Some chartered groups spend little on veterans

A congressional charter does not necessarily signify U.S. government approval.
KNIGHT RIDDER NEWSPAPERS
WASHINGTON -- The pitches from AMVETS are practiced and smooth: Help America's veterans get treatment for their disabilities or monthly checks to compensate for their injuries. Give them the means to avoid homelessness.
AMVETS tells potential donors that it's chartered by Congress, which creates the misleading impression that the U.S. government vouches for the organization and is overseeing it.
AMVETS spent $8.5 million in 2004, but according to its tax record only 22 percent of it went for programs that helped veterans, much less than the 60 percent to 65 percent that experts on philanthropy consider the minimum.
Not involved
Far from watching over AMVETS and the dozens of other veterans groups it's chartered, Congress doesn't even examine the annual reports they're required to file, other than to make sure that they've been filled out properly.
"The fact that they're a congressionally chartered group should no more incline people to give to that group than the fact that it's National Pickle Month should make them eat more pickles," said Rep. Barney Frank, D-Mass., who in 1992 banned new charters when he led the subcommittee that was responsible for them. Since then, however, Congress has made exceptions and granted charters to at least three additional veterans groups.
Congressionally chartered veterans groups do plenty of good work: lobbying for veterans rights, funding medical research, providing training and counseling, and helping veterans with disabilities and their widows battle the U.S. Department of Veterans Affairs for benefits.
But just as they should with any charity, donors who want their money to be used efficiently need to look closely at each veterans group before giving, experts said.
"They have one of the most popular causes ... particularly when we've got a war going on," said Daniel Borochoff, the president of the American Institute of Philanthropy. "It's unconscionable that they're so inefficient."
Defense
AMVETS and other congressionally chartered veterans groups defend their spending practices as legitimate and say the high cost of fund-raising leaves them with less money for programs.
A Knight Ridder analysis of the charitable tax returns filed by the 15 largest congressionally chartered veterans groups and their 32 foundations, scholarship funds, auxiliaries and other related organizations, however, found wide variations in how much of their money is spent to help veterans.
Among the 15 largest chartered groups, six spent less than 60 percent of their money on programs that helped veterans and weren't also used to pay for fund-raising. They include such well-known groups as Disabled American Veterans, Paralyzed Veterans of America and Veterans of Foreign Wars of the United States of America.
Five of the 15 groups reported that they spend at least 60 percent to 65 percent of their money on programs, the minimum that watchdogs at the American Institute of Philanthropy and the Better Business Bureau recommend.
The remaining four groups didn't disclose on their tax returns how much they spent on programs.
Some of the chartered groups' related foundations, auxiliaries and other affiliates spent very little on programs. Only 29 cents of every dollar spent by the Military Order of the Purple Heart Service Foundation went for programs; at the American Ex-Prisoners of War Service Foundation, it was 2 cents.
Financial records
In the past year, the 15 largest congressionally chartered veterans groups and their related organizations have generated more than $480 million in revenue, $330 million of it from public donations, according to Knight Ridder's analysis of their financial records. (For more information online about the 47 groups and their finances, go to www.krwashington.com.)
Veterans group officials said their fund-raising costs were high because their contributors tended to be elderly, gave small donations of $5, $10 or $20 and were drawn to solicitations that included expensive stickers, address labels, calendars and other giveaway items. Some of these fund-raising costs are really educational programs, the officials said, because they give safety tips and facts about the groups' services at the same time that they ask for money.
Tax returns can never fully capture the good work that veterans groups do, these officials said.
"One of the frustrations or difficulties for us is a lot of what we do is intangible and goes back to our founding premise of blinded veterans assisting blinded veterans," said Tom Miller, the executive director of the Blinded Veterans Association, which provides counseling, advocacy and other services.
Last year, the association spent $3.8 million. Of that, 43 percent paid for programs that were unrelated to donation requests and the rest went for solicitations and administrative costs. The group lets donors know it's chartered by Congress in its fund-raising pitches.
"A lot of folks receive solicitations and wonder, 'Are these folks legitimate?"' Miller said. "I think a congressional charter gives that assurance."
Honorific
But the title is largely honorific, and Congress provides no meaningful oversight of these groups, despite concerns that have been raised for decades.
Chartered veterans groups noted that they send financial reports to the House Judiciary Committee each year. The committee, which has primary responsibility over chartered organizations, hasn't raised concerns about how they spend their money, they said.
Neither Rep. James Sensenbrenner Jr., R- Wis., the chairman of the House Judiciary Committee, nor Rep. John Hostettler, R-Ind., the chairman of the subcommittee that oversees chartered groups, agreed to be interviewed for this story or responded to written questions. A Judiciary Committee staffer, who can't be named because only the chairman is allowed to speak for publication, said the groups' financial reports got cursory looks for completeness and to ensure that they met accounting standards, but that that was all.
The Congressional Research Service highlighted the "mixed signals" that federal charters send to the public in a 2004 report. There "is an understandable assumption on the part of the public that somehow the charter signifies U.S. government approval of the corporation's activities and that the corporation is being supervised. Neither assumption is merited," it concluded.