Hucksters Milking Charities, Senate Panel Told

Millions of dollars in charity donations go to sophisticated hucksters who prey on the generous to line their own pockets rather than helping the needy, a Senate panel was told Friday.

“In some cases, these vultures simply create their own charity for the sole purpose of putting out a heart-tugging mailing and cashing in on the forthcoming checks,” Sen. Howard M. Metzenbaum (D-Ohio) told the Senate Judiciary Committee.

Officers of leading charities and state officials said that lax accounting rules have enabled self-described charities to make it appear that they provide much more money to education and services than they actually do.

Metzenbaum, who is sponsoring legislation to tighten regulation, said Americans contribute more than $100 billion to thousands of charities and that millions of dollars “end up not in the hands of the deserving but in the pockets of the deceiving.”

West Virginia Secretary of State Ken Hechler said that one group claimed it had donated $100,000 worth of powdered milk to the Philippines when the actual value was $15,000. Another organization, he said, claimed to have spent $571,300 to fight hunger in the United States after mailing out “carloads of books on microeconomics . . . . How can we eat books on microeconomics?”

Connecticut Atty. Gen. Clarine Nardi Riddle said that new accounting rules “permit a charity to shift, on paper, a generous portion of the costs associated with fund raising into the program service category on its expense statement.”

A charity that solicits donations through mass mailings can claim that a mailing has the dual purpose of raising funds and educating the public. Even an organization that raises $10 million through a mailing and pays $9.75 million to its fund-raising consultant can report half of the amount passed through to the fund-raiser as a program service expenditure, Riddle said.

“If something is not done soon, there will be a devastating erosion of public confidence,” she said.

Col. Walter C. French, the Salvation Army’s deputy director of national public affairs, said that in any large-scale fund-raising operation some volunteers will engage in irregularities.

“But practices of that nature are never countenanced or winked at (by) the Salvation Army,” he said.