Take a look at this beautiful 90-second video posted a few days ago on YouTube, and promoted in emails, on behalf of the American Foundation for Children with AIDS, a small charity in Harrisburg, Pa. Then read the rest of this post.
With such artistry, what's not to like about a requested $1 donation for such a worthy cause as fighting AIDS in Africa? Let us count some of the reasons:
--According to its 2010 federal tax return, 62% of the $1 million contributed in cash was spent in raising the money, and another 9% in overhead. So on average only 29 cents of that dollar got anywhere near benefiting Africa.
--Again according to the tax return, a paid solicitation company in Florida hired by the foundation took 88% off the top of the $630,000 portion it generated. So only 12 cents from each of those dollars made it to the stated charitable mission.
--The Better Business Bureau's Wise Giving Alliance faults AFCA for what it calls "a lack of sufficient oversight" by its board of directors.
--Last year, AFCA signed a consent decree with Pennsylvania charitable regulators in which it admitted it made "material false statements" on required filings by incorrectly reporting contributions income and fundraising costs and also failing to disclose various conflicts of interest. AFCA also paid a $4,000 fine. (The charity later blamed its accountants and said a lack of resources forced it to admit wrongdoing in the consent decree.)
--AFCA has considerable ties with a Canadian nonprofit, Pediatric AIDS Canada, that earlier this year shut down and was stripped of its tax-exempt status north of the border on grounds it hid how little it really spent on the charitable mission.
Several message left by Forbes at AFCA's Harrisburg office for Executive Director Tanya Weaver were not returned. AFCA paid her and a company she co-owns $82,301 last year.
On its 2010 tax return, AFCA listed total charitable contributions of $6.3 million. But $3.5 million of that--more than half--was the value attributed to "donation of medicine" by Lifesgood Inc. That's a Canadian company associated with Craig Copland, a fundraising consultant in Ontario who has been the subject of unflattering articles in the Toronto Star.
Last year, the paper, reporting on a government audit, said that Pediatric AIDS Canada paid $877,000 (Canadian) to Lifesgood Inc. for medicine but claimed on its financial statements the value was $15.5 million. That's a nearly 1,700% mark-up. The higher number made the nonprofit's financial efficiencies look much higher than they really were, authorities said. For this article Copland and Lifesgood couldn't be reached, but he has denied any wrongdoing and has said he did not control Pediatric AIDS Canada.
If AFCA used the same valuation multiple for the medicine it got from Lifesgood as did Pediatric AIDS Canada, AFCA's reported operations would shrink by 50%.
Clearly, the fingerprints of Pediatric AIDS Canada have been all over AFCA. Founded in 2004, AFCA produced its first financial statement a year later showing a loan from from Pediatric AIDS Canada. According to the Pennsylvania settlement, one of AFCA's current directors is a former executive director of Pediatric AIDS Canada (a fact not noted on the bios posted on the AFCA website). At various times Pediatric AIDS Canada was AFCA's biggest contributor. Moreover, AFCA's Florida-based fundraising company is affiliated with the fundraiser that did much work for Pediatric AIDS Canada and, according to the Toronto Star, once had Copland on its board.
In the world of U.S. charities, AFCA is relative small fry. The cut-off point to make last year's Forbes list of the 200 largest U.S. charities was $47 million in contributions received. But with more than 1 million U.S. nonprofits alone, there is a lot of competition for your contributed money. For some tips on sorting out out the prospects, click here.
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