Shriners’ Leader Assails Report Questioning Group’s Charity Finances

The leader of the nation’s Shriners on Monday assailed as “inaccurate, wrong and confusing” a Florida newspaper report that claimed his fraternal organization gives its 22 hospitals for crippled children less than than one-third of the millions of dollars that it raises each year, spending the rest on travel, food and entertainment for its members.

“The inference that we’re doing something wrong is not right,” Imperial Potentate Walker S. Kisselburgh told a press conference at the Westin Bonaventure Hotel in Los Angeles, where the group is holding its international convention. “We have a very confusing organization.”

The report, published Sunday in the Orlando Sentinel, claimed that in 1984, 76 of the Shrine’s 185 temples raised $10.4 million from circuses, football games, newspaper sales and other activities, but less than $3 million of the money went to the hospitals. The temples kept the rest for their own use, according to Internal Revenue Service records cited by the newspaper.

Past Tax Records

Moreover, the newspaper said a projection based on past income and spending, including 1982 and 1983 tax records, showed that all the temples raised $25.3 million from the public in 1984. The hospitals reported receiving only $8.3 million. The rest was spent on food, travel, entertainment and fraternal ceremonies for the Shriners, according to the newspaper.

The New York-based National Charities Information Bureau, which monitors 410 national charities including the American Cancer Society and the March of Dimes, maintains guidelines suggesting that at least 70% of solicited money should go into charitable programs. No more than 30% should be used for fund raising or overhead expenses, said Frank Driscoll, research associate for the nonprofit group, which publishes its findings in a “wise-giving guide.”

2 Separate Groups

Kisselburgh and other Shriners said the “confusion” over the Shriners’ finances stemmed from the fact that hospitals and the fraternal organization are separate tax-exempt corporations, headquartered in two different states. Headquartered in Iowa, the fraternity, the Ancient Arabic Order of the Nobles of the Mystic Shrine, has 880,000 members in the United States, Canada, Mexico and Panama. It now has 188 temples. The charity, known as Shriners Hospitals for Crippled Children, was started by the fraternity in 1922. Administered by a Colorado corporation, it operates 19 orthopedic and three burn hospitals, including the Shriners Hospitals for Crippled Children in Los Angeles. The net worth of the hospitals is $2 billion, said Robert J. Turley, a Lexington, Ky., attorney and member of the Shriners’ board of trustees.

‘Knock It Off’

The Sentinel said its investigation found that Shrine temples use their association with the hospitals to generate money for themselves, and that the Shrine does not follow recommended financial reporting criteria set for charitable organizations by the nation’s largest rating agencies. Shriners, however, said that in most cases money specifically raised for the hospitals goes to the hospitals. Kisselburgh said temples that may have misled contributors will be told to “knock it off.”

Under Shriners’ rules, Turley said the national organization must give permission for a local temple to invoke the hospital’s name for fund-raising purposes, whether it be a circus or football game. Each temple submits a charity activities form for such events, tabulating what was raised.

‘Their Own Business’

No reporting is required for fund-raising activities that do not use the hospital name. “Fund-raising activities on the basis of the temples themselves don’t require that report,” Turley said.

What the temples raise on their own behalf, Kisselburgh said, “is their own business.”

In 1985, the Shriners said, $14.3 million was raised for the hospitals through various fund-raising activities. Of that, $8.1 million went to the medical facilities and another $1.1 million was reserved to cover “start-up” costs for future events.

The remaining $5.1 million covered operating expenses, a figure that Turley said is “not out of line” for staging such events as circuses and football games.