Over four years, as increasing numbers of veterans returned home from wars in Iraq and Afghanistan, a charity called Disabled Veterans Services of Pompano Beach, Fla., reported raising more than $8 million in cash and nearly $4 million in donated goods that it claimed would help disabled and homeless veterans.
But barely a nickel of each dollar the charity raised in cash went directly to help veterans, a News21 analysis shows. Although it claimed to have sent about $2.5 million in donated drugs and medical supplies to a Boston homeless shelter, the shelter said it received just one shipment worth about $210,000.
Another charity, Help Hospitalized Veterans of Winchester, Calif., spent only 25 cents of every dollar it raised on arts-and-crafts kits and “craft care specialists” as “diversion therapy for veterans facing extended hospitalization.” Most of the rest of the money, according to the charity’s filings with the Internal Revenue Service, paid for mass mailings soliciting more money and urging Americans to volunteer at veterans’ hospitals and become pen pals with patients.
In the years that the country has been at war, Americans have given over $12 billion to veterans’ and military charities. Donations grew nationwide from more than $615 million in 2001 to more than $1.6 billion in 2011 alone.
Federal and state laws demand financial reporting from all charities, but they require little in the way of reporting the results of services the charities claim to provide, the News21 investigation shows. Though many charities offered needed help, others spent much of their money — sometimes most of it — on the organization’s overhead expenses, rather than services promised to veterans.
“The scoundrels and the thieves and the rip-off artists … that want to make a lot of money know that these are categories of charities where the American public is gravitated, it pulls at the heartstrings and they know that the tendency of Americans is to give impulsively, emotionally with that pull,” said Ken Berger, president and chief executive officer of Charity Navigator, an independent charity evaluator. “They exploit that and they use that.”
Using federal tax filings, News21 identified more than 1,900 public charities across the country working to support veterans, service members and their families between 2001 and 2011.
A review of those filings, called Form 990s, shows charities claim to provide everything from cash assistance and craft kits to housing help and wheelchair repair. But descriptions of their programs often are cursory, which means donors may know little about how their money actually is spent.
Charity experts and watchdogs say at least 70 percent of a charity’s expenses generally should go to programs or services and no more than 30 percent should be used to pay for its management and fundraising. News21 found that seven of the top 12 charities that raised the most in donations from 2001 to 2011 spent 75 percent or more on programs and services from 2001 to 2011.
The Fisher House Foundation, for example, which builds accommodations for families of service members and veterans receiving medical treatment at military bases and VA medical centers, directed more than 95 percent of its spending, about $230 million, to its programs from 2001 to 2011. It spent less than $4 million on fundraising.
The Navy-Marine Corps Relief Society, which helps military veterans or their families during tough times, raised more than $185 million, but spent just 2 percent on fundraising, among the best rates of the charities analyzed for this story.
“We could really care less if you’re collecting millions and millions of dollars. What are the results — are they significant?” asked Kimberly Mitchell, who was deputy director of the Office of Warrior and Family Support for the chairman of the Joint Chiefs of Staff until early 2012. She is now president of the Dixon Center for Military and Veterans Community Services, a program of Easter Seals.
Disabled Veterans Service, for example, which until recently operated out of a single room in a suburban Florida office building, spent 86 cents of every dollar on private fundraising companies and telemarketers tasked with drumming up more money between 2008 and 2011. Another 9 cents of every dollar was paid to private management consultants to keep the books and prepare state and federal filings.
In four years, with no paid staff or volunteers of its own, DVS reported that it had raised more than $12 million in cash and donated goods for its stated mission, “to help motivate, and offer assistance programs to disabled veterans in order to assist the service related disabled veteran in regaining their position back into society.”
DVS’ primary service involved paying for the shipping of donated goods to homeless veterans shelters. It claims to have received about $3.9 million in such donations, mostly “drugs and medical supplies,” between 2009 through 2011, according to tax returns.
But though DVS says it sent about $2.5 million in supplies to the New England Center for Homeless Veterans in Boston, the center could confirm only one shipment, which DVS valued at about $210,000, was ever received.
“Upon reviewing our records, New England Center for Homeless Veterans can verify a gifts-in-kind donation from Disabled Veterans Services in 2009,” said Charlene Pontbriand, senior vice president for the nonprofit. “A letter of gratitude for that gift was shared with them.”
It has no record of receiving the remaining $2 million or more that DVS says it shipped, she said.
These types of in-kind donations have been the subject of concern, according to the IRS exempt organizations division’s 2012 annual report, because of “poor record keeping of the gifts-in-kind, inaccurate reporting of this activity” and “inadequate discretion and control over the final disposition of the items.” It did not mention any specific organization.
The report also says more cases are being reviewed “for potential examinations, with specific emphasis on organizations with limited charitable activity and excessive compensation.”
No representative of DVS would comment for this story, despite repeated calls. Visits to business addresses associated with the charity or listed in its filings with state and federal agencies revealed most to be post-office boxes. DVS’ only actual business office was vacant in mid-July. A neighboring business owner said it had been vacated six months earlier.
Records show its president is Glen Svensson, who also could not be reached. Efforts to contact him at his last known address in Pompano Beach were unsuccessful; his house was foreclosed on in May.
According to four years’ of IRS filings, the charity raised most of its $8.4 million in cash by hiring telephone solicitation companies. Of that, at least $7 million went to the three for-profit fundraisers — Courtesy Call, Innovative Teleservices and Associated Community Services. Don Tanner, a spokesman for Associated Community Services said, “ACS does not comment on specific clients or client work. The other two did not respond to requests for interviews.
The rest went to outside management services, mainly to a company named FUM Management, which lists as its business address a mailbox in a UPS Store about six miles from the DVS office. For managing the charity, it was paid $340,000 in 2011. Since 2008, DVS paid a total of about $740,000 in “management fees,” though it does not specify to whom, other than that paid to FUM in 2011.
The full extent of FUM’s connection to the charities is an intricate one; Jamie O’Bryan is named president of FUM Management and was listed in records as DVS’ president working 10 hours a week, according to the charity’s 2008 tax records. She lives with Doug Sailors, a convicted money launderer who calls himself a management consultant for FUM. Both were evicted from a luxury townhome in Pompano Beach and now live together in a million-dollar home in Lighthouse Point, Fla.