South Carolina Secretary of State Mark Hammond made the announcement just days ahead of Saturday’s Veterans Day observance: A settlement has been reached between 24 state agencies and VietNow National Headquarters Inc., an Illinois-based charitable organization. The pact will result in the dissolution of the organization – and that appears to be a very good thing.
In March 2017, Michigan Attorney General Bill Schuette alleged thousands of deceptive solicitation violations against VietNow for misrepresenting its charitable programs to donors. That investigation led to other state actions and the present negotiated resolution shutting down the charity.
In addition to appointing a receiver to dissolve VietNow, the settlement obtains injunctive relief against VietNow’s directors and officers and requires their cooperation in investigations of VietNow’s professional fundraisers. Upon dissolution, VietNow’s remaining funds will be distributed to two national and well-respected veterans’ charities, Fisher House Foundation and Operation Homefront.
The S.C. Secretary of State’s Office had previously named VietNow National Headquarters a “Scrooge” in 2003 and 2015, based on the organization’s low percentage of total expenses devoted toward charitable programs. In its most recent financial statement for the fiscal year ending June 30, 2016, VietNow reported raising nearly $2 million nationwide. However, most of this cash was paid to fundraisers, with only 4 percent of its expenditures going toward charitable programs.
Hammond said, “Organizations like VietNow that exploit the sacrifices of the men and women serving in the armed forces and donors’ patriotism are the lowest of the low.”
But they are not rare.
Brian Mittendorf, Fisher College of Business distinguished professor and chair of the Department of Accounting & Management Information Systems at The Ohio State University, researches nonprofit organizations and teaches about their finances. He notes that 10 percent of the charities tagged as “America’s Worst Charities” by the Tampa Bay Times and the Center for Investigative Reporting in 2013 focused on veterans.
“Many Americans honor those who have lost their lives in the line of duty by donating to charities that help military veterans,” Mittendorf writes for theconversation.com “It can, however, be daunting to choose from the more than 8,000 such groups operating nationwide.”
It is important to know which organizations deserve support.
“I have observed that while some veterans’ charities do squander donors’ dollars, others make the most of donations in meeting their mission,” Mittendorf states. “Fortunately, a little research goes a long way toward spotting the difference between a good cause and a lost cause.”
He offers four key key tips:
1. Learn what exactly the charities do: Be wary of vague statements about a group’s activities. While language indicating that a charity “supports” or “honors” veterans does not always signal a problem, it does mean you should seek more specific information. Many of the veterans’ charities that have faced criticism, such as Paralyzed Veterans of America and National Veterans Services Fund, have had vague mandates to educate the public about what veterans need.
2. Find out what share of the money raised for organizations actually supports them: Michigan’s attorney general determined that only 39 percent of funds raised by professional solicitors for charity in the state in 2016 actually supported those groups. The fundraising contractors kept the rest of the money. The picture is even more lopsided for veterans’ charities in the state, with only 23 percent of donations making it into their coffers. The track record in Michigan is no anomaly – New York, Massachusetts and other states have found similar patterns.
Professional solicitation is not inherently problematic – but outsourced fundraisers keeping most of the money raised for a charity is a real concern. The federal government does not track this information but most offices of state attorneys general maintain databases that indicate how the organizations raising funds in their states stack up.
3. Check out IRS 990 forms: Perusing IRS forms is the best way to discover how donor dollars are actually spent. Finding a charity’s tax form is easy, even if groups don’t post them on their own websites, thanks to databases like Propublica’s Nonprofit Explorer and the Foundation Center’s 990 Finder. If you do check out a 990 form, be sure to go to page 10. That’s where nonprofits classify their expenses, both by function and type. There, you can see where donated money primarily goes.
“When it comes to vetting charities, a little work goes a long way. These four steps should help you find veterans’ charities with goals that match your own and that you can trust to make the most of the money you give away.”