As inevitable as falling leaves, and as ubiquitous as zombies at a Halloween party, is pink in October. From pink crystal pendants to pink footballs the world is awash in merchandise that claims to either donate money to, raise awareness for, or help researchers end breast cancer. Sadly, the reality is not that simple.
Few of the 1,400-or-so IRS recognized tax-exempt charities that claim to have something to do with breast cancer actually have anything to do with the disease, reported Marie Claire in 2011. In some cases the detachment of the “charity” from the cause has gotten so extreme that it qualifies as fraud.
In June 2011 the New York Attorney General sued the Long Island-based Coalition Against Breast Cancer and claimed that the $9.1 million the organization had raised, by having independent telemarketers tell donors that their money would go to things like mobile mammogram screenings and support seminars, was used solely for the enrichment and enjoyment of founder Andrew Smith and his inner circle.
The New York Attorney General’s office alleged that the CABC spent a grand total of 4% of the money raised actually on breast cancer, instead they rewarded themselves with $550,000 salaries, $150,000 retirement accounts and $50,000 home loans. While Smith is contesting the charges, two of the alleged conspirators pled guilty in August 2011 to grand larceny, scheming to defraud, and falsifying business records.
A lot of loose money tends to attract scam artists, which is why the CABC is not the only bad actor in the breast cancer game. The Mesa, Ariz.-based Breast Cancer Society has also been investigated for how it used money generated from its car donation program.
The impact of the allegedly fraudulent charity operations is not limited just to taking money from donors, the diversion of funds by questionable organizations has been a contributing factor in the bankruptcy of at least one well recognized national breast cancer charity.
In July, Y-Me, a Chicago-based national breast cancer charity best known for its 24-hour hotline that was staffed by actual breast cancer survivors, closed its doors and began the process of filing for bankruptcy. Crain’s Chicago Business reported that when Y-Me was at its peak the organization was able to pull in $17 million per year.
However, over the last three years the organization watched donations continue to dwindle, so much so that for fiscal 2011 Y-Me’s budget was down to $5.2 million in revenue with a $1.2 million deficit. While the organization had been beset by mismanagement the Chicago Tribune reported that “there are simply too many cancer organizations with overlapping missions vying for the same donors” for everyone to survive.
The problem of competition was not unique to Y-Me, or is isolated to breast cancer charities. In a recent Non-Profit Times article George Omiros, executive vice president of campaign and field development for the Leukemia and Lymphoma Society, explained that the goal for healthcare charities is to “steal market share from other organizations to continue to grow.”
For every Y-Me, a victim of oversaturation, there are victors—like Susan G. Komen—who dominate the market. Despite struggling with bad publicity early this year, which led to a decline in fundraising and participation at some Komen event, the massive charity, with approximately $400 million in annual revenue, has remained one of the top cancer charities in the U.S.
Market dominance allowed Komen to handsomely reward its executives, founder and CEO Nancy Brinker received a $417,171 in compensation for 2011. While Brinker’s salary may seem high to some, it is in keeping with CEO compensation levels for similarly sized charities.
The Dana-Farber Cancer Institute, which had $894 million in total revenue in 2011,provided CEO Benz Edward Jr. $943,858 in total compensation. John Seffrin, who oversees the nearly $1 billion budget of the American Cancer Society, received more than $2 million in compensation last year.
As difficult as it may be for donors to ignore the sky-high salaries of non-profit CEOs, executive compensation is possibly the least important factor in determining who to donate to. Instead of focusing on which CEO of which organization can afford a vacation villa, donors should be more concerned about how much of that organization’s money is making it to the programs or people that the charity supports.
According to Charity Navigator, a website that evaluates non-profit expense reports, Dana-Farber’s program expenses account for 85% of the organization’s budget. Komen’s program expenses account for 75% of its budget and the American Cancer Society spends 70.8% on programs.
While the American Cancer Society spending $200 million on fundraising and $68 million on administrative expenses may seem excessive to some donors, other organizations spend so a far higher percentage of their budget on bringing in money and managing their organizations. The American Breast Cancer Foundation spends 25% of its $5.2 million budget on program expenses and $3.4 million on fundraising.
Where and how to give
For potential donors who are concerned where their funds might go there are a few things simple things that can be done.
- In order to make sure as much of a donations makes it to the program or cause intended donors should visit websites like Charity Navigator, Guidestar, the American Institute of Philanthropy and the BBB’s Wise Giving Alliance.
- Think Critically before purchasing pink
- Since the only pink ribbon logo that has been trademarked has been Komen’s variation, many of the products have been accused of ‘pink washing’ their products to cash in on breast cancer. Think before you pink has a list of questions consumers can ask manufacturers in order to make more informed decisions about how they can spend their money.
Follow Alex Wukman on Twitter: @AlexWUkmanCMN