Charities

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced a settlement in People v. Help Hospitalized Veterans, et al that forces all Help Hospitalized Veterans officers and directors named as defendants to resign and requires payment of $2.5 million in restitution.

In August 2012, Attorney General Harris sued the charity’s executive officers and directors for improperly diverting funds intended to support programs serving veterans and active-duty military, including providing arts and craft kits to hospitalized veterans. Executives used these funds to pay for fundraising and excessive compensation.

“Veterans face many challenges when they return home – it’s unconscionable that Help Hospitalized Veterans officials misused charitable money intended for those who served and have sacrificed for our country,” said Attorney General Harris. “I am pleased this settlement forces these officials to resign, in addition to paying restitution.”

The lawsuit alleged that the directors and officers of Help Hospitalized Veterans breached their fiduciary duty by wasting its charitable assets on such things as golf memberships and a condominium for use by executives to fundraise, and authorized excessive compensation for the group’s former president, Roger Chapin, and its current president, Michael Lynch. 

Under the settlement, Help Hospitalized Veterans will receive $2 million from the Chapin Trust. Chapin passed away in August. Lynch will retire from his position as president of Help Hospitalized Veterans and resign from the board. After a transition period, he and the four directors named in the suit – Thomas Arnold, Robert Beckley, Gorham L. Black III, and Leonard Rogers -- will be permanently barred from acting as an officer, director, fiduciary or trustee of any California charity.

The directors will resign on a rolling basis, to facilitate an orderly transition to new management. New board members will be subject to the approval of the Attorney General’s office.

In addition, the charity’s director and officer liability insurance policy will pay $450,000 to Help Hospitalized Veterans in restitution, on behalf of the defendant officers and directors.

Controversy around the performance of veteran’s charities like Help Hospitalized Veterans was brought to the public’s attention in 2007 by Rep. Henry A. Waxman who, as Chairman of the House Oversight and Government Reform Committee Hearings, held hearings into their fundraising practices and overhead.   

A copy of the settlement document is attached to this press release at www.oag.ca.gov

SACRAMENTO -- Attorney General Kamala D. Harris today released data showing that commercial fundraisers in California raised $338.5 million in 2011, just over half of which was actually received by charitable organizations.
 
The 51 percent of donated funds going to charities using a professional fundraiser represents an increase from the 2010 average of 44.4 percent. The data is included in the California Department of Justice’s Annual Report of the results of commercial fundraising campaigns for charities, produced by the Charitable Trusts Section.

“This report gives Californians the vital information they need to make educated choices about where to make charitable contributions this holiday season,” Attorney General Harris said. “While commercial fundraisers play a role in supporting charities in California, it is important for donors to know how much of their money will be used to support the charity’s programs, and how much will go to overhead.”

Commercial fundraisers, who are hired by charities to raise money on their behalf, typically charge a flat fee for their services or take a percentage of the contributions they collect. Most charities registered with the Attorney General do not use commercial fundraisers to raise funds, but do their own, in-house fundraising.

By law, commercial fundraisers must register with the Attorney General’s office prior to fundraising in California and must file annual financial disclosure reports detailing income and expenses for each fundraising campaign.

The annual report contains an alphabetical list of charities that hired commercial fundraisers in 2011 – along with the total revenue raised in those campaigns and the dollar amount and percentage of total funds raised that went to the charity.

According to reports filed with the Attorney General’s office, commercial fundraisers who operate in California collected $338.5 million in donations in 2011. This figure excludes thrift store operations and vehicle donation programs, which are accounted for separately.

On average, $172.8 million – or 51.05 percent of the funds raised – went to the charities. The remainder was retained by the commercial fundraisers as payment for fees and expenses.

The Attorney General’s office also publishes the Guide to Charitable Giving for Donors that provides advice, guidelines and information to help donors make informed decisions about giving. The guide suggests that donors:

1. Ask the fundraiser how a donation will be distributed. Fundraisers are required by law to tell a consumer this information.
2. Ask what percentage of donations will be used to pay for fundraising expenses. This information can better inform the consumer as to how much of the contribution will go to the cause versus overhead.
3. Ask if the fundraiser works for a commercial fundraiser and is being paid to solicit. If the answer is yes, then it is likely less of the funds are going to the charity.
4. Avoid cash donations, as cash can more easily be diverted to non-charitable purposes and there is no way to trace it.
5. Avoid giving credit card information to a telephone solicitor or in response to a telephone solicitation.
6. Learn about a charitable organization, its activities and its fundraising practices before giving. The Attorney General’s office maintains a searchable online database on registered charities and registered professional fundraisers at http://rct.doj.ca.gov/MyLicenseVerification/Search.aspx. Donors can also check the websites of the Wise Giving Alliance at http://www.bbb.org/us/charity/  and the American Institute of Philanthropy at http://www.charitywatch.org/.  The Guide to Charitable Giving for Donors is available online at: http://oag.ca.gov/charities/publications

The full report on commercial fundraisers can be located here: http://www.oag.ca.gov/charities/publications#fundraisers
 

SACRAMENTO --- Attorney General Kamala D. Harris today released data showing that commercial fundraisers in California raised $362.9 million in 2010, of which charitable organizations received less than 45 percent.

This represents an increase from the 2009 total of less than 43 percent. The data is included in the California Department of Justice’s Annual Report of Commercial Fundraisers, produced by the Charitable Trusts Section.

“The data in this report allows donors to make informed choices this holiday season,” Attorney General Harris said. “Commercial fundraisers play a role in supporting charities in California, but it’s important for donors to know how much of their money will be used to support the charity’s programs, and how much will go to fundraising expenses.”

Among numerous other tables, the annual report contains an alphabetical list of charities that hired commercial fundraisers in 2010 – along with the total revenue raised in those campaigns and the dollar amount and percentage of total funds raised that went to the charity.

Commercial fundraisers, who are hired by charities to raise money on their behalf, typically charge a flat fee for their services or a percentage of the contributions they collect.

By law, commercial fundraisers must register with the Attorney General’s office prior to fundraising in California and must file annual financial disclosure reports detailing income and expenses for each fundraising campaign.

According to reports filed with the Attorney General’s office, commercial fundraisers collected $362.9 million in donations in 2010. This figure excludes thrift store operations and vehicle donation programs, which are accounted for separately.

On average, $161.1 million – or 44.38 percent of the funds raised – went to the charities. The remainder was retained by the commercial fundraisers as payment of fees and expenses.

The Attorney General’s office also publishes the Guide to Charitable Giving for Donors that provides advice, guidelines and information to help donors make informed decisions about giving. The guide suggests that donors:

1. Ask the solicitor how a donation will be distributed.
2. Ask what percentage of donations will be used to pay for fundraising expenses.
3. Ask if the solicitor works for a commercial fundraiser and is being paid to solicit.
4. Avoid cash donations.
5. Avoid giving credit card information to a telephone solicitor or in response to a telephone solicitation.
6. Learn about a charitable organization, its activities and its fundraising practices before giving. The Attorney General’s office maintains a searchable online database on registered charities and registered professional fundraisers at http://rct.doj.ca.gov/MyLicenseVerification/Search.aspx? facility=Y. Donors can also check the websites of the Wise Giving Alliance at http://www.bbb.org/us/charity/ and the American Institute of Philanthropy at http://www.charitywatch.org/.

The Guide to Charitable Giving for Donors is available online at http://ag.ca.gov/charities/publications.php#guides.

The Attorney General’s 19th annual report on commercial fundraisers can be found at
http://ag.ca.gov/charities/publications/2010cfr/cfr2010.pdf.

SAN FRANCISCO --- Attorney General Kamala D. Harris today issued a consumer alert with tips on how Californians can make safe, informed donations this October, which is National Breast Cancer Awareness Month.

Attorney General Harris offers the following five tips to the public on how to avoid “sound-alike” organizations and scam artists that use high-volume donation periods to prey on the goodwill of Californians.

1. Avoid giving your credit card number to a telephone solicitor. Avoid giving cash to an individual or responding to an e-mail solicitation. Instead, seek out known organizations and give directly by calling the organization, visiting its official website, or mailing a check to the listed address.

2. Research an organization before you donate by visiting:
- California Attorney General’s Registry of Charitable Trusts, http://oag.ca.gov/charities
- Better Business Bureau’s Wise Giving Alliance, www.give.org
- Charity Navigator, www.charitynavigator.org

3. Learn about an organization by asking the right questions: Does the organization only support research? Does it fund community health programs? How are donations used? What percentage of donations is used for charitable activities?

4. Avoid generic claims like “Supports Breast Cancer Programs,” and look for a name, label, or logo that you recognize and can verify.

5. Ask the organization not to store your credit card information.

For additional tips on charitable giving, go to http://ag.ca.gov/charities/charit_giving.php.

Californians who believe they have been victimized by a fraudulent charitable solicitation should file a complaint with the Attorney General’s Registry of Charitable Trusts at http://ag.ca.gov/charities.php.

OAKLAND -- Attorney General Kamala D Harris today encouraged Californians to make charitable donations to help victims of the devastating earthquake and tsunami in Japan but warned citizens to beware of scams posing as charities that sometimes prey on the goodwill of California donors during times of tragedy.

Attorney General Harris offers the following tips on how to give wisely if solicited to help disaster relief efforts, in order to assure that donations are used as the donor intends:

1. Carefully review disaster-relief appeals before giving. In times of disaster, many 'sound-alike' organizations and sham operations solicit donations.

2. Make sure the charity is registered in the Attorney General's Registry of Charitable Trusts. Registration does not guarantee that a charity is effective, but it is an important indicator. A searchable database is available at http://ag.ca.gov/charities.php.

3. Ask what percentage of your donation will be used for charitable activities that directly help victims.

4. Avoid donating through e-mail solicitations. Clicking on an e-mail may lead you to a website that looks authentic but is established by identity thieves seeking to obtain money or personal information.

5. Only provide your credit card information once you have reviewed all information from a charity and verified its credibility. Ask the organization not to store your credit card information.

6. Do not give cash. Write checks payable to the charitable organization, not a solicitor.

7. Take action on your own rather than responding to solicitations. Seek out known organizations and give directly, either by calling the organization, using the organization's official website, or mailing a check to the address listed on the organization's website.
The Attorney General's Office regulates charities and their for-profit fundraisers in order to prevent the misuse of charitable donations.

For additional tips on charitable giving, go to http://ag.ca.gov/charities/charit_giving.php. Information on national charities is available from the Better Business Bureau's Wise Giving Alliance at 800-575-4483 or www.give.org.

Californians who believe they or others have been victimized by fraudulent charitable solicitation can file a complaint online with the Attorney General's Registrar of Charitable Trusts at http://ag.ca.gov/charities.php.

SACRAMENTO — Attorney General Edmund G. Brown Jr. today released his office’s annual report on commercial fundraisers, which finds that while commercial fundraisers in California raised $391.5 million in 2009, charitable organizations received less than 43% of those funds.

“This report allows donors to make informed choices in their charitable giving,” Brown said. “Some commercial fundraisers are effective at generating millions for worthwhile charities but many others divert the majority of the donations to overhead.”

Among numerous other tables, the annual report contains an alphabetical list of charities that hired commercial fundraisers in 2009 – along with the total revenue raised in those campaigns and the dollar amount and percentage of total funds raised that went to the charity.

Commercial fundraisers, who are hired by charities to raise money on their behalf, typically charge a flat fee for their services or a percentage of the contributions they collect.

By law, commercial fundraisers must register with the Attorney General’s office prior to fundraising in California and must file annual financial disclosure reports detailing income and expenses for each fundraising campaign.

According to reports filed with Brown’s office, commercial fundraisers collected $391.5 million in donations in 2009. This figure excludes thrift store operations and vehicle donation programs, which are accounted for in a supplemental report.

On average, $166.8 million – or 42.61% of the funds raised – went to the charities. The remainder was retained by the commercial fundraisers as payment of fees and expenses.

Brown’s office also publishes the Guide to Charitable Giving for Donors that provides advice, guidelines and information to help donors make informed decisions about giving. The Guide suggests that donors:

1. Ask the solicitor how a donation will be distributed.
2. Ask what percentage of donations will be used to pay for fundraising expenses.
3. Ask if the solicitor works for a commercial fundraiser and is being paid to solicit.
4. Avoid cash donations.
5. Avoid giving credit card information to a telephone solicitor or in response to a telephone solicitation.
6. Learn about a charitable organization, its activities and its fundraising practices before giving. Donors can Brown’s office maintains a searchable online database on registered charities at http://rct.doj.ca.gov/MyLicenseVerification/Search.aspx?facility=Y, and on registered commercial fundraisers at http://cfr.doj.ca.gov/. Donors can also check the Web sites of the Wise Giving Alliance at http://www.bbb.org/us/charity/ and the American Institute of Philanthropy at http://www.charitywatch.org/.

The Guide is available online at http://ag.ca.gov/charities/publications.php#guides .

The Attorney General’s annual report on commercial fundraisers, currently in its 18th year of publication, can be found at http://ag.ca.gov/charities/publications.php#commercial_fundraisers .

LOS ANGELES — Attorney General Edmund G. Brown Jr. today announced a settlement with a charity that “betrayed the trust of its donors” by using deceptive fundraising tactics and diverting thousands of dollars from the care of burn victims to pay for meetings in resort communities.

“The trustees of this charity grossly abused their responsibilities as guardians of charitable assets,” Brown said. “They betrayed the trust of donors by squandering donations on such things as an expensive Caribbean cruise and trips to posh resorts.”

The Association for Firefighters and Paramedics, Inc., based in Santa Ana, misrepresented how and where donations would be spent, and mailed out invoices for pledges that had never been never made. Board members also diverted $33,000 from the charity for out-of-town board meetings in San Diego and Las Vegas, and a Caribbean cruise for board members and their families before a meeting in Florida.

The settlement, filed in the Orange County Superior Court, recovers $100,000 in funds diverted from the charity, plus attorney’s fees and investigative costs. For the next four years, the charity’s fundraising materials and program expenses will be closely monitored.

In May 2009, Brown’s office filed eight lawsuits against 12 charities and 17 fundraising groups that performed telemarketing on their behalf. The lawsuits were filed as part of a nationwide effort to crack down on fraudulent fundraising activities by or on behalf of charities with names that give the false impression that the charities are associated with public safety organizations.

Through its investigation, Brown’s office obtained a list of California residents who donated to the Association for Firefighters and Paramedics. Responses to a questionnaire sent to those California residents revealed that telemarketers calling on behalf of the charity told people their donation would be used to help pay for the care of burn victims in their area, along with supporting the fire department and paramedics in their town.

The charity’s website reiterated this claim, noting that the charity would seek out cases “within a reasonable radius of your area so that the impact of your donation can be felt close to home.”

In fact, the grants were only made to Southern California residents, even though funds were solicited nationwide, and none of the funds were used to support local fire departments or paramedics. Further, donors who asked were told that 80 to 100% of their donation would go to the charity when, in fact, the charity received less than 15 percent. Eighty to ninety percent of the donations received were used to pay for the charity’s fundraising expenses.

A copy of the settlement with the Association for Firefighters and Paramedics is attached.

SAN FRANCISCO – Concluding an investigation into fundraising practices at California State University at Stanislaus, Attorney General Edmund G. Brown Jr. announced today that the CSU Stanislaus Foundation has agreed to improve oversight of the money it raises and spends for the school.

“We examined whether money given to a charitable foundation was handled appropriately, but found no violation of law,” Brown said. “However, the foundation board has agreed to make changes to improve oversight of its funds.”

Brown’s Charitable Trusts Section found that the foundation exercised inadequate oversight of its $20 million in assets, but found no misuse of its funds and no violations of state law.

In April, at the request of state Senator Leland Yee of San Francisco, Brown agreed to investigate the foundation, including whether it was spending its money for the benefit of the campus as it promises its donors, the university and the public. Brown also investigated the refusal of CSU Stanislaus to turn over records of an appearance by Sarah Palin at a university fundraising event.

Subsequently, Californians Aware, a non-profit watchdog group, filed a civil lawsuit against both the university and the foundation to compel disclosure, and Brown suspended his investigation pending resolution of the lawsuit.

Brown’s audit showed that the foundation’s accounting procedures were inadequate, it failed to understand fully its duties and responsibilities under the law – including basic charitable trust concepts – and it failed to implement its own auditor’s recommendation to prepare a budget for all fundraising events. Recently, the foundation has been working with an independent auditor to rectify these lapses.

The foundation’s board of directors agreed to:

• Participate in directors’ training on management of charitable organizations and the fiduciary duties of charitable boards of directors.
• Consider immediately all recommendations made by its independent auditor.
• Ensure that its relationships with all outside fundraisers comply with California law.
• Ensure that it consistently follows all its fiscal and governance policies.

The Attorney General’s Charitable Trusts Section oversees charities to make sure they comply with the law and their articles of incorporation. The Attorney General is authorized to bring legal actions against charities if they misuse funds under their control or otherwise fail to follow the law.

The closing letter to CSU Stanislaus is attached.

MONTEREY – Attorney General Edmund G. Brown Jr. has filed a lawsuit to shut down the Monterey County AIDS Project and recover more than $2.8 million intended for the benefit of people affected by HIV/AIDS that was illegally diverted to other uses.

Brown said that former officers and directors of the Seaside charity, called MCAP, took some of the money for personal use and for-profit ventures, in violation of state law and a May 2000 court order specifying that at least $1.8 million be used “solely for the purpose of providing housing for people with the HIV disease.” The complaint alleges that another $1 million in other grants and donations was misspent as well.

“The duty of these officers and directors was to protect the charity’s assets so the funds could be used for the support of very sick people,” Brown said. “Instead, they violated their trust and spent the money any way they wanted.”

The Attorney General’s lawsuit, filed Friday in Monterey County Superior Court, seeks to dissolve MCAP, obtain a complete accounting of its finances, and recover any remaining assets dissipated through “the mismanagement and neglect of former officers and members of its board of directors.” Brown also seeks return of assets that were illegally diverted. Sixteen former officers and directors are named.

The complaint describes a scheme in which the MCAP officials, over nearly a decade, drained the organization’s coffers of money earmarked for HIV/AIDS patients.

The organization’s record-keeping was so sloppy and incomplete that it’s hard to determine exactly where all the money went. MCAP continued to provide housing and services for AIDS patients, but at a lesser level than its overall expenditures would suggest.

Some of the charity’s money was spent on unauthorized expenditures, such as meals at expensive restaurants, personal expenses on credit cards, purchasing items for personal use at auctions, personal moving and storage expenses, a personal mortgage payment, and steam-cleaning a carpet in a private residence.

MCAP was created in 1985 to provide support, resources and services, including housing assistance and hospice care, for HIV/AIDS patients in Seaside, north of Monterey.

Eleven years ago, MCAP received $1.8 million in cash and property from the estate of Douglas E. Madsen, a Monterey County resident, with the restriction that the bequest be used for the sole purpose of housing active AIDS patients.

But, according to Brown’s complaint, more than $2.8 million of charitable assets, including the Madsen money, was “misappropriated, misapplied or wasted.” In 1999, MCAP listed assets of $2.1 million. By 2004, that had dwindled to $1.4 million, and by 2007, only $205,000 was left.

As Attorney General, Brown is the official charged with ensuring that charitable organizations in California spend their money for the purposes specified by their founding documents, internal policies and state law.

MCAP’s filings with the Attorney General’s Registry of Charitable Trusts can be found at http://ag.ca.gov/charities/index.php

The complaint is attached.

SAN FRANCISCO – Attorney General Edmund G. Brown Jr. announced today that he has launched a broad investigation into the California State University Stanislaus Foundation to include an examination of its finances and the alleged dumping of documents into a university dumpster.

This action follows an inquiry Brown began last week into whether the CSU Stanislaus Foundation violated the California Public Records Act. On April 7, State Senator Leland Yee asked Brown to investigate the refusal of California State University Stanislaus to turn over records, under the Public Records Act, pertaining to the $500-a-plate June 25 speaking engagement of former vice presidential candidate Sarah Palin at the university’s 50th anniversary gala. Palin’s compensation for speaking at the CSU Stanislaus gala hasn’t been disclosed, but she earned $100,000 for speaking in February at a Tea Party convention in Nashville.

The expanded inquiry will seek to determine whether the foundation, which has assets of more than $20 million, is spending its money to benefit the campus, as it promises donors, the university and the public. The CSU Stanislaus Foundation spends more than $3 million each year on university endeavors. The Attorney General is asking university officials to preserve foundation documents.

“We are taking this action to make sure that the money raised goes toward the intended educational purposes and not a dollar is wasted or misspent,” Brown said, “Prudent financial stewardship is crucial at a time in which universities face vastly decreased funding and increased student fees.”

The Attorney General oversees charitable organizations to make sure that they comply with the law. Brown’s office has recently sought records of several foundations following allegations of improprieties including a no-bid contract to a foundation board member, a loan -- with a large loss -- to a former foundation board member, a $1.5 million-dollar loss because of bad debts, a questionable real estate deal and a $200,000 low-interest loan to a university president.

The university foundations provide crucial financial help to state universities, supplementing student fees and state support for scholarships, academic programs, buildings and operating expenses.

Brown said his office would also review documents obtained from Yee today, including part of Palin’s speech contract, which students say they plucked out of a dumpster near the CSU Stanislaus administration building. Investigators will first attempt to determine whether the documents are authentic and how they ended up in the dumpster.

“This is not about Sarah Palin,” Brown said. “She has every right to speak at a university event, and schools should strive to bring to campus a broad range of speakers. The issues are public disclosure and financial accountability in organizations embedded in state-run universities. We’re not saying any allegation is true, but we owe it to the taxpayers to thoroughly check out every serious allegation.”

The assets controlled by 95 auxiliary bodies and foundations associated with the entire CSU system amount to $1.34 billion, according to the CSU chancellor’s office. UC system foundations control another $4 billion in assets.

The Attorney General’s investigation is being conducted by its Charitable Trusts Section, which works with charities to make sure they comply with the law and their articles of incorporation. The Attorney General is also authorized to bring legal actions against charities if they misuse funds under their control.

For more information on the Attorney General’s Charitable Trusts Division, see http://ag.ca.gov/charities.php.