There are three things donors should be able to reasonably expect when they give money to a charity for hungry kids:
That the organization is on the up-and-up.
That the money donated will be used for good works.
And that hungry kids will be fed.
California Atty. Gen. Xavier Becerra filed a lawsuit Wednesday night against a Windsor nonprofit organization called Aid for Starving Children that allegedly came nowhere close to living up to its name. I got my hands on the suit earlier this week.
It alleges the group misled donors with exaggerated descriptions of its activities and by inflating contributions from drug companies.
It also alleges the bulk of cash donations was used for administrative purposes, with only a small portion going toward hungry kids.
“Most people on this Earth would want to aid starving children,” Becerra told me. “But when you have an organization that does anything but, you need to notify the public.”
He said lawsuits such as this are intended “to separate the real players from the deceivers.”
Dr. Monte Wilson, president of Aid for Starving Children’s board of directors and a defendant in the lawsuit, did not return calls for comment. A lawyer for the group called efforts to change how pharmaceutical donations are valued “misguided.”
The lawsuit comes as a bill — AB 1181 — makes its way through the state Legislature. It would require greater transparency for charity financials, including a stipulation that noncash donations (think pharmaceuticals) be valued according to the overseas markets where they’ll be used, rather than at bloated U.S. prices.
According to the lawsuit, Aid for Starving Children reported raising about $105 million from May 2011 to April 2018.
The organization says it focuses on “feeding programs, building clean water systems, supporting children’s homes for orphans, victims of abuse and those affected by AIDS, as well as providing shipments of medicines and supplies to hospitals and clinics in underprivileged regions across the globe.”
“We believe that each life is of infinite value to God and that we have both the opportunity and the responsibility to affirm that value through our actions,” the group says on its website.
However, the lawsuit alleges that of the $105 million raised over seven years, $97.4 million was in the form of drugs donated by pharmaceutical companies — many for conditions not normally associated with starving children, such as menopause.
And the $97.4-million figure is suspect, the suit says, because Aid for Starving Children valued the contributions based on U.S. list prices, which typically are the highest in the world, rather than the significantly lower prices in countries where the drugs were used.
The lawsuit doesn’t make a guess at how much the organization may have fudged the numbers. It says only that the figures reported by Aid for Starving Children on its tax forms were “much higher” than the value of the drugs in recipient countries.
The suit also alleges that of the $7.4 million in cash donations received by the organization from 2011 to 2018, about $6.2 million went to “overhead, salaries, consulting contracts and fundraising expenses.”
This left less than $1.3 million — or 1.3 cents per donated dollar — available for the group’s stated goal of assisting hungry kids and their families, the suit says.
It alleges the organization paid a for-profit company, Charity Services International, to procure the prescription meds, locate international organizations to receive them and ship the drugs on the charity’s behalf.
Paul Murphy, a lawyer for Aid for Starving Children, told me prior to the filing of Becerra’s lawsuit that there’s nothing misleading about the organization relying so heavily on pharmaceutical donations.
“You can’t just take the drugs from this,” he said. “That’s a primary thing they do — getting drugs to people around the world.”
Aid for Starving Children was incorporated in 1981 as the American/African Education Foundation, according to the suit. It received tax-exempt status from the Internal Revenue Service a year later.
The organization renamed itself the American/African Self-Help Foundation in 1989, the suit says. It changed its name again in 1999 to the African American Self-Help Foundation, and became Aid for Starving Children in 2011.
In 2012, according to the suit, the IRS contacted the group about “certain deficiencies” in its record-keeping and reporting practices, including how donated goods were being used.
The suit says there’s no evidence that Aid for Starving Children followed the tax agency’s recommended changes.
It also cites a number of eye-opening transactions for an entity purportedly dedicated to assisting hungry kids. These include a donation of about $9 million worth of drugs typically prescribed to post-menopausal women.
Other meds linked to Aid for Starving Children included drugs generally associated with dementia, high cholesterol, kidney dialysis and ulcers.
Murphy, the group’s lawyer, said that “if you’re helping a child’s parents, you’re helping the child.”
Atty. Gen. Becerra responded that this “doesn’t pass the laugh test.”
“It’s called Aid for Starving Children, not Aid for Parents of Starving Children,” he said. “This is as deceptive as you can get.”
A photo gallery on Aid for Starving Children’s website is almost exclusively populated with kids, giving the impression that they, not their parents, are the focus of the organization’s charitable activities.
The lawsuit cites mailers sent to potential donors claiming that “96.3% of all donations were allocated to life-saving programs.”
It notes that photos in the group’s materials “are those of starving children,” as opposed to “the large shipments of drugs that make up the vast majority of Aid for Starving Children’s actual program activities.”
Often, according to the suit, Aid for Starving Children “did not know the identity of the manufacturers of the pharmaceuticals, or the origin of the goods.”
Rather, it says drug companies would donate meds to other charities on the condition that the drugs not be used domestically. Those charities, in turn, would donate the drugs to Aid for Starving Children.
“Despite exploiting the images and the efficiency percentages contained in its solicitation materials, Aid for Starving Children is unable to substantiate that any charitable donations were used to feed starving children and families,” the lawsuit says.
If you’re making a significant contribution, delve into the organization’s annual report, which usually will be found on its website. Look for how much cash the group takes in versus “gifts in kind,” which may be corporate contributions of goods.
Look especially for how much money is spent for administrative purposes. Most reputable charities spend at least 75% of their funds on programs, rather than overhead and fundraising.
Take everything with a grain of salt. Aid for Starving Children’s most recent annual report, for example, says the organization received and spent $14.5 million over a 12-month period, with 93.7% of donations “allocated to life-saving programs.”
“Aid for Starving Children offers children around the globe a fresh beginning through programs which provide nutritious meals, clean water, education, loving homes, medical care and more!” the report says.
According to the state’s lawsuit, most of the contributions in fact were overvalued drugs with little if any relation to the group’s core mission.
Be wary of any organization that hasn’t been around very long, or that asks you to wire money, or keeps pestering you for more cash. Do a search on GuideStar, which has a database of millions of registered nonprofit organizations.
Finally, don’t let stories about charities that may fail to make the grade deter you from doing good.