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I-Team: Following The Charity Money Trail

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I-Team: Following The Charity Money Trail

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  In today's economy it's even tougher to find the cash to donate to charity, and how those donations are used is of greater concern. The CBS4 I-Team  wanted to know how much of your monetary donations have been spent as intended such as for animals, children or disabled veterans.

So the I-Team investigated every non-profit operating in Florida. Some of what I-Team investigator Stephen Stock found might make you angry.

The wine and the money flowed at a gala celebration held recently at Miami-Beach's posh Eden Roc Hotel. The "Caberet Medley" party was meant to thank big donors and celebrate the 30th anniversary of the Children's Resource Fund.

But some donors likely didn't realize that according to state and IRS records, all of the $306,635 collected in 2006, at least 100% went to administrative costs rather than directly to children's programs.

According to IRS records, $357,447 was spent on direct expenses such as advertising, management and other overhead expenses.

"The overhead is the biggest part of this center," chairwoman of the board for the Children's Resource Fund, Peggy Armaly said. "Because they're teachers and they're therapists."

To be fair, the same IRS tax records do show $832,103 was spent on children's programs services. But those same records show that was covered by tuition, grants, membership dues and interest collected from $4,416,950 in surplus sitting in the bank.

"I think its misrepresented," said Children's Resource Fund Executive Director Roxana Rapaport. "What we do here, when you call "administration" and all the money goes to "administration," it really goes to pay three teachers in each class with 15 children. It goes to pay the salaries of occupational physical and speech therapies as well as psychological services."

The CBS4 I-Team reviewed IRS tax records for every charity and non-profit operating in Florida. It dug through a database of 18,576 state and IRS records for every nonprofit and charity doing business in Florida.

We used computer analysis of thousands of Federal and State financial records for all 501(c)(3) organizations dating back to 2005. We also obtained data from the Department of Agriculture and Consumer Affairs. Their information comes from 2006 IRS 990 forms – the latest data available.

The I-Team discovered dozens of charities that spent little to no money raised on the actual charity.

"What! You're kidding me!" regular church giver Marlene Remond said in reaction to the results of a computer analysis of financial records for nonprofits.

"It kind of angers me to be honest with you," 45 year-old charitable donor Luis Puebla said. "You give out of the goodness of your heart. And then you see it doesn't go to the right people."

You can search the list yourself by clicking this link.

There is nothing illegal about any of the way charities spend the money you donate.

There are no federal or state rules requiring a charity to spend a certain amount of the money it raises on programs or on the charity in its name. Private philanthropy organizations have rules and guidelines for the amount of money that can be spent on overhead. But the government does not.

The law only requires a charity to report income and expenses accurately and truthfully on an IRS 990 form. The 990 is a form available for public inspection every year.

When told of the CBS4 I-Team's findings, charitable giver Kenrick Walters was surprised. "I find that shocking. Absolutely shocking," the 37 year-old Walters said.

"I guess we should be more informed then where the money is going," the 46 year-old Remond said.

The I-Team obtained this database of charity records from the Florida Department of Agriculture and Consumer Services, Division of Consumer Services. It is the same data which is published in the Florida Department of Agriculture's annual "A Guide to Charitable Giving in Florida." Those records are based on the charity's IRS990 forms from 2006, the latest data availlable.

To search for a charity or non-profit of your choice go to the link accompanying this story, type in the information you want to know and the search engine should give you an answer. You can even search by the amount or percentage of money spent on "Programs", "Fundraising", and "Administrative Costs."

The CBS4 I-Team's computer analysis uncovered at least 581 charities which do business in Florida that reported spending 100% of the money they raised on "Administrative Cost."

According to the I-Team's computer analysis, of the $48,257,801.33 those 581 charities collected, a little less than half went to administrative costs --$19,587,684.97--. The rest of the money those 581 charities raised --$30,798,688.62-- was surplus—put in the bank!

For example: records show Children's Resource Fund kept $388,737 collected in 2006 as surplus. That money added to a balance of more $4,416,950 at the end of 2006 which sits in its financial kitty. (UPDATE 12/8/2008: The state of Florida incorrectly reported the numbers for the Children's Resource Fund. Click here to read the state of Florida's letter and the Children's Resource letter.)

Daniella Levine is an expert in advising non-profits how to spend their money in a balanced fashion.

As founder and CEO and President of Miami-Dade's Human Services Coalition she helps train charities and non-profits about the IRS financial reporting rules and how to budget and allocate resources.

"No organization should be 100% administrative cost," Levine said. "'Adminstrative (costs is a category defined as) what you use to provide the infrastructure for your services."

Officials at the Children's Resource Fund did say that they just spent more than a million of those surplus dollars expanding their building, putting in more rooms for special needs children. (UPDATE 12/8/2008: The state of Florida incorrectly reported the numbers for the Children's Resource Fund. Click here to read the state of Florida's letter and the Children's Resource letter.)

Then there are those that spend most or even all of their donations raising more money. Again, our on-line database shows those charities.

"There is so much need in society and the dollars available for donation are shrinking we can't afford to be wasting our money on things that are not truly having an impact," Human Services' Coalition's Daniella Levine said.

For another example of a local charity that raises questions go no further than Fort Lauderdale, home of The National Save the Sea Turtle Foundation, Inc.

In 2006 the Foundation wrote off about 3 Million in the value of donated boats.

Even so, the charity still had $1,554,362 left in the bank at the end of the 2006 reporting period. And State of Florida Department of Agriculture and Consumer Service records show the Foundation only used 5% --$194,141-- of the money it raised on actual turtle programs.

State records show they spent 90% --$3,691,102-- of the money they raised on more fundraising.

The foundation's accountant blames the disparity on the economy and the decline in donated boat values.

Or take, as an example, the National Vietnam Veterans Foundation which is based in Alexandria, Virginia, but has an office in Fort Lauderdale.

According to IRS and Florida Agriculture and Consumer Affairs records, the National Vietnam Veterans Foundation raised $1,249,154 in 2006. But according to those same state of Florida records, the Foundation only spent 8% --$97,548-- of the money it raised on actual Vietnam Veterans programs.

A spokesman did not return CBS4's requests for an explanation.

Then there's Share-A-Pet.org. Share-A-Pet is based in a nondescript building housing a doggy day care near Fort Lauderdale.

"Every single amount of money is given towards getting dogs in the facilities," Share-A-Pet's founder and president Sachin Mayi told the I-Team.

But 2007 IRS records raise questions.

The records show that of the $27,099 in donations and income raised, Share-A-Pet spent only $4,130 or 16% on actual programs.

"The way our corporation works and the way every other volunteer corporation works is that you have organizational expenses like marketing," Mayi said. "So all of those expenses go to solicit more volunteers to get them involved."

Experts say you should raise red flags if a charity spends anything over 30% of the money it raises on overhead--including administration and fundraising.

That said experts caution there can be exceptions.

"Just because a charity's overhead may be high it is not necessarily a predictor of an agency that's not doing a good job," says Harve Mogul, President and CEO of The United Way of Miami-Dade. "It may be simply that it costs more to provide a particular kind of service," Mogul says.

In fact some non-profits such as The Children's Resource Fund can tangibly show that your donations go to the good even if they spent a large amount of their donations on overhead. (UPDATE 12/8/2008: The state of Florida incorrectly reported the numbers for the Children's Resource Fund. Click here to read the state of Florida's letter and the Children's Resource letter.)

To help you learn more about your favorite charity, the CBS4 I-Team has set up a searchable database of more than 13 thousand non-profits, every charitable organization that reports financial records to the State of Florida.

Just type in the information about the charitable organization you'd like to check for the information on file with the State of Florida.

Some  charities expressed concern that this type of giving may go down as a reaction to this story.

In fact, some charities were upset that we were doing this investigation.
They believe that the actions and spending priorities of a few questionable charities would hurt everyone.

But our experts emphasize that people should not stop giving to charity. And that this report will actually empower people to give to charities that operate more efficiently with an eye toward the bottom line.

Experts say when you give make sure you do it wisely.

After all it is your money.

So it's up to you to know where they money is going and how it is truly being spent.

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