Mar-a-Lago Red Cross Gala Raises Questions

(The gates of luxury: outside of Mar-a-Lago)

Does it matter where you host your charity gala?

The days following Trump’s January 27 executive order were chaos. Customs and Border Protection agents were abruptly tasked with barring Syrian refugees’ entry to the United States indefinitely, blocking all other refugees for 120 days, and preventing the entry of all citizens of seven mostly Muslim countries for 90 days. The plan was ill-defined and generated immense consternation among those enforcing it. It also created tremendous backlash, bringing protesters out to airports in support of refugees and in opposition to the targeting of a single religion, Islam.

A familiar charity – the Red Cross – was at JFK Airport in New York, providing basic provisions to those impacted by the order, just as they have done since 1881 for others dislocated by major events.

According to the American Red Cross’s 2015 990, the group received over $46 million in government grants. Not a significant amount when factoring in annual gross receipts over $3 billion. But is it a conflict of interest to accept funding from a government that creates duress for those the nonprofit is supposed to serve?

Consider this: The American Red Cross recently hosted its annual charity gala at Mar-a-Lago, a Trump property, which has become known as the Winter White House. The Trumps attended the gala and offered praise to the organization.

Optics matter. Nonprofits should be mindful of the potential repercussions of their actions. Fixing with one hand what the other breaks isn’t going to make any real progress.

Was Trump Foundation’s Political Donation Intentional?

The IRS clearly states that charity organizations are “absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign.”

A brewing controversy involves one of today’s most recognizable names potentially breaking this cardinal rule. Citizens for Responsibility and Ethics in Washington (CREW) requested that the IRS undertake an investigation into a gift made by the Trump Foundation to Florida Attorney General Pam Bondi.

If CREW’s hunch is correct, Donald Trump’s namesake foundation may have made a colossal misstep by gifting $25,000 to a group supporting Florida Attorney General Pam Bondi in 2013. The donation arrived in the same week that Bondi began investigating charges of fraud at Trump University – the now defunct educational enterprise of Trump and current hot topic of debate in the Republican presidential race. Trump’s opponents have pointed to the failed endeavor as an emblematic case of the candidate’s disastrous business record and potentially fraudulent practices.

Trump has chalked up the donation as a clerical error, in which Bondi’s political support organization – And Justice For All – received a check that was designated for a Utah-based nonprofit of the same name. To further complicate the situation, the gift was listed as going to yet another organization – a Kansas-based pro-life nonprofit called Justice for All – in the Trump Foundation’s 990.

The coincide, however, is quite staggering. Bondi ultimately dropped the investigation into Trump University, and has since endorsed the real-estate mogul and front-runner for the Republican presidential candidacy.

CREW Communications Director Jordan Libowitz remarked that “there’s so much going on here that the IRS really needs to investigate and find out where the truth was.”

Key Elements Group will cover the developments relating to Donald Trump and the political donation his foundation made as CREW continues to lobby for an investigation and the presidential race brings more candidate controversies to the national discourse.

Scrutiny for Wounded Warrior Project

One nonprofit is in hot water following the dismissal of its top leadership. The Wounded Warrior Project – a charity whose mission is to provide care for injured veterans – is facing scrutiny following reports that personnel grossly mismanaged organizational funding and directed few resources to its charitable programs.

The group’s board jettisoned Chief Executive Steven Nardizzi and Chief Operating Officer Al Giordano, while attempting to reassure the public that the nonprofit has done nothing wrong. A press release from the group claims that statistics on organizational spending cited by the charity watchdog group Charity Navigator as well as The New York Times are misleading.

Critical reports cited extravagant galas and meetings – one of which cost $1 million dollars and featured histrionics including Nardizzi rappelling from the ceiling. The overall picture is further darkened by first-hand accounts from former employees, one of which described the organization’s operations as “frat party.”  The former staffer – Erick Millette, a veteran himself – continued by remarking that “there was heavy drinking, dancing, inappropriate sexual behaviors. There was everything. It was just totally out of control.”

Long a topic of debate in the world of philanthropy, the ratio of programmatic spending versus spending directed to fundraising is not set in stone. Many in the field – including Wounded Warrior ally and vocal apologist for the organization Dan Pallotta – believe that spending a lion’s share of fundraising on further fundraising is ultimately the best way to achieve results.

Key Elements Group will have more as event unfold at the Wounded Warrior Project.

Anti-Choice Laws Spur Backchannel Abortions

(Mississippi State Capitol in Jackson)

A haunting trend has emerged in Google search behavior among U.S. citizens, indicating the effects of anti-choice legislation sweeping across the country in recent years.

In an op-ed for The New York Times, Seth Stephens-Davidowitz discusses an alarming uptick in search queries for alternative means to terminate pregnancies.

The state with the highest search rate for backchannel abortion methods is Mississippi, the state with perhaps the most stringent anti-choice legislation in the books. State lawmakers have passed measures that place onerous requirements on abortion clinics, raising near-insurmountable bureaucratic and financial hurdles that effectively drive them out of operation. The state has one remaining clinic, which could face closure in a case before the supreme court.

Mississippi officials state that the anti-choice law is “medically legitimate health and safety regulation,” which arose from “highly publicized reports of deaths and injuries involving abortion facilities across the country that raised serious doubts as to the safety of women undergoing abortion procedures.”

Research has proven that women are 14 times more likely to die from childbirth.

In the op-ed, Stephens-Davidowitz breaks down the list of search phrases – beginning with seemingly more benign queries including “buy abortion pills online” and “free abortion pills,” and entering decidedly more harrowing territory.

“How to self-abort,” “how to have a miscarriage,” and “how to do a coat hanger abortion” are increasingly common search phrases.

Mississippi is by no means alone. Texas is party to another supreme court case that calls into question the constitutionality of similiar legislation that has shuttered all but a handful of clinics across the state, the second most populous in the nation. Other states have gone after women’s healthcare provides such as Planned Parenthood, which was recently defunded at the sate-level in Ohio through anti-choice legislation signed into law by  Governor John Kasich.

Planned Parenthood has become target number one for anti-choice activists, most evidently in the widely discredited, heavily doctored videos disseminated by the organization Center for Medical Progress, which is now under investigation for its libelous actions.

As nonprofits and fundraisers respond to these threats to women’s healthcare and basic rights, Key Elements Group will provide ongoing coverage.

Nonprofit Suffers from Land’s End Controversy

(Pictured above: Gloria Steinem)

Land’s End – the Wisconsin-based clothing retailer – provoked controversy recently when it published an interview with renowned feminist writer and icon Gloria Steinem in its spring catalog.

As part of the company’s “Legend Series,” Land’s End intended to underscore the contributions Steinem has made to the advancement of women’s equality. Instead, it attracted the ire of anti-choice advocates who pointed out Steinem’s support for abortion rights.

“Our goal was to feature individuals with different interests and backgrounds that have made a difference for our new Legends Series, not to take any political or religious stance,” a statement from Lands End read.

In response to the interview, some religious schools have announced that they will cease purchasing uniforms and other goods from the company. Anti-choice advocates are calling for a boycott.

The interview was shaped around an appeal for shoppers to donate to the Equal Rights Amendment Coalition (ERA) – an organization whose aim is to pass a new amendment to the United States Constitution to explicitly “prohibit discrimination against girls and women on the basis of sex.” The option to give to the organization now appears gone in the wake of the interview’s backlash.

Unfortunately, the opportunity for a thoughtful and engaging dialogue about the advancement of women’s equality was cut down by the first sign of controversy. Doubtlessly, the ERA Coalition would have stood to benefit from Legend Series initiative. Instead, a worthwhile organization has witnessed another potential revenue stream dry up.

Nonprofits Play Role in Patent Troll Debate

(Photo: Two Vermont nonprofits were threatened with a lawsuit if they did not pay licensing fees stemming from an obscure part of their office scanners)

It’s hard enough for business and nonprofit leaders to keep their organizations afloat without completely erroneous charges of patent infringement showing up in the mail. But that is exactly what has been happening to professionals around the country. Practiced by so-called “patent trolls,” these stunts involve shell companies that attempt to extract royalties from patents of dubious value. In many cases, the arguments are completely absurd and blatantly disingenuous. Two Vermont nonprofits play a big role in one of the most illustrative cases.

Lincoln Street and ARIS Solutions – Vermont nonprofits that provide disability-related assistance – were targeted by a Texan-owned, Delaware-based firm called MPHJ Technology Investments in 2012. The letters accused each nonprofit of owing thousands of dollars in payments stemming from the licensing fees of an obscure, MPHJ-owned patent relating to a specific part inside office scanners.

These patent-trolls may have stepped too far. The Vermont Attorney General has requested a federal court to dismiss a previous ruling that held that MPHJ could continue its duplicitous campaign. More businesses are starting to pay notice now that patent trolling has gained more traction in the media. Congress may also be taking serious steps to counter the phenomenon.

The trend continues, however, with many organizations simply choosing to pay for fear of costly legal services. This is awful and parasitic, stifling legitimate innovation and the work of fair-playing business and nonprofit leaders.

An online organization called Trolling Effects offers advice to victims of patent trolling. If you or an associate has received a confusing letter alleging patent infringement, consult their website, and contact other consumer advocacy organizations.

FIFA Fumbles Its Nonprofit Mission

On May 27, nine FIFA representatives – along with a handful of sports media executives – were arrested on corruption charges in Geneva, Switzerland. The United States-led case against soccer’s most powerful nonprofit institution is less surprising in the content of its allegations (bribery, racketeering, and fraud) than the extent of the indictments.

News reports appeared last year showing that FIFA officials may have received bribes from vested interests in Qatar for lobbying on the Middle Eastern country’s behalf in the campaign for the World Cup. Indeed, the last year has seen a host of stories concerning the less salubrious aspects of FIFA’s operations, including the nonprofit’s undue pressure on governments to change local laws in order accommodate sponsors’ interests. While these and other controversies were hardly secret, the multi-billion dollar institution exuded an air of invincibility, weathering criticism through its immense influence as the international administrator of the world’s most popular sport.

Sports are big business, and nonprofit sports institutions are not immune to the corrosive influence of billions of dollars in profits. Whether it is the exploitive profiteering of the NCAA or the evasiveness and obscurity of the NFL’s (now bygone) tax exemption status, United States sports fans have seen the unsavory – if not entirely illegal – side of sports nonprofits. Taken to the world stage, the picture gets even shadier. The larger scope often means that the corruption is more sinister, involving governments and business interests that are not held to the same human rights checks that U.S. sports fans naturally expect domestic institutions to adhere to.

Enter Qatar: the highly controversial recipient of the 2022 World Cup. One of the chief issues at play in last month’s indictments against FIFA representatives is the bribery of officials by Qatari interests – backroom arrangements involving illicit cash transfers that may have ultimately secured the rights to the World Cup for the Gulf state.

Outside of the excruciatingly high and perhaps disqualifying temperatures in Qatar (desert conditions can reach as high as 120 degrees Fahrenheit), critics also say that the nation’s abusive labor practices should bar it from hosting the Cup. The massive development projects currently underway to build stadiums for the tournament depend on inhumanely treated and miserably compensated migrant workers from Southeastern Asia, including Nepalese, Sri Lankan, Bangladeshi, and Indian workers. According to reports, as many as 1,200 workers have died since construction projects began in 2010. To put this in perspective, the closest contemporary fatality rate for a massive world sports competition development project was the Sochi Olympics, which saw the deaths of 60 workers. The Guardian projects that migrant worker deaths in Qatar could reach as high as 4,000 by the completion of the project.

Qatar’s ruthless labor practices don’t stop there. Reports indicate that workers are compelled to work in scorching weather with little to no access to water. Often hired through third-party brokers, workers have their passports confiscated by employers upon arrival and face hefty contractor fees that largely negate their salaries. Recently, Nepalese workers were denied the right to return home to attend funerals for family members that perished in Nepal’s catastrophic earthquake.

Taken together, all of these components paint a picture of virtual slavery, tacitly endorsed by a mum FIFA.

Additionally, FIFA’s damaging effects on developing countries emerged as a big issue during the Brazil Cup. An ordinance that barred alcohol sales during soccer matches – legislation that, after it was passed, drastically decreased violence during sporting events in Brazil – was rescinded in order to placate Budweiser, one of FIFA’s biggest sponsors. FIFA shrugged off criticism concerning its stance on local autonomy, flippantly suggested that Brazilian authorities simply had no say as to whether or not its own laws were enforced.

The supposed economic benefits of hosting the game was also proven erroneous. Brazil constructed the second most expensive stadium ever built, and it is now used primarily as a parking lot for public buses. The nation saw widespread demonstrations and unrest due to the perceived waste of government spending for a temporary event that catered primarily to foreign tourists and fans to the detriment of Brazilian citizens.

In the world of global sports, FIFA ranks among the most profitable organizations. This is due largely to the fact that soccer is by-and-large the world’s most popular sport. Between 2011 and 2014, FIFA earned around $5.7 billion, $1.6 billion of which came from corporate sponsorships alone. With labor abuses and internal corruption, FIFA’s unethical practices and sizable profit margin distract from the lofty principles of peaceful and honorable competition.

Whether or not the United States-led indictments lead to an overhaul of FIFA’s operations remains to be seen. Sepp Blatter – the long-time, controversial president of FIFA – was recently reelected to his position despite the scandal. Infamous for his suggestion that women’s soccer would be more popular if the athletes wore tighter uniforms, Blatter is criticized as out-of-touch and emblematic of the entrenched elite that control the mechanisms behind the institution.

The definition of what constitutes a nonprofit varies around the world, but at the core of the definition is the idea that an organization empowers people or otherwise contributes positively to human experience by promoting constructive causes. Sports are certainly an empowering cause, helping further everything from gender equality to health, economic opportunity to cultural understanding. FIFA’s stated mission is dedicated to “the constant improvement of football.” Whether or not it actually pursues this goal according to the values expected of an international nonprofit institution is contingent on rooting out structural abuses and aggressively advocating international standards of human rights for the benefit of all people from around the globe.

Vetting Veterans Charities: How to Make a Difference this Memorial Day

What is perhaps the most important take away from the recent breakup of the Reynolds family scam nonprofit ring?

Vetting organizations before donating.

The Tennessee-based ring of cancer nonprofits swindled donors of $187 million, spending as little as 3 percent on the cancer patients purportedly assisted through the groups’ services. With sizable executive salaries for friends and families and the steep cost of third-party fundraising contractors taking up to $0.85 for each fundraising dollar, the rings’ actual services were superficial at best.

The organizations in the network, however, had atrocious ratings long before they were shut down. The recent lawsuit alleging illegal and deceitful practices was simply the final straw that led to their dissolution. The use of high-fee solicitors is legal, and is practiced across the nonprofit world, essentially diluting charitable dollars.

This point may seem like 20-20 hindsight for the those whose generosity was abused by the Reynolds family and their associates, but being aware of nonprofit ratings in the future can be invaluable for making sure charitable gifts make the greatest possible impact.

There are multiple rating services that provide insight into how well nonprofits pursue their mission and how transparently they manage their finances.  Charity Navigator is easy to use and generates starred ratings for nonprofits that provide a sense of security for the giving public.

This memorial day, as the nation prepares to honor veterans, taking some time to look up and index several legitimate nonprofits will go a long way toward making sure that your charitable gift will make a real difference in veterans’ lives

Be sure to avoid groups mentioned on the worst charities list – a jointly compiled rundown by the Tampa Bay Times and Center for Investigative Reporting. A number of veterans groups are featured, including some that employ third-party solicitors that take up to 90 percent of a funds raised.

The following organizations are highly rated, and promise a positive return on your gift this Memorial Day:

DAV (Disabled American Veterans) Charitable Service Trust

Iraq and Afghanistan Veterans of America

Operation Support Our Troops – America

Thanks USA

Wounded Warriors Family Support

Lawsuit: Network of Cancer Nonprofits Swindled Donors

On May 19, the Federal Trade Commission and the attorneys general of all U.S. states announced a lawsuit against four nonprofits. The lawsuit alleges that the organizations scammed donors of $187 million while ostensibly raising money for cancer patients. The groups include The Children’s Cancer Fund of America, The Breast Cancer Society, The Cancer Fund of America, and Cancer Support Services. The administrative staff of each organization consists of members from the same family or their close associates.

Following the announcement, phones for two of the organizations  – Cancer Support Services and The Breast Cancer Society – had been disconnected.

A handful of ranking administrative staff from the four charities have signed settlements that bar them from future fundraising activities. Children’s Cancer Fund of America President and Director Rose Perkins, Breast Cancer Society Executive Director James Reynolds II, and Cancer Fund of America Chief Financial Officer Kyle Effler are banned from managing charities or charitable assets, and are responsible for $137 million in payments that will go toward cancer patients. The settlements will also dissolve both the Children’s Cancer Fund of America and the Breast Cancer Society.

According to Jessica Rich from the Federal Trade Commission’s Bureau of Consumer Protection, the deceitful activities of the four organizations not only hoodwinked donors, but also negatively impacted genuine nonprofits:

The defendants’ egregious scheme effectively deprived legitimate cancer charities and cancer patients of much-needed funds and support. The defendants took in millions of dollars in donations meant to help cancer patients, but spent it on themselves and their fundraisers.

No one in the groups’ leadership has publicly admitted to the alleged offenses. The Breast Cancer Society’s website now consists exclusively of a letter from Executive Director James T. Reynolds II claiming innocence and blaming government regulation for the organization’s closure:

Charities – including some of the world’s best-known and reputable organizations – are increasingly facing the scrutiny of government regulators in the U.S. The Breast Cancer Society (TBCS) is no exception. Unfortunately, as our operations expanded – all with the goal of serving more patients – the threat of litigation from our government increased as well.

While the organization, its officers and directors have not been found guilty of any allegations of wrong doing, and the government has not proven otherwise, our Board of Directors has decided that it does not help those who we seek to serve, and those who remain in need, for us to engage in a highly publicized, expensive, and distracting legal battle around our fundraising practices.

According to the lawsuits, just three percent of donations raised collectively among the four organizations between 2008 and 2012 were used for charitable ends. Some funding was misused for personal ends, spent on fees for personal accounts on dating websites and trips to Disney World.

A joint report released by the Center for Investigative Journalism and the Tampa Bay Times details the Reynolds’ family and its extensive empire of nonprofits, delving into the network’s nefarious practices. According to the report, the family paid a dozen executive salaries to family and close associates.  In 2011, the interlocking network of nonprofits paid out $8 million in salaries, about 13 times more than the amount spent it on patients. The Cancer Fund of America purportedly spent less than 1 percent of the $34 million it raised over five years on patients.

The organizations in the Reynolds network routinely mischaracterized their operations. For instance, one of the group’s care packages labeled as “urgent pain medication” typically carried over-the-counter ibuprofen. Several programs the charities claimed to to have run in their fundraising efforts – including one to drive patients to chemotherapy – were completely fictional.

Taken together, the charities’ track record paints a damning picture. Over a decade, the biggest winners from the groups’ operations were contract fundraising companies – which made $0.80 on the dollar, totaling for $80.4 million – and the family members, who collectively raked in over $5 million.

NFL Punts Its Nonprofit Status

Over the past year, Key Elements Group has provided ongoing coverage of the controversies facing one of the most profitable nonprofits in the United States – the National Football League. In the wake of domestic violence scandals and soaring profits and salaries for its executive staff, the NFL began attracting more and more public and media scrutiny, particularly over its tax-exemption status.

Evidently, this attention had some effect.

The NFL announced Tuesday, April 29 that it was relinquishing its tax-exemption status. As a nonprofit, team owners pay into the league in a form of dues, which go toward administering the league and paying out the gargantuan (untaxed) paychecks of its chief executives. Roger Goodell – the league’s commissioner – made a staggering $35 million in 2013. A lot of the NFL’s earnings are distributed back to teams, however, which as taxable entities consequently pay up. This doesn’t stop some team owners, however, from bullying cities for preferential treatment and kickbacks.

Goodell announced to the press that the “league office and its management council will file returns as taxable entities for 2015 fiscal year,” referring to its nonprofit status as a “distraction.”

Commentators point out that a primary catalyst behind the move is a desire for less transparency. By law, nonprofits must reveal how much money top-level employees make. Under the new tax categorization, the NFL will not have to reveal just how well-compensated executives like Roger Goodell truly are.

The moral of this story? Bad media attention can force hands.

With executive missteps over the year’s spate of domestic violence cases, looming lawsuits over the longterm health issues faced by former players, and the extraordinary compensation enjoyed by NFL elite, the tax-free treatment that league cadres enjoyed was a bit too much for the nation to bear.

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