To be trusted is a greater compliment than being loved.George MacDonaldThis week in America we have once again seen how difficult it is to build trust and how quickly it can be taken away. Four of the largest cancer charities in the US have been charged by the Federal Trade Commission (FTC) with bilking (an archaic word meaning to obtain or withhold money from someone by deceit or without justification) over $187 million from consumers.
Charges were brought forward by 58 law enforcement partners from every state and the District of Columbia, in one of the largest charity fraud investigations ever conducted.
The complaint named specifically the Cancer Fund of America, Inc. (CFA), the Cancer Support Services Inc. (CSS), the Children’s Cancer Fund of America Inc. (CCFOA) and the Breast Cancer Society Inc. (BCS) charities as well as many past and present executives by name.
As of this moment, the CCFOA and BCS have been dissolved, with executives from both being banned from fundraising, charity management and oversight of charitable assets.
The dissolution of two of the largest charities in America is obviously going to have a huge impact upon the amount of money that is made available to scientists to investigate cancer and search for treatments.
This is not to say that the federal funding of cancer research will be affected in any way by these events. However, if the National Institute of Health website which lists 124 other funding sources for researchers to pursue is anything to go by…
So how to we get to this point?
How can we reach a point where a coordinated national level, federal investigation causes the collapse of two huge charities – both of which make significant donations to real world science research?
Well the answer, as is often a problem, lies in out-sourcing.
Whilst the charities themselves in this investigation are run typically as not-for-profits, this does not stop them sub-contracting parts of their activities to for-profit companies.
Often charities will use dedicated fund-raising firms that use sophisticated direct mail, telemarketing calls and websites to raise money. In one case, these firms allegedly had a department dedicated to raising money from federal employees in attempts to improve their legitimacy.
Sort of like when you walk through a shopping centre and you notice people fundraising. Only to be shopping in the same location the next week, to see the same people fund raising for a completely different charity.
The problem with using for-profit companies as fund raising contractors is that there are no guidelines as to what percentage of funding is returned to the charity, only what the charity negotiates. In some cases these intermediaries are taking over 85 % of any given donation.
The complaint filled states that the charities in question
operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation, with none of the financial and governance controls that any bona fide charity would have adopted.
The complaint further goes on to make allegations that charity executives were preferentially employing family and friends. The FTC went on to further explain that charitable donations were being spent upon
Cars, trips, luxury cruises, college tuition, gym memberships, jet ski outings, sporting event and concert tickets, and dating site memberships.
The director of the FTC’s Bureau Consumer Protection said
Cancer is a debilitating disease that impacts millions of Americans and their families every year. The defendants’ egregious scheme effectively deprived legitimate cancer charities and cancer patients of much-needed funds and support
The defendants took in millions of dollars in donations meant to help cancer patients, but spent it on themselves and their fundraisers
The Children’s Cancer Fund of America and Breast Cancer Society have settled with the FTC with a combined $95.5 million in fines, before dissolution of the companies.
Meanwhile the Cancer Fund of America and Cancer Support Services continue litigation.
However, James T. Reynolds II, Executive Director of the Breast Cancer Society in a statement on the charities website says that “the organization, its officers and directors have not been found guilty of any allegations of wrong doing, and the government has not proven otherwise,” but that they had decided not to engage in a “highly publicized, expensive, and distracting legal battle around our fundraising practices.”
Whilst indeed the legal system should continue with a presumption of innocence until proved otherwise, the future looks bleak for charitable cancer funding in the US.
2 of the largest charities have already folded-up shop and another 2 look to be locked in a long and protruded legal battle.
These allegations are nothing new. I remember from 2013, the then director of one of the world’s largest charities, Oxfam, took a 19 % pay rise (before bonuses) despite the number of donations dropping dramatically.
Sir Stephen Bubb, head of the Association of Chief Executives of Voluntary Organisations, stated at the time that “To keep talent, really strong people, at the top of these organisations, they need to be paid properly” and that raising such issues was a “disgraceful distraction”.
The message here then is clear.
As with all science, transparency is the only solution.
If the funding source had been kept transparent, then there would have been no investigation, and no gap in funding to several key cancer research groups.
Obviously, nobody that donates money to charity wants to think that their money is going towards operational costs rather than to the fund to which they pledged the money. Nor, by any means am I advocating that donations to charity should cease. Most would agree that any campaign, of any size, requires careful management to ensure that the most effective results be obtained.
It is my belief that these alleged practices were deliberately buried, as those involved knew the questionable taste of which they were operating. However, personal greed and ambition meant that ethical lines were crossed. Yes many people given the opportunity would perhaps in the same way, but in such instances, the consequences here really could be peoples’ lives.
When so much of science is peer-reviewed, so much is required to be proven ethical, it seems odd that the funding sources are not held with the same rigour.