Thursday, July 10

Travel voucher horror story hits Points of Light Foundation

The NonProfit Times broke a story this week about an unfolding scandal at the Points of Light Institute.

"An estimated 1,100 customers who purchased travel vouchers for airline flights from the Points of Light Institute’s store on eBay have been left with nothing. The Points of Light Institute has closed that area of the eBay store and is working with law enforcement to investigate what it is calling “significant financial and operational irregularities.”

Each reservation is for one to four people, so as many as 4,400 travelers could be impacted. Sources told The NonProfit Times that travel had been booked through May 2009 that could total more than $1 million."

Michelle Nunn, president and CEO, was interview by The NonProfit Times on Tuesday and tried to explain how the organization uncovered the scandal.
"Two senior managers learned of the irregularities through customer complaints, which they explored and ultimately verified through an independent contractor, and reported to Nunn on the evening of June 26, she said. Customers were notified of the situation late Friday, July 4, at which time the refund application process began.

Because of the ongoing investigation, Nunn could not elaborate on the type of “irregularities.” She said the U.S. Attorney’s Office in Washington, D.C., was contacted within 24 hours, as was the organization’s counsel -- McKenna, Long & Aldridge -- which is doing its own investigation."

It's amazing what kinds of problems managers can actually uncover when they explore customer complaints. Sounds like whoever was pulling off the scam set-up a complex way of hiding what they were doing. Apparently, the organization is still trying to figure out exactly what happened.
"The independent contractor was terminated “as soon as we learned of these issues,” Nunn said. The contract was created and begun in 2003 as a program of the Points of Light Foundation, which merged with the Hands On Network last year. The independent contractor, Maria Herrmann, was a former employee in business development at the Points of Light Foundation, but Nunn did not know the duration of her employ prior to that.

Herrmann is no longer listed on the organization’s Web site and calls to her cell phone and home phone were not returned. A woman answering the door at Herrmann’s Washington, D.C. residence told a reporter she could not help her and declined to say if she was in fact Maria Herrmann."
Call me a cynic, but the whole idea of people raising money for charities by selling discounted travel vouchers sounds shady. Call me a purist, but I get really queasy when the donor's motivation is driven by the idea of "getting something for free" instead of for the donor intent being on helping support the mission.

In hindsight, I wonder if the Board of Directors sees this observation by The NonProfit Times as a damning indictment of the senior management and their own culpability is allowing this to happen:
Despite thousands of tickets being sold, Nunn described the eStore as a “very small enterprise,” grossing about $100,000 and netting $15,000 in the fiscal year ending 2007. She explained that the numbers "are the totals that were reported on our books and in our audited statements of Points of Light Foundation (pre-merger). The recent discoveries obviously do not align to these numbers and that is what is under investigation.”
The NPT story can be from here and to read about a traveler's horror story, go here.

UPDATE: Some people at the eBay Forums website think that incentive travel company Mitch-Stuart, Inc. is to blame. I wonder if there is going to be a blame game coming next? Hermann was quoted in the NPT in May of 2007 talking about Mitch-Stuart.

7 comments:

Anonymous said...

shame shame shame. this is no cracker jack board of directors... the chairman is Neil Bush. jeez oh man... what kind of shitty board of directors allows this to happen???

Anonymous said...

In a previous job (at a school), people always wanted me to use one of these travel companies and thought I was being obstructionist. I just wasn't happy with their hard sell and felt that we shouldn't be raising money through someone's FOR PROFIT scheme.
{Of course, the PTA had a Sally Foster drive--but that was at a smaller scale. This doesn't really justify it--but it is such a tradition in schools and at least I could feel okay about Sally Foster as a vendor}.
The school had an annual auction and I'd get calls from sales people who wanted to sell us a ballooning expedition with an amount we'd pay and anything over that was clear profit. I rejected these because all of our other auction items were donated free and clear and that's the way the auction made money. A whole other subject could be charity auctions--but I digress!
I tried to educate people about the kind of margins we expect to see in fundraising. I think we need to educate donors about this and tell them that we try to spend as little as possible and focus on the mission. And fortunately, we do have luck finding donors who support the cause with no strings.
But the bottom line is what Do Not Tell the Donor says: people weren't looking to make a gift, they didn't care about the cause--they were looking at travel bargains. And now a non-profit has to deal with something which of course is totally outside the realm of its mission, expertise, etc.--and I'm not even going into the liability issue. And let me go into the integrity issue for a moment. The public rightfully holds non-profits to a higher standard and the Points of Light Foundation has not met that standard.

Anonymous said...

To the author of this article, you should be aware of something before you make a comment like: "Call me a purist, but I get really queasy when the donor's motivation is driven by the idea of "getting something for free instead of for the donor intent being on helping support the mission."

The individuals that were scammed by Points of Light Travel Auctions aren't donors. We were sold travel packages that POL described as being donated by the Hotel Chains, Airlines, etc. I assume this website (Don’t tell the donor) is managed by someone that has even the most basic knowledge of how Charity Auctions work. A person that wins/purchases an item in a charity auction is not donating money in the amount of the winning bid. The companies that donate the items up for bid are the donors.

Before you get too queasy.....you should check the facts. You might also go back and double check your tax returns. My guess is that if you don't even know how charitable auctions work....you might actually believe that the winning bidder is making a donation.

Not the case at all! Had the individuals affected by this crime been the actual donors.....we would have all received a "Record of Charitable Contribution" from Points of Light last year for our Federal Tax Returns.

POL knew very well that this wasn't the case; and hopefully you now understand too.

Anonymous said...

I'm the poster who worked at a school (comment #2) and I want to reply to number 3, the poster who makes fund of DTTD: I think the blogger knows that the ticket purchasers are not making a donation. The question she is raising is whether or not this is an appropriate way to raise money--when it's a business and not about charity. Given how unscrupulous the vendor was, it's clear it wasn't a good match for the charity--and that charities should get money from people who intend to be donors.

Anonymous said...

I'm the poster who worked at a school (comment #2) and I want to reply to number 3, the poster who makes fund of DTTD: I think the blogger knows that the ticket purchasers are not making a donation. The question she is raising is whether or not this is an appropriate way to raise money--when it's a business and not about charity. Given how unscrupulous the vendor was, it's clear it wasn't a good match for the charity--and that charities should get money from people who intend to be donors.

Alanna said...

I think that is an interesting point - the people scammed on their travel are not inclined-to-be-sympathetic donors. They are customers, and angry ones at that. Points of Light is not set up to do that kind of customer service.

One laptop per child had a similar problem with the give-one-get-one program; they just weren't set up for customers.

On another note - how exactly do these travel voucher programs make money?

Anonymous said...

This is a very sad situation. I was one of the many people scammed out of over 40,000 in purchased trips. We purchased them for missionary purposes and was told by their advertisement the proceeds go to help volunteers across America. We actually looked into Points of Light to be sure it was a legit organization before we purchased it also they had sold thousands of these before us and had good feedback from previous customers. We now are out over $40,000 and can not afford to purchase all these all over again. We are missionaries and so many are affected! I feel Points of Light should honor the they sold to people. Their apologies dont help the people we were going to serve. www.fommm.org