How Does CharityWatch Rate the Veterans Charities on Trump's Fundraiser List?
After much prodding from the media, presumptive Republican presidential nominee Donald Trump released a list of the veterans groups that received donations in connection with a fundraiser Trump held in late January 2016. While many groups were excellent choices, others were questionable or even outright poor choices based on CharityWatch's ratings.
Trump conducted the fundraiser in Iowa as a benefit for veterans’ causes on the same night he declined to participate in a televised debate with the rest of the GOP field at the time. On the night of the fundraiser, Trump publicized that $6 million had been raised for veterans; the amounts announced on May 31, 2016 total $5.6 million. Some of the funds raised were funneled through Trump’s own private foundation, the Donald J. Trump Foundation, with Trump promising to distribute them to veterans organizations. Included in the $5.6 million is $1 million that Trump himself personally donated to the Marine Corps-Law Enforcement Foundation.
The “Donald J. Trump Veteran Fundraiser” list includes 41 veterans organizations. The respective amounts donated to the 41 groups range from $25,000 to $1.1 million. The most frequently donated amount was $75,000. The three highest donations went to: Marine Corps-Law Enforcement Foundation at $1.1 million, Navy SEAL Foundation at $465,000, and Green Beret Foundation at $350,000.
Eight of the ten CharityWatch Top-Rated Veterans & Military charities (as of June 1, 2016) received donations that amounted to a combined total of $705,000 (about 12.6% of the $5.6 million). In addition to these excellent choices, a number of charities that received donations from the Trump fundraiser have low program spending, and four are sitting on large amounts of available funds.
Of particular concern is Foundation for American Veterans (FAV), which received $75,000. Since 2009 FAV has been rated “F” by CharityWatch for having an extremely high cost to raise each $100 in donations and for spending a very small portion of its cash budget on programs ($85 and 10%, respectively, for 2014). Furthermore, in May 2016 FAV’s primary professional fundraiser was accused by the Minnesota Attorney General of sending false “pledge reminders” and making other deceptive statements in its fundraising solicitations on behalf of FAV.
Also poorly rated by CharityWatch are AMVETS National Service Foundation and AMVETS National Headquarters (with “F” and “D” grades, respectively). Only “AMVETS” is listed as a $75,000 recipient so it is unclear as to which AMVETS the donation was made. The Foundation, a 501(c)(3) public charity, included about $1.9 million in joint costs from a combined educational campaign and fundraising solicitation as part of its approximately $14.3 million in reported total program services expenses in its 2014 fiscal year. Moreover, over 50% of the Foundation’s $14.3 million in reported program expenses consisted of costs related to its thrift store operations, from which it recognized over $2.5 million in merchandise sales. After reallocating this $9.3 million in joint costs and thrift store related expenses from program services to fundraising, the Foundation spent only 29% of its budget on charitable veterans programs in fiscal 2014.
Although not rated a letter grade by CharityWatch, Disabled American Veterans Charitable Service Trust (the Trust) is another veterans group that CharityWatch would encourage donors to research further before pledging a donation. The Trust had an extremely high program percentage in 2014, but a large portion of its donations are passed on as grants to its related organization, Disabled American Veterans (DAV). The Trust’s only program consists of making grants to other veterans organizations, and about half of the total grants made by the Trust in 2013-2014 went to DAV. DAV, however, spent only 50% of its cash budget on programs in 2013-2014, and had a $56 cost to raise every $100 in funds in 2014, yielding a “D” grade from CharityWatch. (For more on the relationship between the Trust & DAV click here.)
It is also somewhat unfortunate that the two highest donations went to charities that do not have an urgent need for funds: Marine Corps-Law Enforcement Foundation and Navy SEAL Foundation. Given that charitable dollars are limited and society’s needs, especially those of veterans, are not, it is vital that charities do not hoard the funds they raise. CharityWatch believes that it is reasonable for a charity to hold less than three years worth of available assets in reserve for financial stability and possible future needs. Once a charity’s asset reserves meet or exceed this three-year mark, we reduce its letter grade rating. At the end of 2014 Navy SEAL Foundation already had enough funds accumulated to cover over four-years’ worth its annual budget. For this reason, CharityWatch downgrades its letter grade rating from an “A+” to a “C+”. Although Marine Corps-Law Enforcement Foundation is not rated by CharityWatch, we have calculated that the charity is sitting on over three-years’ worth its budget as of year-end 2014. Freedom Alliance and Navy-Marine Corps Relief Society are other high asset charities that each received $75,000 donations from the Trump fundraiser. CharityWatch calculated that Freedom Alliance and Navy-Marine Corps Relief Society had 4.4 and 3.0 years of available assets, respectively, relative to their annual budgets as of year-end 2014.