Millions
in Future Donations to Vets Charity Will Pay Debt Owed to Vendors
From the August 2010 Charity Rating Guide
& Watchdog Report
"100 percent of your donation will
go to the charity." This is the language that telemarketers
of Donor Services Group (DSG), a fundraising company soliciting
for Disabled Veterans National Foundation (DVNF), are instructed
to use when on the phone with potential donors, according to a 2009
fundraising statement filed in Massachusetts. Contradicting this
claim on the very same form, and also in DVNF's solicitation notice
in Colorado, the solicitor estimated that its fees would amount
to 98% of donations collected on behalf of DVNF in 2009. Donors
may be even more disappointed to learn that the charity is contractually
obligated to allow another fundraising company it hired, Brickmill
Marketing Services to keep 100% of what it raises from donors until
the charity's debts to this company are paid off.
DVNF's contract with Brickmill states
that Brickmill will be responsible for managing production of solicitation
materials and oversight of vendors. By far the largest vendor of
DVNF is Quadriga Art, Inc., which shares the same phone number and
address in Wilton, New Hampshire with Brickmill and, according to
its web site, is the parent company of Brickmill. DVNF was billed
over $14.7 million by Quadriga in 2008, according to the charity's
tax form of the same year, which is an amount equivalent to an astounding
90% of DVNF's total spending. Billings of $1.4 million from Brickmill
accounted for nearly 9% of the rest of DVNF's total spending in
2008.
The fundraising contract between DVNF
and Brickmill states that the charity "agrees to assign to
Brickmill the net proceeds from all future donor file mailings until
paid." Unfortunately for unsuspecting donors, what this means
is that future donations to the charity given in response to solicitations
run by Brickmill must be used to pay off DVNF's debts to Brickmill
before any funds can be made available to the charity for its programs.
AIP also fears that this part of DVNF's
contract with Brickmill also extends to what the charity owes to
Brickmill's parent company, Quadriga. Brickmill advances the money
used for fundraising campaigns, according to a report on DVNF's
web site by Prof. Richard Steinberg, which was commissioned by the
charity. This arrangement suggests that, while DVNF may be billed
primarily by Quadriga for fundraising services, the funds that Brickmill
fronts to Quadriga for DVNF's solicitation campaigns must be paid
back by DVNF before the charity will receive any of the donations
raised by these fundraisers. A note in the charity's 2008 audit
refers to an $8.4 million debt owed to an unnamed production vendor.
AIP believes that this refers to money owed to Quadriga that was
fronted by Brickmill.
When AIP contacted DVNF for clarification
on this issue the charity's Chief Administrative Officer, Raegan
L. Rivers, claimed to not even be aware that Brickmill and Quadriga
are related companies. "It is my understanding that Quadriga
Art is not the parent corporation of Brickmill. It is a separate
corporation."
Claims made about the percentage of donations
going to charity are not the only contradictions AIP found when
investigating DVNF. "For 35 years we have been putting service
to others before ourselves," says one DVNF solicitation. This
is an interesting statement considering the charity was not incorporated
until November 2007, according to its 2008 tax form. (Note: AIP
does not rate groups until they have three years of financial reports.)
In addition to soliciting over the phone,
the charity also sends out fundraising letters. An AIP member, curious
about the group, described the first solicitation she received from
DVNF and forwarded to us the follow-up solicitation she received.
According to that AIP member, DVNF first sent a large plastic envelope
containing a calculator and planner which she had not requested,
along with a contribution form. They later sent her a follow-up
solicitation asking "Did you receive the Patriotic Calculator
and Planner Set I sent you?" This statement was printed in
red letters above her name and address on the envelope next to a
photo of an injured soldier being carried into a helicopter on a
stretcher. Charities that mail unrequested gifts while at the same
time requesting contributions are trying to guilt you into giving,
in AIP's opinion. Donors should be aware that they are under no
legal or, for that matter, moral obligation to send contributions
in response to gifts they have not requested.
Donors should also be careful not to
read too much into the emotionally-charged language or sad photos
included in many charity solicitation letters. DVNF's appeal references
the "hell of combat" and says, "You'll put meaning
behind the words 'Support Our Troops,' with your gift to DVNF today!"
The language in this solicitation could lead potential donors to
believe that the charity seeks funds primarily for direct assistance
to veterans, which is not the case. According to DVNF's 2008 audit,
only $127,421 or less than 1% of DVNF's $16.3 million budget could
have been spent on grants or aid to individuals. Except for this
amount and a $40,000 unrestricted grant to a related party, all
the rest of DVNF's reported program expenses of $4.5 million were
direct mail related.
Donors may also be interested to know
that according to DVNF's 2008 audit, it incurred $482,137 of fundraising
mailing costs, which it allocated to program expenses, for another
organization, the National Association of State Women Veterans
Coordinators. This group shares five of DVNF's board officers
and has entered into a strikingly similar contract with Brickmill
Marketing Services.
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