Over four years, as increasing numbers of veterans returned home from wars in Iraq and Afghanistan, a charity called Disabled Veterans Services of Pompano Beach, Fla., reported raising more than $8 million in cash and collecting nearly $4 million in donated goods that it claimed would help disabled and homeless veterans.
But barely a nickel of each dollar the charity raised in cash went directly to help veterans, a News21 analysis shows.
In the years that the country has been at war, Americans have given over $12 billion to veterans’ and military charities. Donations grew nationwide from more than $615 million in 2001 to more than $1.6 billion in 2011 alone.
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Federal and state laws demand financial reporting from all charities, but they require little in the way of reporting the results of services the charities claim to provide, the News21 investigation shows. Though many charities offered needed help, others spent much of their money – sometimes most of it – on the organization’s overhead expenses, rather than services promised to veterans.
“The scoundrels and the thieves and the rip-off artists … that want to make a lot of money know that these are categories of charities where the American public is gravitated, it pulls at the heartstrings and they know that the tendency of Americans is to give impulsively, emotionally with that pull,” said Ken Berger, president and chief executive officer of Charity Navigator, an independent charity evaluator. “They exploit that and they use that.”
Using federal tax filings, News21 identified more than 1,900 public charities across the country working to support veterans, service members and their families between 2001 and 2011. Descriptions of their programs often are cursory, which means donors may know little about how their money actually is spent.
Charity experts and watchdogs say at least 70 percent of a charity’s expenses generally should go to programs or services and no more than 30 percent should be used to pay for its management and fundraising. News21 found that seven of the 12 charities that raised the most in donations from 2001 to 2011 spent 75 percent or more on programs and services from 2001 to 2011.
The Fisher House Foundation, for example, which builds accommodations for families of service members and veterans receiving medical treatment at military bases and VA medical centers, directed more than 95 percent of its spending, about $230 million, to its programs from 2001 to 2011. It spent less than $4 million on fundraising.
In contrast, Disabled Veterans Service, which until recently operated out of a single room in a suburban Florida office building, spent 86 cents of every dollar on private fundraising companies and telemarketers tasked with drumming up more money between 2008 and 2011. Another 9 cents of every dollar was paid to private management consultants to keep the books and prepare state and federal filings.
In four years, with no paid staff or volunteers of its own, DVS reported that it had raised more than $12 million in cash and donated goods for its stated mission, “to help motivate, and offer assistance programs to disabled veterans in order to assist the service related disabled veteran in regaining their position back into society.”
DVS’s primary service involved paying for the shipping of donated goods to homeless veterans shelters. It claims to have received about $3.9 million in such donations, mostly “drugs and medical supplies,” between 2009 through 2011, according to tax returns.
But though DVS says it sent about $2.5 million in supplies to the New England Center for Homeless Veterans in Boston, the center could confirm only one shipment, which DVS valued at about $210,000, was ever received.
The center has no record of receiving the remaining $2 million or more that DVS says it shipped, said Charlene Pontbriand, senior vice president for the nonprofit.
These types of in-kind donations have been the subject of concern, according to the IRS exempt organizations division’s 2012 annual report, because of “poor record keeping of the gifts-in-kind, inaccurate reporting of this activity” and “inadequate discretion and control over the final disposition of the items.” It did not mention any specific organization.
The report also says more cases are being reviewed “for potential examinations, with specific emphasis on organizations with limited charitable activity and excessive compensation.”
No representative of DVS would comment for this story, despite repeated calls. Visits to business addresses associated with the charity or listed in its filings with state and federal agencies revealed most to be post-office boxes. DVS’s only actual business office was vacant in mid-July. A neighboring business owner said it had been vacated six months earlier.
Records show its president is Glen Svensson, who also could not be reached. Efforts to contact him at his last known address in Pompano Beach were unsuccessful; his house was foreclosed on in May.
According to four years’ of IRS filings, the charity raised most of its $8.4 million in cash by hiring telephone solicitation companies. Of that, at least $7 million went to the three for-profit fundraisers — Courtesy Call, Innovative Teleservices and Associated Community Services. Don Tanner, a spokesman for Associated Community Services said, “ACS does not comment on specific clients or client work.” The other two did not respond to requests for interviews.
The rest of the money went to outside management services, mainly to a company named FUM Management, which lists as its business address a mailbox in a UPS Store about six miles from the DVS office. Since 2008, DVS paid a total of about $740,000 in “management fees,” though it does not specify to whom, other than $340,000 paid to FUM in 2011.
Jamie O’Bryan is named as president of FUM Management and was listed in the charity’s tax records in 2008 as DVS’s president, working 10 hours a week. She lives with Doug Sailors, a convicted money launderer who calls himself a management consultant for FUM. Both live together in a million-dollar home in Lighthouse Point, Fla. . Neither could be reached for comments, and attempts to speak to O'Bryan and Sailors at their Lighthouse Point house were unsuccessful.
At News21’s request, Charity Navigator reviewed DVS’s 2011 tax filing. DVS fell short on many of the measures the charity review site evaluates.
“We see more charities that are low-rated by us that are in the veterans, firefighters, police and cancer cause areas,” Charity Navigator’s Berger said. “Certainly there are great veterans’ charities, but there are some real horror shows.”
From 2008 to 2009, the Federal Trade Commission and charity enforcement officials from 49 states and Washington, D.C., cracked down on charities and fundraisers claiming to support veterans, police and firefighters. The sweeps led to disciplinary actions against 22 nonprofits or organizations claiming to be nonprofits, 31 individuals and 32 fundraising companies, among them two of the fundraising companies that did work for DVS, Associated Community Services and Courtesy Call Inc.
“The single largest problem in enforcement in this community is that as a society we have not yet decided to do more than lightly regulate a sector that’s worth billions of dollars,” said Cindy Lott, lead counsel for a program at Columbia Law School that provides legal research and education to state attorneys general about charity enforcement and oversight.
Chad Garland was an Ethics and Excellence in Journalism Foundation Fellow and Andrew Knochel was a Hearst Foundations Fellow this summer for News21.
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