sirenspeaks
Dec 14, 2005, 11:25 PM
NRC, Scandalous in South Dakota
One rogue charity, the American Indian Relief Council (AIRC) in Rapid City, SD, gained notoriety among Sioux activists in the early 1990s when it dumped useless textbooks and outdated seeds on the reservation as part of its relief program. Employees blew the whistle on the organization's dubious fundraising pitches, which they said were manipulative exaggerations and lies. AIRC workers also complained that the money they raised for Native Americans wasn't making it to the reservations.
Eventually the Pennsylvania Attorney General's office sued AIRC in 1993 for lying to donors that certain reservations were hit by catastrophic natural disasters and that funds were needed to prevent famine and death. The lawsuit also charged that AIRC overvalued the price of goods donated to tribes--like the expired seeds--which it listed at market value. AIRC settled in 1999 and paid $350,000 to the state.
AIRC's president, Brian Brown, had been a private accountant for six large national charities. Four of his clients were sued in 1991 by the Attorneys General of Connecticut and Pennsylvania for willfully conspiring to inflate commodity values and deceive donors.
In 1993, when Brown's AIRC scam was laid bare by the media, the charity discreetly downsized its South Dakota operations and shifted its focus to the American Southwest. Today the charity has been reborn under a different parent organization, National Relief Charities (NRC), which operates two new subsidiaries, Council of Indian Nations and Southwest Indian Relief, both in Apache Junction, AZ.
Despite its makeover, NRC is still distributing a pitiful portion of its revenues to the constituency it purports to serve. According to NRC's 1999 federal tax filings, it brought in over $8.3 million in donations last year but only 30 percent were spent on programs. In contrast, Brown's salary has hovered at about $120,000 for the last two years. The National Charities Information Bureau, a Washington, DC-based watchdog group, suggests charities should spend at least 60 percent of donations on programs and services.
Brown's tactics are par for the course among a few other large charities like the Native American Heritage Association (NAHA), a sibling of AIRC.
The couple at the helm of NAHA, Dave and Bernice Myers, were co-defendants in the Pennsylvania lawsuit against AIRC. That's because the Myers actually created AIRC in 1990, then gave it to the board of directors who elected Brown as president. The sweetheart deal guaranteed the Myers a $10,000 "bonus for past services" and a $650,000 award for a contract to deliver future services to Native Americans. No services were ever rendered with that money. Both charities have consistently received failing marks from watchdog groups. One, the American Institute of Philanthropy, gave NRC an "F" grade and NAHA a "D" for its fundraising and service delivery performance.
A former NAHA employee, Dennis Running Shield, told the newspaper Indian Country Today in 1997 that the charity only donated used goods to tribes and that Meyers asked employees to do personal errands for him, like paint his house. A closer look at the organization's federal tax filings for 1999 shows that barely 43 percent of its funds were spent on programs and services. But even this figure is a liberal one--a considerable portion of this amount is spent on salaries, compensation and benefits for NAHA fundraisers and staff. Last year, Meyers took a salary of over $143,000 as president.
Surprisingly, although NAHA and NRC's policies may seem unethical, they're not illegal. That's because charities that distribute donated goods--surplus food, used clothes, textbooks--can count them as a program expense at up to market value according to current regulations. Accounting rules are unclear about how these "gifts-in-kind" should be appraised. Moreover tucking money back into charity operations by shifting fundraising overhead costs into program expenditures is a common practice and does not violate any accounting guidelines. And a 1998 statement of position from the American Institute of Certified Public Accountants allows charities to account for part of their fundraising costs as a program expense if the fundraising material has an educational bent. In this case, some charities say their solicitation pitch educates the public about the situation of poor Native Americans.
One rogue charity, the American Indian Relief Council (AIRC) in Rapid City, SD, gained notoriety among Sioux activists in the early 1990s when it dumped useless textbooks and outdated seeds on the reservation as part of its relief program. Employees blew the whistle on the organization's dubious fundraising pitches, which they said were manipulative exaggerations and lies. AIRC workers also complained that the money they raised for Native Americans wasn't making it to the reservations.
Eventually the Pennsylvania Attorney General's office sued AIRC in 1993 for lying to donors that certain reservations were hit by catastrophic natural disasters and that funds were needed to prevent famine and death. The lawsuit also charged that AIRC overvalued the price of goods donated to tribes--like the expired seeds--which it listed at market value. AIRC settled in 1999 and paid $350,000 to the state.
AIRC's president, Brian Brown, had been a private accountant for six large national charities. Four of his clients were sued in 1991 by the Attorneys General of Connecticut and Pennsylvania for willfully conspiring to inflate commodity values and deceive donors.
In 1993, when Brown's AIRC scam was laid bare by the media, the charity discreetly downsized its South Dakota operations and shifted its focus to the American Southwest. Today the charity has been reborn under a different parent organization, National Relief Charities (NRC), which operates two new subsidiaries, Council of Indian Nations and Southwest Indian Relief, both in Apache Junction, AZ.
Despite its makeover, NRC is still distributing a pitiful portion of its revenues to the constituency it purports to serve. According to NRC's 1999 federal tax filings, it brought in over $8.3 million in donations last year but only 30 percent were spent on programs. In contrast, Brown's salary has hovered at about $120,000 for the last two years. The National Charities Information Bureau, a Washington, DC-based watchdog group, suggests charities should spend at least 60 percent of donations on programs and services.
Brown's tactics are par for the course among a few other large charities like the Native American Heritage Association (NAHA), a sibling of AIRC.
The couple at the helm of NAHA, Dave and Bernice Myers, were co-defendants in the Pennsylvania lawsuit against AIRC. That's because the Myers actually created AIRC in 1990, then gave it to the board of directors who elected Brown as president. The sweetheart deal guaranteed the Myers a $10,000 "bonus for past services" and a $650,000 award for a contract to deliver future services to Native Americans. No services were ever rendered with that money. Both charities have consistently received failing marks from watchdog groups. One, the American Institute of Philanthropy, gave NRC an "F" grade and NAHA a "D" for its fundraising and service delivery performance.
A former NAHA employee, Dennis Running Shield, told the newspaper Indian Country Today in 1997 that the charity only donated used goods to tribes and that Meyers asked employees to do personal errands for him, like paint his house. A closer look at the organization's federal tax filings for 1999 shows that barely 43 percent of its funds were spent on programs and services. But even this figure is a liberal one--a considerable portion of this amount is spent on salaries, compensation and benefits for NAHA fundraisers and staff. Last year, Meyers took a salary of over $143,000 as president.
Surprisingly, although NAHA and NRC's policies may seem unethical, they're not illegal. That's because charities that distribute donated goods--surplus food, used clothes, textbooks--can count them as a program expense at up to market value according to current regulations. Accounting rules are unclear about how these "gifts-in-kind" should be appraised. Moreover tucking money back into charity operations by shifting fundraising overhead costs into program expenditures is a common practice and does not violate any accounting guidelines. And a 1998 statement of position from the American Institute of Certified Public Accountants allows charities to account for part of their fundraising costs as a program expense if the fundraising material has an educational bent. In this case, some charities say their solicitation pitch educates the public about the situation of poor Native Americans.