Wish-granting charity gets an F
A watchdog group fails Kids Wish, and another gives it a zero efficiency rating, citing high fundraising costs.
By CATHERINE E. SHOICHET
Published December 5, 2004
OLDSMAR - In 12 months, the Kids Wish Network raised $7.2-million in cash from donors nationwide to help the charity grant wishes for seriously ill children.
But only $813,934 of that went to children with life-threatening illnesses and their families, according to the charity's IRS filing for fiscal year 2002-03. Most of the money, $6.27-million, went to professional fundraisers.
The amount spent on fundraising is a sign that Kids Wish operates inefficiently, failing its donors and the children it aims to help, say two charity watchdog groups that have examined the organization's tax return.
"A donor considering this charity should be concerned about the fact that so much money is going toward fundraising expenses," said Sandra Miniutti, a spokeswoman for Charity Navigator.
The ratings Web site gave Kids Wish zero out of four stars in an efficiency rating last year. Among 24 wish charities in the Charity Navigator analysis, it ranked first in fundraising costs and last in money spent on wishes.
Kids Wish also gets a failing grade from the American Institute of Philanthropy. It was one of 100 nonprofit organizations on the watchdog group's list of F-rated charities published this month.
"They're pulling the wool over the donor's eye, and if people knew that, they wouldn't support them," said institute president Daniel Borochoff. "They say, "We're not hurting anybody,' but you are hurting people. . . . You're taking money away from a group that can actually give it to a kid."
Kids Wish executives say they would like to spend less on fundraising, but they contend that a relatively young nonprofit like theirs must rely on pricey professional fundraisers to help develop a donor base. They stress that the charity's good work far outweighs its reliance on telemarketers.
"To this point, the predominant source of funds has been an expensive source," Kids Wish Network co-founder, president and director Mark Breiner said. "We are working very hard to turn that around."
"That's all that mattered to us'
At the Kids Wish headquarters in an Oldsmar industrial park, proclamations praising the charity cover an entire wall. Thank-you letters from Oldsmar Mayor Jerry Beverland and New York City Mayor Michael Bloomberg hang across from photos of smiling children posing with the likes of Dolly Parton and Jackie Chan.
Mark Breiner, 50, and his wife Shelley Breiner, 47, sold their used furniture business and decided they wanted to help children with life-threatening illnesses a few years after Shelley Breiner's father died of cancer in 1993.
Along with Shelley Breiner's mother, Barbara Askin, 73, they started the Oldsmar-based Fulfill a Wish Foundation in 1997.
A year later, its founders were in federal court battling a trademark infringement lawsuit.
The Phoenix, Ariz.-based Make-A-Wish Foundation sued the Oldsmar nonprofit, contending that the new charity's name was confusingly and improperly similar to the more well-known Make-A-Wish name.
The parties settled out of court after a judge denied the Make-A-Wish Foundation's motion for a preliminary injunction. The Oldsmar charity changed its name from the Fulfill A Wish Foundation to the Kids Wish Network as part of the settlement.
The organization granted its first wish in 1998 and granted 143 wishes during its most recent fiscal year.
Jeri Pohlman, 50, of Holiday, met representatives from Kids Wish in 1999 when they gave a new bedroom set to her daughter and a new computer to her son.
Lacy Pohlman, a 14-year-old who suffered from cystic fibrosis, had asked to meet with the singer Brandy, but when the musician couldn't be reached, Kids Wish gave Lacy the bedroom set. She died a few months later.
"It lit up her life for a short time, and that's all that mattered to us," Jeri Pohlman said.
Loophole or program outreach?
Kids Wish leaders say telemarketers and other professional fundraisers always have played a major role in helping children's wishes become reality.
"Not having that professional fundraising experience would certainly increase the chance of failure for us," Mark Breiner said. "We decided from the beginning that we would enlist the help of professionals to ensure that we'd be able to pay our rent and pay for the wishes."
Breiner said Kids Wish's telephone donors know that much of their money will go to professional fundraisers.
"Especially in recent years, I think it's been well-publicized that telemarketing has its costs," he said.
But Borochoff said Kids Wish is one of many charities exploiting a tax loophole in reporting professional fundraising costs on its tax forms.
Of the $6.2-million that Kids Wish paid professional fundraisers in 2002-03, $2.2-million was legally counted as program services.
The cost of a fundraising letter, for example, can be so classified because it also contains information about the charity and its work.
The charity also uses telemarketing to track down most of its wish candidates, said Kids Wish director of development Patrick Meehan. That approach, he said, allows the organization to find children who live in more remote areas.
"It's a great method," he said. "If you're going to do fundraising, why not find children at the same time?"
Counting that $2.2-million as part of its programs, Kids Wish says it spent just over $4-million, about half of its revenue, on fundraising in fiscal year 2002-03.
Mark A. Hager, senior research associate at the Urban Institute's Center on Nonprofits and Philanthropy in Washington, D.C., said reporting $2.2-million as program services is "implausible."
"Professional fundraising fees are fundraising fees and nothing else," he said. "That's an attempt to look better."
Negative ratings from watchdog groups like the American Institute of Philanthropy don't fluster Mark Breiner. The groups have an agenda, he said, creating their own guidelines that discriminate against less-established, younger charities.
Charity Navigator's ratings, he said, are a more accurate reflection of a charity's standing in relation to others because they report information directly from IRS forms.
Last year, the site gave Kids Wish four stars for organizational capacity, but zero stars for efficiency. Kids Wish has the highest percentage of fundraising expenses and lowest percentage of money spent on program services of the 24 wish-granting charities, including 12 regional Make-A-Wish chapters, ranked by Charity Navigator.
Comparing Kids Wish to other wish-granting charities is unfair, its leaders said, since granting wishes is only one part of the Oldsmar organization's mission. They said it also provides funeral assistance to families and ships millions of dollars in donated toys to hospitals around the country as part of its Holiday of Hope and Gift Bank programs.
Fundraising is not the only aspect of Kids Wish's operations to catch the attention of the American Institute of Philanthropy.
Borochoff also criticized the organization's board of directors, which consists only of the three founding family members, according to its tax filing. That shows Kids Wish paid Mark Breiner $82,069 in salary in 2002-03, $61,627 to Shelley Breiner and $41,600 to Barbara Askin.
When a board consists of family members, he said, they will be "tempted to do what's in their own interest rather than the interest of the organization."
Mark Breiner said Kids Wish accidentally left three board members' names off the list of directors it supplied to the IRS. Next year, he said, he hopes to increase the board's size to 10.
This year, Breiner hopes to get a higher rating from Charity Navigator, because he said Kids Wish has become less dependent on professional fundraising.
Plans for growth
For fiscal year 2003-04, the organization plans to report to the IRS that it spent 39.6 percent of its $12.7-million revenue - - which includes donated items as well as cash - on professional fundraising, according to a statement released to the Times. That compares to the 47 percent that Kids Wish reported for fundraising during 2002-03.
Last year, Kids Wish spent $998,431 on wishes and counted as program services a little more than $3-million in money paid to professional fundraisers. The organization granted 143 children's wishes and said it received more requests for wishes than it could accommodate.
At the charity's headquarters, white boards list dozens of children awaiting wishes: trips to Disney World or Hawaii, a new guitar, paintball equipment, a meeting with Lance Armstrong. Soon, Meehan said, Kids Wish plans to hire several new wish coordinators to help it grant 250 wishes next year.
Meehan, who began as head of the new development department at Kids Wish in January, said he spends most of his time trying to come up with less costly ways for the organization to raise money. He said in three years the organization's fundraising costs should be reduced to a point that even the most critical watchdog groups are satisfied.
In the meantime, donors who want most of their money to go directly to program services can give $500 or more to the charity's Guardian Angel Fund. The fund also includes contributions raised in local fundraising events, such as the recent Junior Pro-Am tournament at Innisbrook, which netted $32,000 for Kids Wish.
State and county regulators said they have received no complaints about Kids Wish. They advise donors to research carefully before agreeing to give to any charity.
Cassi Beebe, regulatory program administrator for the Florida Department of Consumer Services, said high professional fundraising costs are common for many of the state's charities.
"We only hope to educate the public that if you see a charity that spends 40 percent on program services, perhaps you should look for one that spends 80," said Susanna Tootle, an investigator for the Pinellas County Department of Justice and Consumer Services.
Times researchers Kitty Bennett and Carolyn Edds contributed to this report. Catherine E. Shoichet can be reached at firstname.lastname@example.org or 727 771-4307.
TO LEARN MORE
For more information on national and local charities, check:
Charity Navigator: www.charitynavigator.org Guidestar: www.guidestar.org American Institute of Philanthropy: www.charitywatch.org/ Better Business Bureau Wise Giving Alliance: www.give.org/
Florida Division of Consumer Services: www.800helpfla.com/ or 1-800-HELP-FLA
Pinellas County Consumer Protection: www.co.pinellas.fl.us/bcc/consumer/ or 727 464-6200
To find out more about Kids Wish Network, check www.kidswishnetwork.com or call 813 891-9374 or toll free at (888) 918-9004
[Last modified December 5, 2004, 00:05:18]
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