Multiple Names + Exaggerated Programs = Two Related Charities, But Little Help for Vets or Cancer Relief
Posted on September 20, 2016
Veterans and cancer are two of the most popular charitable causes to which Americans direct significant donations. While these two causes seemingly have little to do with one another, one set of charities proves otherwise. Help the Vets (HTV) and Breast Cancer Outreach Foundation (BCOF) are two relatively new charities that share the same address and phone number, as well as the same family members in leadership positions, including president. But of more concern to donors should be another shared trait between HTV and BCOF — the likelihood that most donations will go towards paying for-profit, professional fundraisers rather than for helping veterans or cancer sufferers.
CharityWatch has assigned Help the Vets an “F” rating for spending a paltry 6% of its cash budget on program services and incurring $89 to raise each $100 in funds in 2015. Breast Cancer Outreach Foundation, founded in July 2014, currently lacks sufficient financial history for CharityWatch to assign it a letter grade rating. If BCOF’s 2015 financial reporting is any indication, though, it is unlikely to fair well on our grading scale in the future due to extremely high reported fundraising expenses during its first full year of operations.
It’s a Family Affair
At the heart of good charity governance is a board of directors that has the independence it needs to put the charity’s best interests above any potential, competing interests. Help the Vets and Breast Cancer Outreach Foundation, however, are not able to make such a claim at this time. HTV and BCOF were founded about a year and a half apart by the same man, Neil “Paul” Paulson, Senior. Paulson serves as the President and Director of both charities, and for 2015 he is reported as the sole paid employee between the two. Five of the six members serving on each charity’s board of directors also are shared by HTV and BCOF. The one uncommon board member between the charities is a different one of Paulson’s sons. Moreover, Paulson’s mother and brother also serve as directors on the boards of HTV and BCOF. This means that the majority (four out of seven) of each charity’s board of directors consisted of Paulson family members in 2015. When a charity’s board lacks independence, it raises questions about the ability of board members to consistently make decisions in the charity’s best interest — a red flag for donors.
Also of concern is Help the Vets’ and Breast Cancer Outreach Foundation’s lack of transparency in the IRS-required reporting of family relationships within each charity. The only familial relationships among board members reported by HTV and BCOF in 2015 were those between Paul Paulson and his sons, Brian Paulson and Neil Paulson, Junior, respectively. The charities failed to report for 2015 that Paulson’s mother and brother also served as board members. A CharityWatch investigation into the charities uncovered these additional family relationships through obtaining and reviewing HTV’s IRS Form 1023 Application for Recognition of Exemption that charities file to obtain tax exempt 501(c)(3) public charity status. Given that Paulson’s mother and brother do not share his last name or the same last name as each other, and that the relationships were not reported in the easily obtainable annual tax filings of the charities, most donors would be unlikely to uncover this information.
An "F" Charity by Any Other Name Is Still an "F" Charity
When a charity solicits donations using different names it often causes confusion for donors who may believe they are sending donations to many different charities, when in reality they are only donating to one. Help the Vets and Breast Cancer Outreach Foundation exhibit a fondness for registering to be able to use multiple names that include the often emotionally charged words “veterans” and “breast cancer.” For the “F”-rated HTV, these alternate names include American Disabled Veterans Foundation, Military Families of America, Veterans Emergency Blood Bank, and Vets Fighting Breast Cancer. The financially inefficient BCOF also may go by the name American Breast Cancer Fund or United Breast Cancer Fund.
Vets Fighting Breast Cancer (VFBC) is perhaps the most odd and confusing of the alternate names used by Paul Paulson’s charities, embodying in one name the typically distinct claimed missions of each Help the Vets and Breast Cancer Outreach Foundation. Paulson appears to be blurring the lines between his two charities with VFBC. The $18,000 HTV claims on its website was raised through VFBC “for research for a breast cancer vaccine” was actually granted to BCOF in 2015. BCOF, however, did not report making any cash grants towards breast cancer research in 2015. Under its VFBC name, HTV is giving the appearance of providing funds for breast cancer research, but those donations were merely funneled to Paulson’s other charity and do not appear to have been used as claimed for breast cancer research in 2015.
Actions Speak Louder than Words When Fundraisers Take a Hair Cut Off of Donations
When Paul Paulson submitted applications to the IRS for tax-exempt status for Help the Vets and Breast Cancer Outreach Foundation in January 2013 and July 2014, respectively, he answered “No” to the question of if the charities have or will have contracts with any outside organizations for fundraising. The documentary evidence, however, reflects major inconsistencies with these “No” answers by Paulson.
One month after the date of Help the Vets’ IRS exemption application, Paul Paulson proceeded to sign a three-year professional fundraising contract with Courtesy Call, Inc. (CCI), agreeing to compensate CCI at a rate of 90% of the funds collected on behalf of HTV. Even more alarming are Paulson’s actions about a year and a half later on behalf of Breast Cancer Outreach Foundation. Paulson signed a three-year fundraising contract between BCOF and CCI, also with payment terms to CCI of 90% of funds raised, five days before he signed BCOF’s IRS exemption application — the same application on which he attested that BCOF would not be entering into any fundraising contracts.
Help the Vets’ and Breast Cancer Outreach Foundation’s extremely high fundraising costs in 2015 are reflective of the 90% payment terms Paul Paulson agreed to in the Courtesy Call professional fundraising contracts. Of the over $2 million collected from donors on behalf of Help the Vets in 2015, only about $222,000 (or 11%) was retained for use by the charity. The remainder went to paying HTV’s three professional fundraisers, including CCI. Breast Cancer Outreach Foundation retained only about $154,500 (or 9.4%) of the over $1.6 million raised on its behalf by three professional fundraisers in 2015, two of which were the same ones used by HTV. Curiously, BCOF even reported that it “utilizes professional fundraisers to assist in raising funds for the Foundation” as part of its Program Service Accomplishments on its 2015 tax filing. We think most donors will agree that the utilization of professional fundraisers is not a charitable program accomplishment.
Non-Cash Donations Mask Financial Inefficiency
On each charity’s IRS exemption application, dated January 2013 for Help the Vets and July 2014 for Breast Cancer Outreach Foundation, Paul Paulson indicated that neither charity would be providing goods to individuals or organizations. It turns out that this response is inconsistent with what was later reported on the each charity’s 2015 tax filing. HTV and BCOF report raising about $6.6 million and $5.1 million, respectively, in total contributions in 2015. However, the majority of each charity’s contributions consisted not of cash, but of donated non-cash items, also referred to as “gifts-in-kind” (GIK). These non-cash donations, which included items such as “lodging” and “chiropractic care” vouchers and pharmaceuticals, were then passed along by HTV and BCOF to individuals or other organizations.
Help the Vets’ reported gifts-in-kind activity in 2015 illustrates the importance of “following the cash” when donors attempt to discern how efficiently their donations will be used by a charity. If HTV’s reported figures for expenses are taken at face value from its financial statements, HTV would appear to be a relatively financially efficient charity, spending 70% of its expenses on programs. Once HTV’s cash donations and expenses are analyzed separately from the portion comprised of GIK, though, a much different picture emerges — one showing that merely 6% of cash donations were spent on programs in 2015. Similarly, Breast Cancer Outreach Foundation’s reported GIK activities were so significant in 2015 that what appears to be a program spending ratio of 74% based on its reported expenses masks that the charity spent only about 3% of its cash budget on programs.
Exaggeration of Program Accomplishments
Those who visit the Help the Vets and Breast Cancer Outreach Foundation websites might be impressed by the significant program accomplishment claims. The large volume of website content includes many photos, along with detailed accounts of “projects,” some of which apparently even warrant their own separate websites that go along with some of the HTV alternate names. CharityWatch’s analysis, however, calls some of these claimed program accomplishments into question.
Help the Vets appears to be greatly exaggerating one of the primary programs described on its website, and even more alarmingly, also may be misleading veterans in crisis. The first thing that appears on the Help the Vets homepage (as of September 2016) is a plea for donations “to support our veterans 24/7 SUICIDE REFERRAL HOTLINE.” This “hotline,” however, is merely Paul Paulson’s personal cell phone number — the same number listed as the charity’s main office phone number on its website and in its government filings. When confronted about this by Fox 35 Orlando (as reported by the Orlando Sentinel in October 2015), Paulson did not deny that the hotline number was his cell phone number. He also tried to defend his qualifications by saying that he has a “B.A. in psychology with an emphasis on counseling” and that he “went to graduate school and studied psychology back in the '70s” and has “kept up on what’s going on.” By comparison, the United Way told Fox 35 that its suicide hotline is staffed at all times by at least two people with no less than 80 hours of training, according to the Orlando Sentinel.
Another of Help the Vets’ claimed projects is its Veterans Emergency Blood Bank, which also happens to be one of the alternate names used by HTV. According to its website, HTV seeks “to obtain 1,000 donations of blood each year for local Emergency rooms,” but this vets blood bank “project” is nothing more than a website containing links to the American Red Cross and two other blood donation agencies. The website page states that it is able to “track” the blood donation appointments that result from website visitors clicking on those links. Apparently, the appointments that are directed from HTV’s website are what the charity considers to be equivalent to “obtaining” or “collecting” blood donations. Furthermore, even if a person did donate blood at an appointment made via the links on HTV’s website, such a donation would presumably become part of the general blood supply, and therefore, it is unclear how that blood would be used specifically for the benefit of sick or injured veterans, as the name of the project suggests.
Forty percent of the “current projects” listed on Help the Vets’ website (as of September 2016) essentially consist of passing along non-cash goods and services donated to HTV by third-parties. For example, HTV reported on its 2015 tax form that it received “2300 vouchers for chiropractic care” from Unity Family Chiropractic in Winter Garden, Florida. HTV valued these vouchers at $690,000, comprising nearly 13% of its reported program spending for 2015. Nowhere in its 2015 tax filing or audited financial statements, however, does HTV report how many veterans benefited from the use of these 2,300 chiropractic vouchers. Moreover, HTV claims that with these vouchers it is providing veterans with care that is not available from the Veterans Administration (VA). What HTV conveniently fails to mention in this program description is that these vouchers can only be redeemed by veterans with the ability, means, and desire to travel to one specific chiropractic practice in Florida.
Help the Vets also reported receiving an unspecified number of “vouchers for veteran lodging” from Sunset World Gives Back of Cancun, Mexico, according to its 2015 tax filing. Apparently, these “lodging” vouchers are actually “certificates for un-used time share and hotel accommodation inventory in South Florida and also in Mexico,” based on HTV’s website. HTV placed a value of over $3.6 million on this unspecified number of time-share/hotel vouchers, representing over 68% of its total reported program expenses for the year. Therefore, for well over half of its purported program spending in 2015, HTV fails not only to report the actual number of vouchers it received, but also how many veterans, if any, were able to use them. The reality is that HTV probably has no way of knowing how many vets actually used the vouchers if what happened at the Camaraderie Foundation is any indication. The staff of Camaraderie, an established veterans nonprofit in Orlando, Florida, recalled Paul Paulson “dropping off a stack of vacation vouchers for Camaraderie to distribute,” Camaraderie’s founder told the Orlando Sentinel in September 2015; the voucher drop-off was done without any formal agreement or partnership between HTV and Camaraderie, which Paulson disputed in the article. Camaraderie did not report any vacation vouchers being received or distributed, based on its 2013-2015 tax forms.
All That’s Gold Doesn’t Glitter
Despite their extremely low program spending, unfavorable contracts with professional fundraisers, and exaggerated program accomplishments, as of September 2016, Help the Vets and Breast Cancer Outreach Foundation each have “Gold Participant” status from GuideStar, a charity information website. Given this designation, HTV and BCOF are not at all shy about plastering the logo that boasts of their GuideStar Gold Participant status on many different pages of their various websites — and this can be very misleading to donors who are unaware of what the GuideStar status actually means.
Donors unfortunately may confuse GuideStar’s Gold Participant status for a charity rating, believing that a charity could not achieve such an impressive looking status without first proving its absolute worthiness. Some charities even contribute to this confusion by referring to their GuideStar Exchange Program status as a rating, something that Help the Vets does on its Veterans Emergency Blood Bank website. In reality, GuideStar does not rate charities in any way, nor does it perform any independent analysis or assessment of the information it receives from charities as part of the GuideStar Exchange Program.
Being a GuideStar Gold Participant is simply a designation that indicates a charity shares a certain amount of information with GuideStar, including standard financial information and self-reported program “impact” information. As an example of how easy it is to satisfy GuideStar’s gold-level information sharing, some of the self-reported program descriptions and impact items highlighted by Help the Vets on GuideStar reference the very same exaggerated and questionable non-cash vouchers and other “projects” scrutinized by CharityWatch in this article. In fact, many charities that receive “F” grades from CharityWatch have gold or platinum (now the new, highest level of information sharing) status in the GuideStar Exchange Program.
CharityWatch’s initial investigation and assessment of Paul Paulson’s new charities, Help the Vets and Breast Cancer Outreach Foundation, raise a number of red flags. CharityWatch is warning donors against donating to these charities directly or through one of their many alternate names, including American Disabled Veterans Foundation, Military Families of America, Veterans Emergency Blood Bank, Vets Fighting Breast Cancer, American Breast Cancer Fund, and United Breast Cancer Fund. Donors who are interested in identifying highly efficient charities working in the popular areas of serving veterans or cancer-related causes should visit CharityWatch’s list of Top-Rated charities in the Veterans & Military and Cancer categories.
UPDATES: (1) On February 14, 2017, the Michigan Attorney General (AG) announced a settlement with Breast Cancer Outreach Foundation (BCOF), wherein BCOF will pay $150,000, with $125,000 going toward breast cancer research, according to the AG’s press release. BCOF is also banned from soliciting in Michigan for a period of ten years. The settlement resolves the AG’s claims that BCOF deceptively raised over $1.4 million nationwide in 2015. BCOF’s solicitations told donors that funds raised would be used for breast cancer research grants, but in reality, except for one $8,235 grant, all of the money raised on behalf of BCOF in 2015 went to professional fundraisers, the company executive’s salary, or other expenses, according to the AG’s allegations.
(2) On July 19, 2018, the Federal Trade Commission (FTC) announced "Operation Donate with Honor," a nationwide crackdown on fraudulent veterans charities involving more than 100 enforcement actions and a consumer education initiative. As part of the crackdown, the FTC and six states filed a complaint against Help the Vets and Neil Paulson, Sr. The complaint alleges that from 2014-2017 Help the Vets took in approximately $20 million from donors nationwide based on misleading promises to assist veterans; instead, almost all of the donations benefited the private interests of Paulson and professional fundraisers. For more, see the Hot Topic: 'Operation Donate with Honor' – the FTC, 54 Attorneys General and 16 State Agencies Join Forces to Target Deceptive Fundraising for Veterans Causes. Help the Vets and Breast Cancer Outreach Foundation have both ceased operations as of December 31, 2017.