Choosing a reputable veterans' charity is similar to walking through a minefield.
"Some of these groups don't really do anything," said Daniel Borochoff, president and founder of the Chicago-based CharityWatch, a watchdog organization. "They just send out a bunch of mailings or make calls telling us that veterans have needs and they give this false indication that they're providing substantial aid."
But often times, they're not.
"The donors don't understand what's going on and the wool is being pulled over their eyes," Borochoff said.
Of the 42 veterans and military charities that CharityWatch graded in 2014, 29 received a D or lower. In order to receive a C grade or higher, more than 60 percent of the funds raised must be given back to the organization's mission. CharityWatch also considers how much money is spent to raise $100.
Problems in Darien
CharityWatch consistently has given the Darien-based National Veterans Services Fund an F rating.
The spotlight is once again on NVSF after its bookkeeper, Cynthia Tanner, was arrested June 2 on a charge of first-degree larceny for writing more than 135 fraudulent checks totaling $186,000 in 2013. Over the course of five years, police estimate that she embezzled $830,000 from the veterans' organization, whose mission was to provide aid to in-need veterans.
It's hard to measure just how many charities fall victim to embezzlement, Borochoff said, because they do not want the bad publicity that comes along with it.
"The kind of people who do this are so bland that if they were in front of a beige wall, you wouldn't see them," Borochoff said. "They're not flamboyant people who draw attention to themselves."
The NVSF is a not-for-profit organization that provides case-managed social services and limited medical and financial assistance to veterans and their families, with a focus on families of disabled veterans.
In articles in the Stamford Advocate, the Hartford Courant, the Tampa Bay Times and watchdog organizations like CharityWatch, the NVSF has long been criticized for its use of contracted solicitors to raise money for the organization. According to Charity Navigator, a nonprofit organization under the Internal Revenue Service, the NVSF spent more money on raising funds than it did on programming.
Charity Navigator gave the NVSF a zero star rating for fiscal year 2011-12 -- the most recent year available -- because of the low percentage of funds raised versus funds distributed.
According to Charity Navigator, the NVSF raised a net of $9,111,243 in fiscal year 2011-12. Of the organization's expenses, 70.2 percent, or $6,719,039, was for fundraising efforts; 18.5 percent, or $1,767,705 for programming; and 11.4 percent, or $1,091,170 for administrative costs. Read Full Article
NVSF Executive Director Phil Kraft received a salary of $118,800 in fiscal year 2011-12, according to Charity Navigator, which is 1.24 percent of NVSF's total expenses.
The NVSF was ranked as the eighth-worst charity in the country according to a year-long project in 2013 by the Tampa Bay Times. The report revealed that from 2002 to 2011, the organization used for-profit solicitors to help raise $70 million. The solicitors kept more than half -- $36.9 million -- as payment. According to the Tampa Bay Times, $33.3 million in cash went to the charity to fund operations.
About $5.5 million was used for veterans' aid during that time period. The yearly average given to veterans is $500,000, according to the Tampa Bay Times.
Using private solicitors is enticing for charities, Borochoff said, because it's easy money. The solicitors come in and say they'll raise $100,000 for the charity, but at a cost of $1 million of donors' money, Borochoff said.
"Charities say it's money they wouldn't ordinarily have," Borochoff said. "But that's a fallacy because that's money the veterans can't have."
Kraft said in an email that the NVSF outsources the fundraising to maintain the focus on providing services for veterans' and their families.
"The funds raised by our professional, outsourced fundraisers provide us the means to accomplish our mission," Kraft said. "A small percentage of something is better than 100 percent of nothing. We do not have the resources, staff or expertise to conduct fundraising on our own. We rely upon professionals who hold us free from risk of loss and have a proven record. Donations received online or sent to us directly are put to immediate use in pursuit of our mission -- helping veterans in need."
Kraft said to blame a charity for money spent on professional fundraisers is "like blaming a driver for the price of gas."
"I suppose that a driver could make his own gas from donated crude oil, and have a staff of volunteers to help refine it, and more volunteers to transport it to volunteer-run gas stations, but it probably wouldn't work," Kraft said. "The fundraisers have the means to reach out to many people, asking them for very small donations. Yes, it is not a perfect system for us, but we are trying to improve."
The NVSF is staffed by two full-time and three part-time employees.
In 2009-10, the NVSF provided assistance to 184 families, according to Kraft. It gave $336,000 to families in 12 states.
The organization operates on referrals from U.S. Veteran Affairs' caseworkers, social workers from state and local municipalities and veteran agencies.
"In this way we can determine that the veteran has sought care from all the other agencies in his or her area and that they are indeed who they say they are," Kraft said.
Doing it right
The Maryland-based Fisher House Fund, which builds homes for families near hospitals housing soldiers, is consistently rated A by CharityWatch.
The first rule, said president David Coker, is stewardship.
"We believe that people give us money so that we can bless others and serve the population," Coker said. The nonprofit directed 94 percent of the money raised to its mission of building and maintaining the homes.
Unlike many veterans' charities, the Fisher House Fund does not use direct mailing or private solicitors.
"I don't like to receive direct mail at home, why would I send it to someone else?" Coker said. "We could easily send out a letter saying, `Hey, give us $10,' but what's not being counted is the cost of sending out those letters."
Instead, the 22 employees of the national charity that helped 22,000 families in 2013, tell people what they're doing and ask them to be a part of that mission.
Some states are taking action against poor-performing charities. In June 2013, Oregon signed a law that makes charities ineligible for tax deductions if 30 percent of its funds are not dedicated to the organization's mission. The legislation is meant to target charities that rely on private solicitors.
Borochoff said the majority of the "inefficient" groups are those that raise money for popular causes, such as veterans or emergency services personnel. Those who raise money for a less popular cause "tend to be more efficient with their causes because they have to particular with their soliciting," Borochoff said.
The Connecticut office of the attorney general is limited in what it can enforce when it comes to charities, said Jaclyn Falkowski, communications director for office of state attorney general.
"The law does not provide for a certain percentage (of funds raised) to go to a specific mission of the organization," Falkowski said. "There is some case law that protects some of these fundraising practices through First Amendment rights."
If the office of the state attorney general does feel that there may be criminal behavior within a charity, the proper authorities are notified .
"We're working with (the state Department of Consumer Protection) to come up with procedures to be more proactive," Falkowski said.
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