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Editorial: Cracking down on the worst charities

 
Published May 23, 2015

It had a catchy patriotic name and a laudable goal. Yet a complaint filed in federal court last week says Cancer Fund of America and three affiliates talked unsuspecting donors out of $187 million and enriched a family fiefdom with salaries and lavish perks. Federal and state authorities who finally cracked down on the Tennessee-based racket — including Florida Attorney General Pam Bondi — should keep up the pressure on other sham charities that siphon millions of dollars from well-intended contributors that should be going to legitimate causes.

A list compiled by the Tampa Bay Times and the Center for Investigative Reporting ranks the Cancer Fund of America as the nation's second worst charity. Ten years of federal tax filings showed only 1 percent of its collections flowed to direct cash aid to people with cancer. It's a shameless template followed by other organizations that gin up official sounding names and prey on people who care about veterans, firefighters, sick kids and others in need. Most of the cash often plows right back into fund-raising, while organizers skim off salaries and other "administrative expenses.''

According to the 148-page civil complaint by the Federal Trade Commission and all 50 states, Cancer Fund founder James T. Reynolds and his clan tricked donors into thinking their contributions would buy wigs for children undergoing chemotherapy, hospice care and warehouses where breast cancer patients could receive free clothing, toiletries and medication. Instead, the complaint alleges, the Cancer Fund and three sister charities functioned as a cash cow employment agency for relatives and close friends. At Children's Cancer Fund, salaries and bonuses for 11 employees doubled the amount of money spent on sick children. "Extravagant insider benefits" included cars, water scooters, college tuition, gym memberships, a Caribbean cruise and trips to Las Vegas, the complaint alleges. The group's telemarketing arm, Cancer Support Services, was registered as a charity, allowing solicitors to claim that all donations would go to charity when in fact fund-raising was the biggest expense.

Reining in such deceptive fundraising is difficult. Courts have ruled that states cannot require that minimum percentages of the money raised must be spent on actual services. Cancer Fund affiliates — Children's Cancer Fund and Breast Cancer Society — agreed to shut down in the face of fraud allegations and accepted a $95 million judgment, but they will pay only about $1 million because most of their deceitful collections are long gone.

Last year, the Legislature responded to the Times/Center for Investigative Reporting series on predatory schemes. It required that charities collecting more than $500,000 a year submit financial documents that track how donations are spent. While that eased Florida's reputation as a haven for boiler room scams, individual citizens still must form the first line of defense.

Donors should concentrate their giving on charities they already know or those they can easily check out. Good resources are the Better Business Bureau's Wise Giving Alliance, the Florida Department of Agriculture's Gift Giver's Guide and the online Charity Navigator. An attorney general hotline — toll-free 1-866-966-7226 — accepts tips about suspicious claims.

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A recent Give Day Tampa Bay campaign demonstrated the power of generosity and communal spirit. That is too prized to be tarnished by parasites.