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CharityWatch Alerts Regulator to Red Flags at American Life League

   Sep 16, 2021

American Life League (ALL) reports that it raised over $20 million in "Gifts, grants, contributions, and membership fees" over the five-year period from 2015–2019, according to its 2019 annual tax filing (IRS Form 990, Schedule A, Part II). But charity regulators at the Department of Agriculture and Consumer Services in the Commonwealth of Virginia (VDACS), ALL's home state, have reported on the VDACS website that ALL is "not authorized to solicit in Virginia" since at least 2018. In 2019, the most recent tax filing publicly available for ALL, the charity reports receiving cash contributions of approximately $3.6 million. Though it is not required to provide a breakout reflecting from which states these contributions were received from donors, the fact that ALL solicits contributions, in part, via its website means that its solicitations cast a broad geographic net that would include its home state of Virginia. On the "WAYS TO DONATE" section of its website, ALL states that it welcomes "any donations by mail or by phone" and lists additional ways to donate, including making an online donation, or donating stocks, bonds, real estate, or matching gifts.

Assuming at least some of American Life League's 2019 donations were actively solicited in its home state of Virginia—the only state in which ALL reports being required to file a copy of its IRS Form 990—the charity could be in hot water with regulators for not meeting its annual reporting obligations. Virginia is one of 40 U.S. states that requires charities to register and meet various other reporting requirements as a condition of being allowed to solicit contributions within their borders. Such public disclosure of charities' financial information helps to inform donors about how efficiently their donations to a charity are raised and spent and what program activities it is engaging in to forward its mission. 

CharityWatch has been rating and reporting on American Life League for over 15 years, analyzing its tax filings and audited financial statements and communicating to donors the percentage of its cash budget spent on program services and its cost to raise each $100 of cash support. It is not unusual for a charity that works in a more controversial cause like abortion (pro or con) to have to spend more to raise funds as compared to a charity with a highly popular cause such as veterans & military or cancer research. That said, ALL has a consistent track record of spending an outsized portion of its annual budget on fundraising, garnering it low ratings from CharityWatch for many years. On CharityWatch's "A+" to "F" grading scale, ALL earned the following letter grades for the fiscal years rated:

2006:  D

2009:  C

2011:  C-

2013:  D

2014:  D

A history of low financial efficiency at American Life League is not the only issue that should be of concern to donors. For the fiscal years 2015, 2016, 2018, & 2019, CharityWatch assigned American Life League a "?" rating due to having insufficient information with which to conduct a meaningful evaluation, and because of ALL's refusal to respond to our inquiries about its financial reporting. Among our concerns is a lack of sufficient independent oversight, a history of significant related party transactions between ALL and a company owned by one of its board members, ALL's chosen accounting method for its annual IRS Form 990 financial reporting, and the lack of public disclosure of its financial information.  

American Life League reports that its governing body consists of only three voting members, according to recent tax filings, with just two members reported as "independent." In the opinion of CharityWatch, ALL lacks sufficient board independence to help ensure that the board's decisions are being made in the best interest of the charity versus its officers and directors. This is of particular concern given ALL's history of transactions with the company of one of its board members. For example, in its 2015 and 2017 tax filings, American Life League reported paying $1,862,208 and $554,897, respectively, to Anthony Kane and Associates for "printing and mailing services," with the relationship reported as "board of director is owner" (IRS Form 990, Schedule L, Part IV, Business Transactions Involving Interested Persons). In 2015, this payment accounted for more than 38% of ALL's total spending for the year. In ALL's 2016 and 2018 tax filings, ALL reported a similar transaction between American Life League and the company owned by its board member, but it omitted the dollar amounts involved.

Another potential red flag at American Life League is its chosen accounting method for its annual tax filings. For many years, ALL has reported on its IRS Form 990 that it has used cash basis accounting to prepare the form—a method that makes financial statements more susceptible to manipulation caused by the timing of cash deposits and payments. While not prohibited by the IRS, reporting on a cash basis of accounting is highly unusual for a charity of ALL's size. The majority of charities that raise $1 million or more in annual contributions report their financial activities on an accrual basis of accounting, matching revenues and expenses when earned and incurred, respectively, in order to comply with Generally Accepted Accounting Principles (GAAP) in the United States. About 20 U.S. states require charities of ALL's size soliciting contributions within their borders to submit a copy of their audited financial statements to meet their respective annual registration requirements. Though ALL reports in its 2019 and other recent tax filings that its books were audited by an independent accountant, CharityWatch has been unable to locate recent filed audits for ALL in publicly available online state databases. Furthermore, ALL has not responded to CharityWatch's requests for its audited financial statements made in June 2020, November 2018, and October 2016.

CharityWatch contacted the Virginia Department of Agriculture and Consumer Services in August 2021 outlining our concerns about American Life League and requesting any information it may have on file for the charity, such as copies of its audited financial statements and records of any enforcement actions taken against it. Later that month, the Charitable Programs Team Supervisor responded that ALL "has not been registered with the Virginia Department of Agriculture and Consumer Services, Office of Charitable and Regulatory Programs since 2016." With respect to concerns outlined by CharityWatch, such as ALL raising millions in donations each year without adequate evidence that it is properly registered in Virginia or elsewhere to do so, they stated: "The information will be reviewed, and the appropriate course of action will be determined. This may include referral to another agency with enforcement authority over the subject of this complaint." 

CharityWatch's most recent letter grade rating for ALL was a "D" based on a Program Percentage of 53% and a Cost to Raise $100 of $48 for its fiscal year 2014. See CharityWatch's profile on American Life League for additional information on its current governance and transparency, executive salaries, and other data.

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