Gift Catalogue Collapse Puts Some Charities in a Bad Light

Several nationally known charities, hoping to raise money through the circulation of as many as 10 million gift catalogues, are upset and embarrassed by the collapse of the Oxnard firm behind the plan.

The charities, including the Hollywood-based Children of the Night, lent their names to the covers of the catalogues in exchange for space to solicit donations. They also were to receive a percentage of the sales of products, which ranged from miniature bonsai trees to cans of buffalo stew.

But the mail-order house, Developmental Marketing Group, flopped. The company, which has filed for protection under Chapter 11 of the U.S. Bankruptcy Code and will stop doing business this week, leaves a trail of 430 creditors and debts of more than $2.5 million.

“It makes us very uncomfortable that something as messy as this might reflect on us,” said Bob Christie, treasurer for Children of the Night, which was formed in 1979 to aid teen-age prostitutes. “We were exposed to problems in ways we never expected.”

Emotional Messages

The catalogues, which were distributed nationwide from March, 1987, to last March, featured the charities’ logos on the covers, accompanied by dramatic illustrations and emotionally charged messages.

A Children of the Night edition, for instance, featured a young girl holding several school books under the caption, “Another child is off the street . . . you make the difference.”

Inside, readers were told that royalties ranging from 6% to 16% of their purchase, minus a handling charge, would be sent to the charity, in addition to any cash donations.

“A small donation or a purchase from this catalog can go a long way toward helping a throw-away child get off the street,” implores a photo message from actress Cybill Shepherd.

The catalogue idea typifies the novel approaches to fund raising that nonprofit groups have turned to as new tax laws have reduced the incentive for people to donate money.

But, say spokesmen for some of the charities, this was a case of generating more problems than income.

While sizable cash donations were collected, the money was used for the Oxnard firm’s operating expenses and some still has not been funneled to the nonprofit groups.

The charities lost no money, but had to field numerous complaints of botched orders from perturbed customers.

And some of the organizations, which gave the mail-order house use of their nonprofit postage privileges, may have to pay thousands of dollars in back postage depending on the outcome of a U.S. Postal Service investigation.

Feeling Disappointed

“I’m not feeling as ripped off as I am disappointed,” said Paul Kawata, executive director of the Washington-based National AIDS Network, which represents 450 community AIDS organizations throughout the country. “What was lost was our name being attached to something that probably wasn’t of the quality that we would have liked.”

Other organizations that signed contracts with Developmental Marketing Group, although not all have appeared in catalogues, include the Sierra Madres Girl Scouts Council in Arcadia, the American Lung Assn., the National Easter Seal Society and the International Wildlife Coalition.

The Girl Scouts, for instance, were hoping to raise $55,000 from sales of its annual calendar, but Developmental Marketing Group encountered financial problems before the catalogue that featured the item could be published.

“We need to come up with some alternative plan now for selling the calendar,” said Marci Mattos, executive director of the Sierra Madres chapter. “We’re disappointed in the fact that we need to start over.”

Developmental Marketing Group, which is housed in a new cement and tinted-glass office building in Oxnard, 60 miles from Los Angeles, was formed by a partnership of about 20 investors in November, 1986, for the sole purpose of producing the catalogues, according to court records.

Tom McDonald, a former purchasing manager and now acting general manager, said in an interview that inexperience and computer problems accounted for most of the company’s failure.

“It was a new concept and didn’t seem to follow the rules of thumb,” he said.

Competition for Donations

McDonald added that increased competition for charitable donations has put nonprofit organizations in an uncomfortable situation. “They’re going to have to take some risks,” he said.

The slick color catalogues, 70 to 90 pages thick, were filled with a variety of household and novelty items, such as computerized bathroom scales, cassette tapes of environmental sounds, sea urchin lamps and sheepskin seat belt covers. Prices ranged from $20 to $40.

While sales were slow, readers did seem to respond to the plea for cash donations.

The International Wildlife Coalition, based in Falmouth, Mass., said that catalogues featuring appeals to save seals and baby kangaroos from slaughter netted the charity about $100,000 in contributions.

“It increased our donations and our profile,” said Stephen Best, the coalition’s vice president. “Overall, it was certainly to our benefit.”

But officials for Children of the Night, which received $120,000 in donations, about $30,000 of which has still not been paid to them, disagree.

“It’s really more important with us to maintain our reputation with the community than have $90,000 in the bank,” said Christie, the charity’s treasurer.

Even those financial gains may not last long. A U.S. Postal Service official in Washington said all contracts between the charities and Developmental Marketing Group are being reviewed to see if nonprofit postage was improperly used for the catalogue mailings.

For Children of the Night, which with more than 5 million catalogues participated in the largest mailing, the cost of back postage could exceed $200,000.

“We still haven’t made a determination,” the postal official said. “But we could ask for that money.”