Posted on 03/18/2010 12:54:44 PM PDT by TRY ONE
For the last several years, Sean Hannity and the Freedom Alliance “charity” have conducted “Freedom Concerts” across America. They’ve told you that they are raising money to pay for the college tuition of the children of fallen soldiers and to pay severely wounded war vets. And on Friday Night, Hannity will be honored with an award for this “Outstanding Community Service by a Radio Talk Show Host” at Talkers Magazine’s convention.
But it’s all a huge scam.
(Excerpt) Read more at debbieschlussel.com ...
Good post, and the cheerleader comment made me chuckle.
What is clear wtc911 is that you do not know enough about accounting principles to understand that you cannot discern what you are trying to with the statements you are looking at.
You also seem to have some resistance to getting to the facts as you fail to mention going to the Charity Navigator site and see what independent rating experts say...you will be impressed and maybe your org is on there or you can present it to them. Will help with your fundraising.
I helped set up a 501(c)3 (economic development), but you are right that I have never been involved with that kind of org tax filings. But, I have been intimately involved with my own which are some years several inches thick...and I understand what a tax statement filing compared to a cash flow statement is. You cannot discern what you are trying to discern with any clarity from a tax statement. That is why Schlussel is using them and not mentioning the fact that there are other programs Freedom Alliance does that has nothing to do with grant scholarships, in fact...some have to do with mailing expenses (shipping care packages to service men and women abroad), and travel (sending families of wounded military overseas to visit them). Over 80% of their money goes into their programs...that is efficient!
What is your “not-for-profit” about?
“On a more general note, I am always leery of any celebrity driven fund raising event. I want to know if the celebrities are paying their own way (their contribution) or if they are using donated funds for travel & lodging and/or actually getting paid for their participation.”
Tell us what you know about your Haiti effort...how you learned about the need, how those in charge act according to your specs.
Criticism
Studies of charity watchdogs' methods have raised concerns about the validity of their ratings, and suggest they may not be reliable source for charity ratings. AIP reviews only 500 charities, where Charity Navigator reviews over 5,400, and it is undetermined how AIP selects the charities it reviews. One group that AIP is critical of claims that AIP rates a large number of liberal groups, as compared to conservative groups, and only a small number of pro-military groups.[26] However, on its website, AIP posts the names of all the charities it rates; the list indicates that of the charities that have a political bias, the charities cover a wide spectrum of political beliefs.[27]
Charity rating organizations have been criticized by philanthropy experts for the validity of their evaluation methods and their conclusions. A study reported in the Stanford Social Innovation Review—an award-winning magazine covering successful strategies of nonprofits, foundations and socially responsible businesses—found that watchdog groups:
Rely too heavily on simple analyses and ratios derived from poor-quality financial data;
Overemphasize financial efficiency while ignoring program effectiveness; and
Do a poor job of conducting analyses in important qualitative areas, such as management strength, governance quality and organizational transparency.
Specifically, this study found that a "gotcha" mentality and lack of transparency were AIP's biggest shortcomings, saying it was "difficult to understand what specific adjustments AIP made to a given nonprofit's ratings and why."[28] This study's authors concluded that, as donors make important decisions using potentially misleading data and analyses, the potential of watchdog agencies to do harm may outweigh their ability to inform.[29] They suggested:
A more effective nonprofit rating system should have at least four main components: improved financial data that is reviewed over three to five years and put in the context of narrowly defined peer cohorts; qualitative evaluation of the organization's intangibles in areas like brand, management quality, governance, and transparency; some review of the organization's program effectiveness, including both qualitative critique by objective experts in the field, and, where appropriate, "customer" feedback from either the donor or the aid recipient's perspective; and an opportunity for comment or response by the organization being rated.[30]
A second study, Rating the Raters: An Assessment of Organizations and Publications that Rank/Rate Charitable Nonprofit Organizations,[25] provides a separate assessment of AIP, Charity Navigator, Better Business Bureau Wise Giving Alliance, and other charity information services. The major findings are:
Approaches and criteria are not the same. The methodologies and criteria used vary significantly among the various rating and ranking organizations.
Evaluation criteria may not be readily apparent. Not all nonprofit rating and ranking groups make it easy for the donor to determine the evaluation method and criteria used. Evaluators may use criteria that are overly simplistic. Simple financial ratios and/or measurements that apply in some circumstances may not apply in others. Evaluators focus on financial measurements and overlook program effectiveness. Financial "efficiency" is assessed by most third-party ratings groups as a percentage of contributions received. This tends to be their primary focus.
Competence of the evaluator is critical and difficult to determine. It is virtually impossible for donors to determine the relevant credentials, expertise and experience of the rating organization's staff. Evaluators often derive revenue as a result of their rating reports, creating a potential conflict of interest and questioning whether these groups are motivated by the desire to inform potential donors or by the media attention that improves their revenue stream. AIP, for instance, charges a fee for a sample copy and requires membership as a condition for receiving its annual rating reports.
Some groups criticized by AIP, such as Paralyzed Veterans of America, have pointed out that they meet "all 20 criteria that the Better Business Bureau Wise Giving Alliance establishes for charities, including that a charity's fundraising costs not exceed 35 percent of contributions, a common standard."[31] The Better Business Bureau Wise Giving Alliance charges charities to use its seal of approval.[32] Vietnam Veterans Memorial Fund asserts that the criticisms leveled here against charity watchdogs all apply to AIP.[26]
A liberal organization that even Wikipedia criticizes!
http://en.wikipedia.org/wiki/American_Institute_of_Philanthropy
Why is it so difficult to understand that Freedom Alliance is raising money to send children of fallen soldiers to college (among other things) and most of these children are very young right now, so it’s perfectly reasonable that most of the money they raise is going into a fund and not being spent. They will spend it later when the kids reach college age.
It’s so easy to pull a few numbers off a tax return and cry foul just as it’s so easy to take a soundbite out of context. If you want to bash Hannity over this you should provide some better evidence.
Scam artists hate a watchdog organization with a "gotcha" mentality.
Better Business Bureau Wise Giving Alliance
According to the Better Business Bureau Wise Giving Alliance the "Freedom Alliance" is refusing to turn over requested paperwork.
Wikipedia
Good grief.
What I have not seen here is a true explanation of the nature of this charity. A charity like the Salvation Army delivers over 90% of their donations to the end user. With the Salvation Army, the process is the product, meaning that the people they are helping are integral to the daily operations of the charity.
Most of the “donors” to the Freedom Alliance are actually purchasing a product. They are buying tickets to concerts. That product (the concerts) costs something, actually quite a bit, to produce. So, I believe that the analysis by Debbie Schlussel may be somewhat unfair in that it does not lay out all of the facts. Clearly, there may have been excesses, and Mr. Hannity should really consider how opulently he needs to be accommodated. I just don’t think it’s fair to expect a charity of this nature, where the “donors” are receiving a benefit for their “donation” to be held to the expectation that 75% or more of the gross income should go to the end user. Clearly there are huge expenses that need to be taken care of before there is a profit to go to the end user.
Let’s see, it’s okay for you to cite an organization that is known for downgrading charities with a perceived conservative bias while giving glowing reviews to charities with known liberal biases; but it discredits my argument to use a known liberal source (Wikipedia), to refute an organization so far to the left that their bias offends even Wikipedia.
Gotcha
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I'm not sure what you want (I know everything about my Haiti effort) or why but if you are asking because you want to help say so and I'll make things clear for you.
Sounds like a good deal to me.
I admit to being skeptical about charity scams while recognizing the importance of nongovernmental charitable donations.
I will apologize WHEN you show the proof of that statement.
Multiple organizations and conservative commentators, actually.
that is known for downgrading charities with a perceived conservative bias
A "fact" not in evidence.
while giving glowing reviews to charities with known liberal biases
Air Force Aid Society (A+)
Armed Services YMCA of the USA (A-)
Army Emergency Relief (A+)
Those are charities with known liberal biases?
Right but what if I spend $1M to build a soup kitchen on the corner and let the kid come for free whenever he wants? The soup kitchen is in a building that is listed as an asset and therefore not an expense on a tax return. I’m just saying you need to understand the whole financial picture and tax returns don’t give you that.
_______________________________________________
Mailing expenses? Yep, there was a line item for mailing expense but a full reading of the return indicates that they were involved in a massive fund-raising through the mail effort. They paid over $420K to rent mailing lists (that's a lot of names requiring lots postage) and an additional $112K in caging services (for those who don't know - caging is third-party collection and tracking of donations received from mass mailings). I see no evidence that the mailing expenses were related to anything else...please point it out to me.
As for your assertion that 80% of their money (donors money in reality) goes into program services exactly how did they end the year with a net $5.2 million higher than they recorded at the beginning of the year ($10.9 million - $5.7 million)?
I said in my earlier post what my activity involves.
Yep, seems like A+ material to me especially on the fiduciary responsibility level.
If the money for scholarships was being placed in a trust fund until a later date, wouldn’t that be mentioned somewhere on the tax documents? To have non-profit status, you have to show that your expenses match your revenue. You can’t just take a few million and keep it under a mattress for later without accounting for it.
It also shows the scholarship amounts. The average amount seem to be about $3000. 10 million a year will buy a thousands of such scholarships, and there seem to be about 70 of them. And that’s just for one year. One assumes they pull in 10 million EVERY year.
Thanks for your information. I thought that’s how all large foundations operate. They use the interest to fund, while investing the donations.
**Hey, I was a “Blond Cheerleader” in high school. ;)
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