Washing My Hands of Dirt at Red Cross

No more writing about the Red Cross this week. The whole thing just depresses me. My quotes in the New York Times are here and here. The Red Cross "subordinate" is identified here and here (it's worse, a lot worse, than just being his secretary). The impact this may have on donors is here. The important questions about transparency (mainly did Everson spend a dime of donor money on this?) are here. And potential replacements for Everson are here.

Red Cross Debacle--Day Two

I'll be on The Situation Room with Wolf Blitzer on CNN tonight to follow-up my comments in today's New York Times about Mark Everson's unfortunate doings and its impact on the Red Cross.

One interesting aspect of Everson's sudden ouster from the organization (and one thankfully that doesn't force us to talk about what he did or with whom) is how this will impact the upper ranks of the Red Cross. You may remember that when Everson came in, he brought a ton of his own people with him, including the man who succeeded him at the IRS. This was not unexpected, as most political types like to surround themselves with confidantes and trusted allies, but the influx of former IRS bureaucrats into the fragile halls of the Red Cross was something I worried about at the time, and wondered how it would play inside the organization and especially among those who had been there for a long time.

Now, with Everson forced out, and members of the organization repulsed by what he did to the organization they love (and believe me, they're repulsed by Everson right now), you have to wonder if any of Everson's cronies will survive his departure. It's possible that, to preserve morale and wash their hands of this ugly situation, the Red Cross may have to buy the former IRS folks out if they don't leave of their own accord, and it seems likely that the Red Cross will need not just one new Chief Executive, but to replace 4 or 5 people at the top of the org. chart.

I have in the past put my professional reputation, whatever that's worth, on-the-line to argue that the Red Cross is a pretty good organization doing damn important work. And it appears, in the wake of the California wildfires, that they're learning from past mistakes and getting better at what they do.

But with Everson's behavior, and subsequent departure, morale among staff and volunteers will suffer. Contributions will lag. Public confidence will plummet. And as a result, the Red Cross will be less equipped moving forward to do what they are chartered by Congress to do--to serve as America's first responder. And all because one married man with children couldn't, well, you know what he couldn't do.

Another Red Cross Debacle

In July of this year, the newly-hired CEO of the Red Cross, Mark Everson, sat down with me and told me that he was "well-suited for the job." Sadly, today we find out that was untrue.

According to the Associated Press, Everson has been forced out after less than 1/2 a year on the job because of "an inappropriate relationship with a subordinate." Ironically, one of the reasons Everson agreed to meet with me in July was because I was highly critical of his selection of a former IRS employee (where Everson had been Commissioner) as the new ombudsperson of the Red Cross and he wanted to set the record straight about his integrity and the way he would run the Red Cross.

This is another black-eye for an organization America needs to be great. And yes, this makes at least 4 ARC presidents who have been forced out in the last 6 years.

This is a sad day for Mark Everson, but he has no one to blame but himself. This is a sad day for the Red Cross, but it is clear they made yet another mistake in their CEO selection. What's worst of all is that this is a sad day for those of us who care about charities, and want public trust in them to be high. We didn't do anything to deserve this.

No Left-Overs If You Start with Nothing

I must have missed this story last week while I was stuffing my face full of turkey, but the Associated Press is reporting that food banks nationwide are being forced to cut back on the portions they're allocating to the hungry, due to overwhelming demand. The situation is created by rising costs of food, housing, utilities, health care and gasoline, coupled with corporate and government cutbacks in providing food and assistance. In this season of excess, it's easy for us lucky ones to forget how hard many people have it. The USDA is estimating that somewhere around 40 million Americans will go hungry this year.

Click here to read Charity Navigator's Holiday Giving Guide, to find out how you can best make a charitable gift this holiday season. If you use your heart and your head this year, maybe we can all take a few positive steps to see if we can find a way to ensure that supply of food meets the demand.

You Give, I'll Take

The Take is on an extended turkey break, resting up to return with great vigor and passion next week. I will, however, kick off the official giving season (50% of all charitable giving by individuals and families is done between Thanksgiving and New Year's Eve) by appearing on Jean Chatzky's radio show on XM's Oprah and Friends station on Thursday.

First Ballot Inductees

At Charity Navigator, we do what we do because we believe, from our board chair to our newest employee, that we can make the world a better place through our work. Not everyone agrees with our philosophy, our metrics, our approach, or our methodology. And some of you have let us know that. But we get up every day, and we do the best we can to give donors unbiased information they can use to make informed giving decisions, and then we come back the next day.

And when someone undoubtedly smarter than us stands up and tells us that they appreciate our efforts, I'll be damned if I'm not going to take a minute to thank them, and to salute the people who work with me for a job well done.

If you click here, and then click on the slide show labeled "Philanthropy Hall of Fame," you'll find the following message from America's #1 weekly business magazine: "To mark the fifth year BusinessWeek has compiled an annual ranking of top philanthropists, we have put together a Philanthropy Hall of Fame comprising standout individuals and campaigns that revolutionized the process of giving through their unique contributions and personal commitments to important causes. This following list is completely subjective. It is not based on who donated the most money, though many candidates have contributed substantial amounts to their respective charities. Rather, these are individuals, organizations, and campaigns that have changed the way we engage in philanthropy."

Charity Navigator is #23 on the list. It's heady company, as we come right after Ted Turner, Bill and Melinda Gates, and Warren Buffett, and it's heady praise, as they argue that we have changed the way people engage in philanthropy. Thanks for noticing, BusinessWeek. And more importantly, to the people who do the work at Charity Navigator and those of you out there who utilize it to be better philanthropists, thank you. We proudly accept induction to this Hall of Fame.

(For more BusinessWeek coverage of our work, click here.)

Teach Your Children Well

I had a great opportunity this week to meet with John Wood, the charismatic leader of the wonderful charity Room to Read, which provides libraries, schools, and scholarships to children in the developing world, primarily in Southeast Asia and Sub-Saharan Africa. John is a rock star in the non-profit world, known for leaving his management position at Microsoft to start the group after backpacking through Nepal and seeing the shocking lack of resources that the children had available to them. His charity is world-recognized for its great works, and John's book about his journeys was a huge success.

John told me a fabulous story that illuminates what can happen when good donors have access to information and are able to identify excellent charities. It also shows how good parents can teach their children to be philanthropic.

John said that he was at an event a while ago when a woman came up to him. She said she had two kids and the kids had come home from school and asked for $10 each to support a charity they'd heard about at school that was working internationally to provide books for children in poverty. She said that was fine, but she wanted the kids to learn more about the charity and the work it did before blindly committing her money, so they went to the computer and used Charity Navigator to look up the group. It turned out to have a 2-star rating. The mom told the kids that she would give them $10 each to give to that charity, or if they could find a 4-star that did similar work, she'd give them $100 each to donate. The kids took her up on it, and they found Room to Read. She happily gave the children the money and they made a donation to John Wood's charity.

As she was telling this story to John, he became very excited, knowing that, yes, his groups' efficiencies and fine fiscal stewardship had paid off, but more importantly that those kids would now be lifetime givers committed to supporting quality charities like Room to Read. And then the lady told John something to the effect of, "if it was good enough for my children, it is good enough for me," and she gave John another check, this one from her and her husband.

That check was for $100,000.

To Protect and Serve

Today's tip of the hat goes to the Middletown (New York) Police Benevolent Association, which has decided to abandon its telemarketing campaign and switch to a mail solicitation to generate funds for its scholarship program. These are the cops in my community, and I'm proud of them. They recognized that their previous practice of hiring a professional telemarketing firm, while it generated a decent amount of contributions from a good and appreciative community, was costly, unnecessary, and stupid, and was contributing to ill will between the generous citizens they serve and the local cops. Officer Mike Canonico explained the switch away from the professional telemarketing firm thusly: "We want the public to know our appeal is legit."

Money quote from the story: "The PBA decided to change its way of getting funds largely because people dislike phone solicitations, especially when they learn the persistent callers are not local and the company they represent is getting 80 percent of the money raised. Canonico said the telemarketers raised $90,000 last year, but the PBA got only $17,000."

So far, the cops have only raised $18,000, but subtracting expenses for the mail campaign, they've netted$16,000, or basically what they made last year in total, even though donors who received the phone calls last year coughed up five times what they've donated this time. I have no doubt that as the campaign continues and the end of year approaches, more people will see the value of the mailers and support the work of the cops. In the long run, the cops will clear a lot more than they did last year using the professional telemarketers.

The cops win. The kids they aim to help win. Donors win.

The only loser is the telemarketing firm. I can live with that. Nice work, officers.

All Hat, No Cattle

For those of you who think Senator Chuck Grassley has overstepped his bounds by investigating mega-churches for excessive compensation, rather than relying on the IRS to do the work, I offer up this piece of exculpatory evidence for the Senator's defense.

According to the Chronicle of Philanthropy, the IRS is warning charities that they may soon take new steps to identify inefficient and ineffective charities. Steven T. Miller, the commissioner of the agency’s tax-exempt and government-entities division, told a group of foundation officials and donors that the IRS is also considering pursuing legislation to require charities to make minimum annual pay-outs, reducing the non-profits' ability to hoard their funding.

Regular readers of this blog of course know that I would support such measures. But I question how Mr. Miller could make such comments with a straight face. Does he actually expect anyone to take him seriously? This is the same IRS that recently ran crying and screaming from their original plans to ask charities to compute their program and overhead expense ratios on the new 990, and explain what percentage of their total budget went to CEO salaries, because according to Ronald J. Schultz, a senior technical adviser for the IRS’s tax-exempt division, “we were implicitly making statements about what was important. That’s not the kind of message we want to be sending.”

They weren't comfortable requiring charities to write down on an informational tax document what percentage of their budget went to programs, because that was being too judgmental, but a month later, they expect us now to believe that the IRS is about ready to start "taking steps to ensure groups are effective and efficient?"

Talk is cheap. And all the IRS is doing here is talking.

Separation of Truth and State

If you read this piece by the Associated Press and some of the comments therein, you might think that jack-booted anti-religious thugs from our federal government were unfairly terrorizing churches nationwide, investigating their daily activities and making unreasonable and burdensome requests for personal, private donor data. But if you thought that, you thought wrong.

What happened was that the top Republican on the Senate Finance Committee, Chuck Grassley of Iowa, launched an "investigation" last week of six evangelical mega-churches by requesting information about "compensation, board oversight and perks -- from luxury oceanside homes to flights on private jets to opulent spending on office furniture." If what Grassley suspects is true (no way for us at Charity Navigator, or you at home, to know--these groups are of course exempt from filing ANY financial documents with any authorities--state or federal), it would seem that these salaries and benefits would not be, as the IRS requires, "reasonable." IRS rules theoretically (again, no way for anyone to know what's going on inside these groups--despite the fact that we as taxpayers subsidize their activities) prevent pastors and other insiders from excessive personal gain through their tax-exempt work. The six ministries in the inquiry are Pentecostal groups that have television presences and preach a ''prosperity gospel'' message, in which the faithful are supposed to receive great material rewards.

Three thoughts:

• Non-profit religious groups are supposedly "policed" by the Evangelical Council for Financial Accountability. I have no problems at all with ECFA, but membership in their group is completely voluntary. None of the groups questioned by Grassley belong (and based on the amount of donations they must be receiving, this refusal to participate has not affected them adversely with donors). The ECFA's principles for governance are the religious equivalent of the new ones recommended by the Independent Sector. While those that adopt them are demonstrating to their donors that they have an interest in playing by the rules, they're worthless for most of us if there are no financial or regulatory repercussions to those that ignore them. Self-regulation is cute, but this case shows that the only way to definitively rein in the outlaws, in a situation void of true market forces, is through external regulation.
  
• How non-accountable are churches, big and small, not just to their individual donors, but to the taxpayer populace as a whole? Senator Grassley's "investigation" consists of him faxing a letter to the mega-churches in question, asking them some questions about how much they pay their leadership, and what kinds of benefits they receive. And what happens if they don't answer his questions truthfully and transparently? Nothing. In fact, they are under NO legal obligation to answer his questions at all. You heard that right. The ranking Republican on the Senate committee with jurisdiction over non-profits in this country can ask these non-profits questions until he is blue in the face and they are under NO legal obligation to answer these questions, ever.
  
• Anyone else troubled not just by the double standard here, but by the hypocrisy of those who say that Grassley is unfairly singling the religious groups out, demanding that they play by different rules, when in reality they're the only ones not playing by the rules? Why should these particular non-profits, which pay no income or property taxes because they are serving the public as a whole, be allowed to pay their leaders salaries which are not "reasonable" and furnish them with "opulent seaside homes," while maintaining total secrecy over their finances, just because they're religious in mission and nature, while at the same time, we demand that every other non-religious group in this nation open their books to anyone who asks? I like my separation between church and state as much as the next guy, but how is this even rational, let alone defensible? The seven-figure compensation package of Benny Hinn is private, even though he's running a non-profit approved by the IRS, to whom every donation to is fully tax-deductible, while the lady who runs my local rape crisis center has her $70,000 salary published on the internet by someone like Charity Navigator?
  

Please don't read this as some sort of anti-religious rant. Nothing could be farther from the truth. It's just an issue of common rules and common sense. If these groups are going to take the benefits from our federal government of being non-profits (and the benefits are immense), shouldn't they have to bear a few of the costs?

Blogging Our Lives Away

I have been attending the Blog World Expo, the largest blogging conference ever (yes, I'm in Las Vegas--I know, I know, my life is not awful), and while I'm not exactly the "live-blogging" type, that was my intention. However a computer glitch at my end made that impossible and I was unable to share any of the sessions with you in real-time as I wished. However, for those you in the non-profit sector interested in learning a bit more about this vital medium, I thought I'd share just a bit of the wisdom I gathered from much more successful bloggers than I. The rest, I'm keeping proprietary, as I attempt to use it to turn the Take into the next big thing.

From a variety of speakers, here are some of the ways to get your blog noticed.

1. Name your blog "Ask a ____." Supposedly people come to the web for two main reasons: To be entertained, and to have a problem solved. If you can solve their problems, they'll keep coming back. So go with "Ask a Lawyer," "Ask the Crafts Expert," or even "Ask the Charity Guy." (Hmm...)

2. Use video. This was the most common tip offered up by the experts. With Google buying YouTube, video is now king. Do whatever you can to get original videos--no longer than 3 minutes--up on your site.

3. Be political. Apparently, from here until the 2008 elections, political blogs will be king. If you can offer a fresh take on the candidates and the process, there's traffic out there for you.

From Matt Mullenweg, the founder of WordPress, his two keys to making your blog successful: Be unique, and love what you're doing.

His keys for attracting visitors? Have fantastic, passionate content, and spend some time commenting on other similarly-themed blogs.

From Newstex President Larry Schwartz, his keys to getting your blog syndicated:

1. Frequency matters--You must post often.
2. Longer posts are better--600 to 700 words a post are best.
3. Stay on topic--If you write a charity blog for instance, don't write about your kids or your favorite recipes.
4. Stay non-exclusive in your syndication agreements--More is better.
5. Use a summary RSS feed--It makes readers come to your site to get the full content.
6. Use video!

Also from Larry, here are the 10 most likely subject areas from which to get your blog syndicated (Special note here, EVERYONE noted that if you want to get your blog read--or at least looked at--the best way to do that is to show pictures of cheerleaders wearing little or nothing, but if you want to be legit, or have your stuff read in libraries, schools, and corporations, these are the topics of most interest):

1. Political
2. Financial
3. Tech
4. City Life
5. Media
6. Law
7. Health
8. Video Games
9. Automotive
10. Entertainment

And yes, I of course noticed that "charities and non-profits" wasn't on the list. That just means that those of us in the sector have less competition!

Gateway to a Fraud

In our 2007 Holiday Giving Guide, we highlight 10 of the worst non-profits in the country. If anyone on your giving list asks that you make a donation in their name to one of these groups, cross that person off your list. Life is too short to hang out with people who are clueless.

For space constraints, we of course only cite a few of the low-lights for each group. But if you want to read more about how criminal one of these groups is (and in this particular case, I actually use the word "criminal" literally), please check out this story in today's St. Louis Post-Dispatch about Gateway to a Cure and its founder Lou Sengheiser. Sengheiser is a bad dude, and it looks like he's headed for prison.

On a personal note, I think it's important to point out that Gateway's unraveling is a direct by-product of the investigative reporting of Bill Smith, a great reporter for the Post-Dispatch. Bill knew something stunk with Sengheiser's group, and he kept pulling and pulling, like only a good reporter can and will. The result is this story, a bad group going under, and donors in St. Louis being a lot safer from predatory charitable scams. Sadly, for those donors and those who care about identifying charities that don't deserve the public trust, Bill retired a few weeks ago. I know I'll miss him. Safe to say that Lou Sengheiser won't.

(UPDATE--11/9/07--Gateway to a Cure founder Lou Sengheiser apparently took his own life yesterday, while the jury was deliberating on his federal criminal charges. )

Shameless Self-Promotion

I'm on the road today but not too far away to notice a couple of honors for the organization I'm proud to work for. For those of you who hate it when I point out some of the positive acclaim we receive, leave now and come back later today for another post; right now I'm going to brag a little bit.

First, Kiplinger's Personal Finance Magazine has named Charity Navigator as one of the "25 Best Websites in America." We're obviously very proud of this honor, as one of our main goals as an organization is to get people to take their philanthropy as seriously as they take their investing.

And secondly, the Five Sector Alliance has named me as one of their 2007 lifetime achievement winners for my "impact on society."(Click on 2007 Five Sector Gala to learn more) Now, my impact on society is minimal without Charity Navigator, so this award is obviously for us, and I'm proud to accept it on behalf of the good folks at Charity Navigator.

A Veterans Group That Must Hate Veterans

The Pittsburgh Channel has the story of an investigative report by Channel 4 in that city about a charity (in name only) that is calling Pennsylvania donors, collecting tons of money, and spending mere pennies on the dollar on their charitable cause. The charity is Paralyzed Veterans of America, their fundraiser is Civic Development Group (unfortunately, of my state, New Jersey), and the story is sickening but all too common. The group has raised well in excess of $5 million, and spent at least 85% of that on telemarketing fees.

The reporter from Channel 4 in Pittsburgh asked Joseph Dornbock, the director of the "charity" if donors should be concerned, saying "they probably think that donation, most of that money is going to be used by the paralyzed veterans, and it's really not, isn't it?"

Replied Dornbock: "It's a common misperception that there should be an overwhelming amount of every $1. There are expenses along the way."

A "common misperception" that if you donate money to paralyzed veterans, that most of the money should get to, well, paralyzed veterans?

No. The only misperceptions here are that many donors still think that everyone in the charity world is out to help others, and that I thought I'd seen the depths that human beings could sink to in their quests to line their own pockets at the expense of good donors and needy recipients.

Please don't give to these telemarketing groups, especially those that purport to represent our veterans. 99 times out of 100, they're bogus telemarketers, representing only themselves, and they know that the nation is filled with sympathetic but unsuspecting donors who would never dream that the person on the other end of the telephone line isn't really as honorable or patriotic as the people they claim to be fundraising for (or from).

To find a reputable group helping our veterans, click here to learn more.

Kim is Kool

In the parlance of the advertising world, Kim Komando and her recommended sites "move the needle." And therefore, we at Charity Navigator are honored to be today's "Cool Site of the Day" for Sunday, November 4, 2007.

Holiday Giving Time

Now that Halloween is over, we can start focusing our attention on holiday giving. I'm of course not referring to the presents you buy your friends and family, but the charitable gifts most of you will make to benefit others. In fact, if you care enough about charities and philanthropy to read my blog, you probably know that 50% of all charitable giving by individuals and families is done between Thanksgiving day and New Year's. It's the time of the year when you feel the most altruistic, it's the end of the year so you have some idea of what will be left in the family budget and therefore can be donated with good conscience, and of course, it's when you need to make your charitable gifts to ensure you get the full tax deduction in this calendar year.

Here at Charity Navigator, we'll do all we can to make sure your charitable giving goes as well as all of your other holiday plans (if not better), and the first thing we want to do is unveil our 2007 Holiday Giving Guide. Here you'll find our giving tips for this year (in both written and video form), a roundtable discussion at which we asked some tough questions of some of the industry's most successful fundraisers, a list of the 10 charities no one in their right mind should ever give to, some holiday giving facts, and our highest and lowest-rated charities in each cause we cover. I hope you'll find the guide useful in identifying good charities to support this holiday season. When it comes to finding just the right present for your mom, however, I'm afraid you're on your own.

Maybe Women Are Just Better Fundraisers

According to the National Prostate Cancer Coalition, 27,000 American men will lose their lives to prostate cancer in 2007. Meanwhile, the Breast Cancer Research Foundation claims that around 40,000 American women will die from breast cancer this year. So the diseases are relatively similar in the devastation they create.

And yet, when I checked the IRS database for charities that have missions related to breast cancer, I found 1523 such groups and only 230 that were related to prostate cancer. I know this is not surprising to most of you, and the reasons for it are many. In the world of fundraising, breast cancer research and advocacy is a compelling and even sexy sell, while few men, even those with prostate cancer, like talking much about that subject.

As anyone with a pulse can tell you, we just finished up Breast Cancer Awareness Month. If you turned on your TV, read your paper, or even dared to step outside, I'm sure that you are "aware" of breast cancer by now. The "Pinking of America" is now complete. We've been inundated with pink cars, pink food, and pink clothes, and if you were somehow able to spend the entire month without sponsoring a participant or competing yourself in a fun run or walk for a breast cancer group, well, you're definitely in the minority.

Now contrast that with those fighting prostate cancer. September was apparently National Prostate Cancer Awareness Month (must have missed that one in the back-to-school excitement) and now November brings the "largest one-time event designed to bring awareness and funding to this important cause." What is this event, those of you not in the know might be asking? Why, it's "Movember" of course.

"Movember?" Yes, this is apparently a worldwide fundraising effort, in which men grow mustaches during the entire month of November, in return for donors making pledges to the Prostate Cancer Foundation. (The name comes from combining the Australian slang word for mustache--"mo"--with the month in which it is held--November). Given the lack of mustaches you see in corporate board rooms, the national media, elected office, Hollywood, and even the upper echelons of non-profit management ranks in this country, I am not optimistic about the success of Movember. In 2007, we're just not a country of mustache-wearers, and I'm sure very few men will be willing to buck that trend and grow a mustache for fighting prostate cancer, no matter how compelling and universal that cause may be. Given no other option for showing their support, men will keep their upper lips clean, and their money in their pockets.

Prostate cancer fundraising will continue to take a back seat to breast cancer, and while some of it can be attributed to men's insecurities about talking about their bodies, some of it will simply be because of the lameness of the campaigns. Maybe the breast cancer advocates could give a few ideas to the prostate cancer folks. Even if they used up all of their good ones during October, the ones that are left over can't be any worse than Movember.