Opinion: Veteran Charity ‘Scams’ (One of These Is Not Like the Others)

By Jason Lynch

Good Reports, Bad Comparisons

Earlier last month, the Center for Public Integrity (CPI) did some solid investigative work and slammed the Virginia-based veteran charity Circle of Friends for American Veterans (CFAV).

The group deserved criticism—lots of it.

But the good reporting made one serious error: It grouped CFAV with a number of other veteran charity “scams” and drew a parallel to last year’s criticism of Wounded Warrior Project (WWP). Even after WWP was cleared of wrongdoing in multiple follow-up investigations, in covering the CPI story, several outlets made a similar nod to WWP.

Therein lies one of the major issues with today’s media: Crucial nuance gets lost. When the media regularly omits key context, there are real consequences. In the U.K., for example, sensational media coverage has rapidly eroded public trust in charities.

It’s outrageous to suggest that CFAV is in the same league as WWP. Let’s look at the two side-by-side.

Fundraising

In 2015, CFAV’s fundraising yielded only $500,000 for programs—almost all of which was fees paid to a telemarketing firm. About 90 percent of their donations went to telemarketers over an extended period of time. High-fundraising costs might make sense for one, two or even three years. But after 10 years, they’re still spending $0.90 to raise $1? That’s a failed business model.

On the other hand, WWP took a sophisticated approach to fundraising and saw a considerable ROI from it. They raised funds much more efficiently than CFAV and netted $250 million for programs in 2015.

If you compare the respective dollars available for veterans ($500,000 to $250 million), it’s like putting a yard stick beside the Empire State Building.

Programs

CFAV’s programmatic work is utterly unremarkable. They claim to be educating elected officials and the general public about veteran issues. First of all, there are other veteran charities already doing a much better job of that. But assuming there was a need for more education and awareness, it looks like the majority of CFAV’s “education” efforts consist of issuing press releases—not exactly a high-impact approach.

WWP? They provide everything from in-home physical rehabilitation to individual mental health care to over 100,000 veterans and families, and they take a rigorous approach to program evaluation and impact measurement.

Compensation

We’re the first ones to call for value-based compensation in the nonprofit sector. But the key word there is “value.”

From what we can tell, CFAV was grossly overpaid for the job he did. In 2016, he was paid about $340,000 from his two charities when they had less than 30 staff members, combined revenue of about $3.8 million, and no meaningful programmatic impact. At best, he’s an leader who should have replaced himself or shut the charity down. At worst, he’s been intentionally using unethical practices.

Again, WWP is on the opposite end of the spectrum. In 2015, their CEO made about $450,000 when they raised $400 million, employed 600 staff and served more than 100,000 veterans.

A Higher Standard

You simply can’t compare the impact of these two charities. One was clearly mismanaged; the other was a professionally run organization doing good work at scale.

Donors and journalists are right to hold charities to high standards. But, the same high standards should also apply to the media. Journalists need to ask smarter, deeper questions and be thoughtful about the issues they criticize.

If good charities continue to be conflated with scams, the nonprofit sector has little chance of solving today’s urgent social problems.