Five years ago, an investigation into a St. Louis charity called Reach Our Children revealed that its president, David J. Lovell, had poured 3 million dollars into a marketing company co-owned by his wife.
Lovell was quickly shown the door, and a new president, Renee Verhoff, came on board to try and right the ship.
The charity was in dire financial straits, having funneled too much of its money into telemarketing contracts (which did little to help fundraising) instead of program services. Verhoff quickly changed the charity's name to Foundation for Children With Cancer in order to shed all affiliation with the previous regime.
This being the season of charitable giving, we wondered how the foundation was doing since the change at the top. A quick cruise around Charity Navigator, a website that evaluates charities, suggested that not much has changed. The foundation, which is affiliated with hospitals in all 50 states, is the only St. Louis-based charity in the system to receive a ranking of zero stars out of four. To make matters worse, the Oregon Attorney General's office recently included the foundation on its 2010 list of the twenty worst charities that do business in that state.
But after further analysis, we discovered that the foundation, which helps the families of kids with cancer pay for living expenses, isn't failing at all. In fact, it seems to be doing pretty good, given the recession and their loss of resources since the scandal broke. This surprising back story shows the limitations of online charity evaluators -- and questions whether their methodologies preclude them from staying up-to-date in some cases.
Here's the main rub: Databases like Charity Navigator rely on tax forms that are, in some cases, two years old. For a group like the Foundation for Children With Cancer, which has gone through a recent overhaul, the two-year gap between then and now makes it easy to mistake a relatively competent charity for a dysfunctional one. (The Oregon "Top 20" list, we discovered, was based on older tax forms, too.)
Better Business Bureau standards hold that charities should use at least 65 percent of their funds for program services. In 2008 - the year reflected on the most recent tax form being used for the Charity Navigator ranking - the children's cancer foundation was still saddled with old telemarketing contracts it'd wanted to shed. According to Verhoff, the new president, one of those telemarketing companies, Charitable Resource Foundation, charged 88 cents for every dollar they raised. (That foundation is known throughout the nonprofit and law enforcement communities for its questionable contracts, according to the BBB.) By year's end, only 15.2 percent of the foundation's expenses went toward programs, while a whopping 71.4 percent went toward fundraising.
But, since then, with the help of the Washington University legal clinic, the foundation has eliminated all contracts with telemarketing companies. They did so after making one mistake in 2007, which they acknowledged on previous occasions: they failed to opt-out of what they didn't realize was an automatic renewal with Charitable Resource Foundation.
Judging by the charity's most recent tax forms, which weren't considered by Charity Navigator, the foundation has re-charted its course. With the expiration of its final telemarketing contract in September 2010, they should be in a position where they're plugging more than 65 percent of their available funds into program services.
Indeed, records show that Verhoff has put the foundation back on good footing, despite annual revenue plunging from $4 million in 2006 to $674,000 during the last fiscal year. Her staff has been cut in half. And the economic climate hasn't exactly caused potential donors to reach for their wallets. But she and the board members refused to watch the organization disintegrate, she says. Since 2006, she says, the company has helped 1,800 families - more than double the total from the previous five years. It just opened its first chapter, in Wisconsin.
"We've been working so hard," Verhoff told Daily RFT. Noting that about 35,000 kids in this country suffer from cancer, she said: "Never once through any of this have we ever stopped helping families. And that is an incredibly awesome thing."