Charities may not be donating as much money to groups as you think

ATLANTA — Pennies on the dollar: Charities that say they are helping the nation's veterans but most of the money raised ends up elsewhere.

Channel 2's Washington Bureau reporter Justin Gray found that these organizations are raising millions of dollars from well-meaning donors.

The names of the charities sound great. The fundraising letters and the websites are powerful. But the problem is that the vast majority of the money some of these groups are raising never gets to veterans in need.

Butch Kelly is on a fixed income but gives when and what he can. When he first got a letter from Disabled Veterans National Foundation, he sent back a check.

“You see 'disabled veterans' and think, 'Wow, these people are doing good work,'” Kelly said.

Disabled Veterans National Foundation's website is slick. There are videos and testimonials about work to help vets. But the organization's tax filings show that, out of every dollar donated, less than a quarter is actually going to programs that support veterans.

Daniel Borochoff monitors nonprofits at Charity Watch. The group gave Disabled Veterans National Foundation an F rating.

“They're basically taking money away from needy veterans,” Borochoff said.

Another watchdog, Charity Navigator gives it 0 out of 4 stars.

“They should be embarrassed and ashamed of themselves,” Kelly said.

The majority of the $27 million DVNF raised in 2016 went to mailings.

Disabled Veterans National Foundation's headquarters is a building in suburban Washington DC. More than a month ago, Gray first reached out asking to talk to them about their finances. But they've repeatedly refused his requests for any kind of interview.
 
They did send a letter. It touts the military record of Purple Heart-winning CEO Joseph VanFonda who has been "working to revamp the organizations operations, programs, staff and fundraising practices."

The letter said, “DVNF is committed to transparency and accountability.”

But VanFonda won't talk to Gray. And Charity Watch said the proof is in the numbers.

“You're really helping the telemarketer more than you're helping the veterans,” Borochoff said.

DVNF is not alone.

The Veterans Support Foundation gives less than a quarter out of every dollar to veterans.

The president of Veterans Support Foundation, Keith King, said his organization provides housing for veterans in need

“We're proud of what we do once we have the money in the house, how we take care of that money, what we do with that money and I think that is as important, if not more important, than what it costs me to raise that money in the first place,” King said.

King said money problems forced his charity to turn to telemarketers, who now get half of every dollar he raises.

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“We had gotten to a point to where we were looking seriously to simply shut our doors,” King said.

That's what Charity Watch said should happen.

“They should go out of operation,” Borochoff said. “They're just siphoning money out of the giving pool.”

Money can be raised efficiently. At the National Military Family Association, 80 cents out of every dollar donated goes to programs.

“It's important to ask the question, ‘How much of my dollar is going to support the people you say you serve?’” said NMFA’s Joyce Raezer.

And if a charity doesn't have an answer, Borochoff said you should reconsider giving.

DVNF sent a response to Gray:

"You are correct, DVNF has made many changes and continues to make more.  We have professionalized the organization in many respects, starting with the hiring four years ago of Joseph VanFonda as CEO, upon his retirement, with the rank of Sergeant Major, from a 27-year career in the U.S. Marine Corps. A recipient of the Purple Heart, VanFonda remained on active duty after being injured in combat. His final assignment in the Marine Corps was serving as the Regimental Sergeant Major for the Wounded Warrior Regiment, responsible for the coordination of non-medical case management for combat and non-combat wounded, ill, and injured Marines.  

At DVNF, Mr. VanFonda who has been working to revamp the organization’s operations, programs, staff, and fundraising practices.  

As you and I discussed on the phone, charity evaluation sites are generally only able to rate a very large number of charities (more than 9,000 in the case of Charity Navigator) by using algorithm-driven data metrics and several yes/no questions.  They simply don’t have the resources for close evaluation of the effectiveness of individual charity’s programmatic activity.  Organizations like DVNF that don’t have large numbers of corporate donors and wealthy individuals and rely instead on direct mail—with its high overhead costs for printing, mailing and postage—often end up with zero stars even though they may run very fine programs that provide significant benefit to a large number of people.  We believe this is the case with DVNF.  

Also, please consider three other points about DVNF’s Charity Navigator rating:  

•    DVNF has low administrative costs.  Charity Navigator awards the highest score on this metric for organizations whose administrative costs are less than 15% of their total budget.  DVNF’s percentage is just 8.3%.  
•    DVNF does not pay exorbitant executive salaries.  Charity Navigator says that an organization whose CEO’s compensation is 1% of the organization’s budget is an example of “tighter expense control.”  In DVNF’s case, the CEO’s compensation is less than half that:  0.49%.  
•    DVNF also has strong year-to-year growth in program expenses, a good thing.  Charity Navigator awards the highest score on this metric for organizations whose growth in spending on programmatic activity exceeds 10%.  DVNF’s score is 11.4%. 
•    DVNF is committed to transparency and accountability.  Charity Navigator awards four stars, the maximum, for any organization with a 90% score or better on accountability and transparency.  DVNF’s score is 96%.  Moreover, DVNF is a participant in the GuideStar Gold Transparency Program.  

One important indicator of DVNF’s progress in professionalizing the organization over the last few years is the fact that we have been awarded grants from several corporations and governmental agencies.  These grants are a vote of confidence in the value of our service to veterans and in the integrity of the organization.  

Another factor that offsets to some extent the high cost of direct mail is the fact that DVNF gets great “bang for the buck” for its programmatic spending.  So, for example, the Health & Comfort program, which sends shipments of health and hygiene supplies, clothing and toiletries to veteran stand-down events and veteran shelters around the country, distributes mostly donated products.  So, for a modest expenditure of staff time and transportation costs, many thousands of veterans benefit.  More than 20 stand-down events received distributions in 2017, and organizers tell us that these free distributions help to attract veterans to their events, where they can get other vital services like health screenings and benefits assistance from the VA.  

Similarly, the “Tailored for Troops” program distributes free suits and other business attire, donated by a corporate partner, to unemployed veterans who will have a much better chance at higher paying jobs if they can dress professionally.  That program also has impact that is out of proportion to the cost.  
 
Another program that leverages our expenditures for maximum impact are our Capacity Building Grants, where DVNF selects highly promising veteran-service organizations and awards grants that are designed build the scale and long-term effectiveness of the organizations’ programs that directly serve veterans.  In 2017, 59 organizations were supported with significant grants.  These included organizations that provide very specific services one-on-one to disabled veterans, like adaptive bicycles, service dogs, advanced prosthetic devices, art therapy, etc.  

All told in 2017, DVNF supported more than 50,000 veterans through our programs, and we hope to keep doing even more to support the men and women who served in defense of our country going forward."

Cox Media Group