Jeff Gelles: Let the donor beware: How to double-check on charities

Mike Hardy doesn't have vast sums to donate to charity. But he and his wife, Marion, give as much as they can, and they want their money to count. So Hardy has found himself increasingly upset by signs of waste and deception.

In the fall, Hardy counted 184 fund-raising letters sent to the couple's home in Maris Grove, a Delaware County retirement community, most from groups to which he has never contributed. One pitch, in a large yellow envelope, seemed emblematic.

It came from the Disabled Veterans National Foundation, and included a calculator, planner, and pen, along with a plea for donations that would help veterans get the rehabilitation, care, and education they deserve.

To Hardy, such costly gifts were a red flag. And when he turned to the Internet to learn more, he says, his suspicions were confirmed.

Thanks to a 2010 report from CharityWatch, a Chicago organization that digs deep into the financial disclosures of charities, Hardy found that donations to the veterans group were going almost entirely to marketing companies that solicited them.

One firm told its staffers to promise prospective donors that "100 percent of your donation will go to the charity." But on forms filed with regulators in Massachusetts and Colorado, the company estimated its fees would eat up 98 percent of the donations it collected on the veterans group's behalf in 2009.

That wasn't even the worst. Documents showed the veterans group had agreed to allow another fund-raising contractor to keep 100 percent of what it raised - yes, every single penny - "until the charity's debts to this company are paid off," CharityWatch said.

Better alternatives

I couldn't reach anyone last week at the Disabled Veterans National Foundation - it was closed from Dec. 22 to Jan. 2 for the holidays. And neither Hardy nor I want to dwell on the shortcomings of any single charity.

It's worth noting that the veterans group's website says it cut fund-raising costs to 35 percent of total expenses in 2010 from 55 percent in 2009, while boosting program spending to 57 percent from 37 percent. It's also worth noting that CharityWatch disputes key elements of those calculations. Its president, Daniel Borochoff, says the veterans group, like some other charities, counts some large fund-raising costs as program expenses.