership will become due immediately if they are found to have misrepresented their financial condition.

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