Tuesday, April 26, 2011

Making Money from Charity?

Is this man a saint or a crook?  60 Minutes says the latter.

I received a letter in the mail from the "Central Asia Institute" which is an interesting anagram for CIA, if you think about it, signed by a Greg Mortensen.  He was whining about how 60 minutes did an expose on him, and how it is all lies.

I never heard of the CIA, er, I mean the CAI and this Mortensen fellow.  But apparently, people are rightiously pissed off at him, as he did the usual thing, wrote a book, raked in royalties, set up a tax-free "Non Profit" Corporation, and, well, did pretty well for himself, apparently.

Ostensibly, the charity was set up to build schools for girls in Afghanistan and Pakistan.  But there is some question now as to whether those schools were built or ever ran or are still running.

As I noted in "The Profit in Non-Profits", you can make a lot of money working for, or essentially owning, a Non-Profit organization.

And according to the 60 Minutes report, the way he did it was by pocketing the money from his two books as well as his $30,000 speaking fees, while having his charity pick up the tab for private jets and travel expenses.  Not a bad gig.

I am not sure why he wrote a letter to ME about it, other than I am on some charity mailing list.  As far as I know, I never donated to his cause or inquired or contacted the CAI at any time.

But his experience illustrates how donating to charity and following causistas can be difficult.  It can be hard to tell the real-deal from people who are lining their own pockets - and the latter can do real damage to the whole concept of charities.  As I noted in the Profit in Non-Profits, you can make a lot of money running a "non-profit" organization.

And unfortunately, this sort of thing happens with regularity.  Organizations take on a life of their own, and once they become established, well, self-preservation becomes their primary focus.

So it does not surprise me that these sort of allegations are being leveled against Mr. Mortensen. This sort of thing happens all the time.

Before you send off your life's savings to "do good deeds", make sure the money will go to do good deeds and not pay for someone's private jet.

Checking out the organization Charity Watch is one good step.  But the problem with such organizations is that they sound the warning only after the barn has burned down - in this case, only after board members and the treasurer have resigned over accounting issues and the organization has been exposed on "60 Minutes".

Charity Watch does have an interesting feature - it lists the salaries and compensation for various charities.  Here is a list of the top charity earners.  There is a lot of money to be made in Charity!  I wonder how much these guys donate, of their own salaries, to their charity?  Or why not just take less money?  A million bucks a year?  That does seem a bit excessive - for a charity.

Oh, well, charity begins at home.  My personal opinion is that I don't need to give money to a charity that is paying people hundreds of thousands of dollars a year in salaries.  Let them donate first!

Harold Varmus, M.D., Past President/CEO Memorial Sloan-Kettering Cancer Center $2,557,403
William Barram, Past National VP, Division Services American Cancer Society $2,428,592
Includes $1,096,232 in supplemental executive retirement plan and $866,041 deferred compensation. CEO John Seffrin earned $1,316,356, including $386,562 in deferred compensation.
Roger Chapin, Past President Help Hospitalized Veterans $2,239,346
Includes a retirement benefit of $1,955,269.
Edward J. Benz, M.D., President Dana-Farber Cancer Institute/Jimmy Fund $1,233,800
Robert J. Mazzuca, Chief Scout Executive Boy Scouts of America - N.O. $1,211,572
Robert J. Beall, President/CEO Cystic Fibrosis Foundation $1,098,945
Harry Johns, President/CEO Alzheimer's Association $1,065,524
Includes $392,218 retirement and other deferred compensation.
Gail McGovern, President/CEO American Red Cross $1,032,022
Includes a one-time reimbursement of $473,570 for relocation costs to work at the national headquarters.
Ernest Allen, President/CEO National Center for Missing & Exploited Children $1,028,533
Includes $422,337 retirement and other deferred compensation, of which $330,944 is a catch-up amount for underfunded retirement benefits in previous years.
Stephanie Streeter, Past CEO United States Olympic Committee $1,006,336
Includes $558,462 bonus and incentive compensation.
Edwin J. Feulner, President Heritage Foundation $989,634
Wayne LaPierre, Executive VP/Ex-Officio National Rifle Association & Foundation, respectively $970,588
Christopher DeMuth, Past President American Enterprise Institute for Public Policy Research $939,059
Includes $528,972 in supplemental executive retirement plan payments.
Michael L. Lomax, President/CEO United Negro College Fund (UNCF/The College Fund) $877,582
Includes $686,080 in retirement funds for 5 full years of service.
Joseph V. Haggerty, COO United Way Worldwide $864,875
Includes $318,578 SERP imputed income.
Jonathan W. Simons, M.D., President/CEO Prostate Cancer Foundation $850,188
Alan J. Lewis, Past President/CEO Juvenile Diabetes Research Foundation $813,732
Joseph Krajbich, M.D., Orthopaedic Surgeon Shriners Hospitals for Children $807,917
Includes $410,435 retirement and other deferred compensation.
Howard Rieger, President/CEO Jewish Federations of North America $801,866
James E. Williams, Jr., CEO Easter Seals $781,000
Rabbi Marvin Hier, President/CEO Simon Wiesenthal Center $770,209
William E. Evans, Director/CEO St. Jude Children's Research Hospital/ALSAC $742,718
Shulamith Bahat, Past Associate Executive Director American Jewish Committee $706,563
Includes $530,798 deferred compensation and retirement payments in respect to 50 weeks salary and accrued vacation.
Rabbi Yechiel Eckstein, President International Fellowship of Christians & Jews $696,737
Abraham H. Foxman, National Director Anti-Defamation League of B'nai B'rith $689,398

UPDATE: June 2011:  This article in TIME Magazine takes a look at the numerous Cancer Charities out there.  Many of them spend far more on fundraising than they do on actual research.  Some spend none or close to it!  Still think you are "better than me" for donating to one of these Charities?  If you don't check it out, first, you are just tossing money to marketers and con-artists - but that is redundant.