I’ve been reviewing car donation charities for a while now, and the minute I logged on to carsforveterans.org, several things immediately raised red flags for me:
First, there is precious little transparency. Even some of the slimiest car donation organizations have some transparency, either in the form of an “about us” or “FAQ” section on the website, a reference to their parent company, or information about how the proceeds help a charity.
Carsforveterans.org is a one-page site with its very limited information contained in a small side bar entitled, “Why Cars for Veterans” (without a question mark.) The sixth (out of 7) item reads, “Car donations help fund programs: And benefit National Veterans Services Fund. An IRS 501(c)3 nonprofit organization.”
Now, first of all, I’m thinking, Can’t you find someone who understands basic punctuation principles to write your website? And second of all, I’m thinking, The whole purpose of donating your vehicle to charity is to benefit a charity. Why is that very important “why” so far down on the list? And in fact, that one little poorly punctuated blurb is the only mention whatsoever of your car donation helping anybody out in any way. Which makes since, because Cars for Veterans smells like a dead, rotting fish already, and I haven’t even gotten to the second red flag, which is:
The New York State Office of the Attorney General has an article on their website about avoiding car donation scams, which includes the tip, ” Be wary of offers that seem too good to be true. Some car donation programs offer vacation trips and large gift certificates in exchange for the donation of a car. If it sounds too good to be true, it probably is.”
Right off the bat, I know that researching this organization and the charity involved is probably going to be a good way to get my blood pumping without having to work out, because boy, do I get prickly when I come across nasty “charitable” organizations that prey on the decency of good people.
The National Veterans Services Fund
The charity that Cars for Veterans purportedly supports is the National Veterans Services Fund (NVSF), which claims to help veterans in whatever way they need it: a new wheelchair, paying utilities that are on the verge of disconnect, providing temporary housing, and in one case, paying a soldier’s veterinary bill.
NVSF on Guidestar
Guidestar is a nonprofit organization that compiles information, including the IRS Tax Form 990, on every charity that’s registered with the IRS as a 501(c)(3) nonprofit organization. You can learn a lot about a charity by looking over their Form 990.
Charities have three categories of expenses:
- Programs, which are supposed to be the purpose of the charity’s existence.
- Administration, which includes salaries, rent, utilities, office supplies, and so on.
- Fundraising, which includes anything that involves soliciting donations, from making phone calls or sending out direct mailings to throwing a $500-a-plate dinner party or organizing a marathon.
A charity is considered to be efficient if at least 75 percent of its expenses are directly related to the programs it offers, with the remaining 25 percent split between administrative and fundraising costs.
According to their 2013 Form 990, here’s how that breaks down for NVSF:
- Total expenses for 2013: $9,022,976
- Portion of expenses that went to programming: 21 percent
- Portion of expenses that went to admin costs: 12 percent
- Portion of expenses that went to fundraising costs: 67 percent
No surprises there.
Now, I’ve learned that when I find a highly inefficient charity, I should look a little closer at the info on their Form 990, and upon closer inspection, here’s what I found.
Conflict of Interest?
Form 990 indicates that $1,947,612 of the total expenses went toward programming, including $8,500 in “assistance” that was given to VFW Post 6933.
A little later, upon Googling NVSF president Phillip Kraft, I learned that he is also…ta da!… the commander of one VFW Post 6933 in Darien, CT. And yet there was no mention of this little transaction on Form 990 Schedule L, “Transactions Involving Interested Persons.”
Charity? Or Loan Shark?
But what was listed on Schedule L was a personal loan given to an unnamed employee in the amount of $28,668.
The Company You Keep…
While the expenses listed under the fundraising category add up to just $5,967,456 on Form 990’s Part XI: Statement of Functional Expenses, NVSF actually paid out $8,366,586 to three independent fundraising contractors:
$4.7 million went to Vehicle Donation Processing Center for “fundraising.” This third-party fundraising intermediary organization also operates under the name Vehicle Donation Center and earned two out of five stars in my recent review of them.
$3.4 million went to Direct Response Consulting Services for “fundraising counsel.” This commercial fundraising company, formerly known as Watson & Hughey, changed its name after a multitude of lawsuits were filed in the 1980s and 1990s, several of them by various state attorney generals, most of them claiming that Watson & Hughey diverted funds from charities and damaged reputations with their deceptive and misleading fundraising tactics.
$287,296 went to Bee L.C., another commercial fundraiser, for “fundraising.” According to the Washington Secretary of State’s office, Bee L.C. raised $2,243,737 for charities in the state of Washington during the fiscal year of 2013, but only passed on $269,722 of the proceeds to the charities, which translates to a despicable 12 percent.
If an intermediary fundraising organization doesn’t pass on at least 60 percent of proceeds to charity, they’re considered unsatisfactory. Anything under 50 percent is generally considered disreputable at best or downright fraudulent at worst.
When Accountability Takes a Hike
One last bit of information about National Veterans Services Fund: In June of 2014, The Darien News reported that the bookkeeper for NVSF was arrested for embezzling $186,000 in 2013 by writing over 135 unauthorized checks to herself and her two adult children. She also used the NVSF credit card for Internet purchases and vacations, and she made electronic car payments on NVSF’s dime.
Police reported that she started embezzling from the organization five years ago, and investigators estimated that by the end of the investigation, the total amount embezzled would end up being more along the lines of $830,000. How does a small charity with just four employees not notice that kind of money missing? And how did NVSF fail to notice it, when the IRS Form 990 requires delving deeply into financial records? Did her caper have anything to do with that $28,668 loan to an “interested person?”
The Bottom Line on Cars for Veterans?
Don’t even think about it! Cars for Veterans has received our 1 star rating which is our LOWEST possible rating.