The $100,000 Pyramid

Army Times
http://www.armytimes.com/news/2008/01/mili...harity_080117w/


Lawmakers:
Vets charity must be accountable

By Karen Jowers - Staff writer
Posted : Thursday Jan 17, 2008 21:33:24 EST

Retired Army Gen. Tommy Franks was paid $100,000 — out of donations made to wounded veterans — for allowing his name to be used on fundraising appeals by a charity that has come under increasing scrutiny for the way it handles its money.

Lawmakers questioned the ethics of the Coalition to Salute America’s Heroes Foundation not only for using donors’ money to pay Franks, but for failing to disclose to potential donors who received the mail solicitations that Franks was paid for his endorsement.

Rep. Henry Waxman, chairman of the House Committee on Oversight and Government Reform, said Franks has now disassociated himself from the Coalition and asked that his name not be used in connection with the solicitations.

Franks’ endorsement helped the charity raise “millions of dollars more” than it otherwise could have, said Roger Chapin, president of Help Hospitalized Veterans Inc., and the Coalition to Salute America’s Heroes Foundation. At a Jan. 17 hearing, Chapin said he is also paying retired Air Force Brig. Gen. Arthur (Chip) Diehl III $5,000 a month for similar assistance.

Rep. Chris Cannon, R-Utah, noted that other lawmakers had implied that Franks and Diehl had sold their integrity by working with Chapin.

“Absolutely not — it’s an insult!” replied Chapin.

A spokesman for Franks, the former chief of U.S. Central Command in the early stages of the wars in Afghanistan and Iraq, said the general did support the Coalition in 2004 and 2005.

Franks “made several speeches for the organization because he supports the idea of taking care of our disabled veterans,” said retired Army Col. Michael Hayes, Franks’ chief of staff, in an e-mail response to questions.

“He also permitted the use of his name in direct mailings for about a year,” Hayes said. “He ended his support … in late 2005 when he learned the percentage of money raised that was going to the troops was less than 85 percent, a figure which was then, and remains today, his criteria for supporting charitable organizations.”

The payment to Franks is just one facet of lawmakers’ concerns about the finances of Chapin’s groups and others like it. Congress is exploring whether legislation is needed to provide more protections for donors and the people they are supposedly donating to.

“I don’t begrudge people getting money,” said Rep. Eleanor Holmes Norton, D-D.C. “It’s all about disclosure.”

The three-hour hearing was charged with heated exchanges about Chapin’s operations and the disclosure of costs to donors.

Lawmakers pushed Chapin and two executives of fundraising companies on the question of whether solicitations should disclose information about the percentage of donations that a group spends on fundraising.

“If we disclose, we’d be out of business,” Chapin said.

“Your words are wonderful, because if the public knew, they wouldn’t donate,” said Rep. Christopher Shays, R-Conn.

Chapin acknowledged that his organization has used inflated numbers in its mailings when describing what percentage of donations actually helps veterans.

While some mailings have stated that 92 percent or even 100 percent of donations have gone to veterans, the real figure is closer to 25 percent, according to a congressional study.

An analysis of Chapin’s financial documents by the committee’s staff showed that his organizations took in more than $168 million in donations from 2004 to 2006. They spent $125 million on fundraising, overhead and administrative costs, and the rest — only about 26 percent of the total — on veterans.

“I’ve tried everything under the sun to reduce fundraising costs,” Chapin said, including a variety of advertising.

“What about reducing your salary?” asked Rep. Elijah Cummings, D-Md.

According to the committee’s analysis, Chapin and his wife received $1.5 million in salary from 2004 to 2006 and also were reimbursed more than $340,000 for meals, hotels, entertainment and other costs.

Chapin said his salary is in the lower half of salaries of charity executives, while his performance is in the upper half. Committee staff members contest that figure, noting that his salary actually falls within the median range of for-profit executive compensation.

Among other things, the committee questioned why Help Hospitalized Veterans has authorized a payment of $17,000 for a country club membership on behalf of one of the company’s officers. “I think it’s appropriate,” Chapin said. “The board is not paid, they volunteer.”

In 2006, Help Hospitalized Veterans also bought a $444,600 condo in Northern Virginia that is used by the Chapins. Chapin said they were spending so much time in the area for organization business that it seemed more convenient to buy the property. Some of the wounded veterans at the heart of the controversy remain convinced of the value of Chapin’s organizations.

“I’m very disappointed in them for attacking Roger,” said Navy Construction Mechanic 1st Class Peter Reid, wounded in Iraq in 2004 and now partially paralyzed with a brain injury and the loss of an eye, who attended the hearing.

Reid’s wife, Michele, said the Coalition helped them find the right government agencies to get their earned benefits and arranged to fly them to an annual Florida conference that educates severely wounded combat vets and families about resources and strategies for dealing with their altered life circumstances.

“If it weren’t for [the Coalition], we’d be homeless, under a bridge,” said Reid, who is on the temporary disability retirement rolls. “I’m just like any other man — I want to provide for my family. The Coalition showed me I could do that.”