Veterans Charity Forgiven of $13.9 Million of Debt Is $6.9 Million in the Red Only 3 Years Later
Only three years after Disabled Veterans National Foundation (DVNF) entered into a settlement agreement with the New York Office of the Attorney General (OAG) and was forgiven of $13.9 million in fundraising debt, it reports being nearly $7 million in the red as of 12/31/2017. DVNF’s liabilities (the money it owes to outside parties) exceed its total assets by $6,945,307, according to its 2017 audit. The substantial cause of the accumulated deficit is once again significant spending on outside professional fundraising services that have eaten up the vast majority of donations raised in the name of helping veterans, while plunging the charity further into debt.
At the end of 2013, prior to the debt forgiveness, DVNF’s deficit balance was $14.2 million, and after the debt forgiveness in 2014 was only $1.5 million as of the end of that year. Despite having 98% of its 2013 deficit balance wiped clean in mid-2014, DVNF did not use the nearly clean slate it was granted to subsequently implement significant reforms to its unsustainable fundraising practices. Instead, it has driven itself nearly halfway back into its pre-settlement deficit balance, while its auditors have expressed “Substantial Doubt about the Organization’s Ability to Continue as a Going Concern,” according to a May 29, 2018 Auditor’s Report.
As CharityWatch previously reported, part of the OAG’s settlement agreement required DVNF to replace all of its founding board members with at least five new directors that would add experience in the areas of accounting, nonprofit administration, social services and board governance; to create an independent audit committee to oversee its accounting and financial reporting processes; and to discontinue its relationships with two of its fundraisers for a three year period, among other requirements. At the time of the settlement agreement, CharityWatch expressed our concern that the OAG should have gone further by dissolving DVNF rather than imposing the cited requirements and monitoring the charity through July 15, 2019. DVNF has received "F" ratings from CharityWatch since we began monitoring the group in 2010.
According to its 2017 audit, DVNF’s management has created a “Deficit Reduction Plan” which involves working with its fundraising vendors to reduce production costs and obtain concessions, and to decrease its “operational cost footprint without any program impact,” among other measures. Whatever management’s plans, donors need to ask themselves if DVNF is worthy of yet another chance to deliver on its stated mission to “change the lives of men and women who came home wounded or sick after defending our safety and our freedom.” In 2017, DVNF spent more on fundraising than the cash contributions it brought in as a result: $25.6 million to raise $25.5 million in donations. An abysmal 4% of its cash expenses is all it spent on its programs that year. If DVNF is not able to operate efficiently and in the black despite receiving millions in debt forgiveness, years of monitoring by the OAG, and the addition of experienced leadership to management roles, CharityWatch is not hopeful that more years and likely millions more in wasted donations will result in a significant improvement. Donors beware. CharityWatch advises donors wishing to aid veterans to consider giving to a highly rated veterans organization.