The Davos of Philanthropy

Peter Deitz, Founder of Social Actions, is covering the Council on Foundations Conference for Tactical Philanthropy.

"I find myself on the edges of what could easily be called the “Davos of Philanthropy.” Roughly three thousand attendees have flown in from across the globe to discuss the current and future states of global philanthropy."

You can read his first impressions here.

The biggest charity scam of all time?

CNBC's hit show American Greed devoted its broadcast Wednesday night to the infamous story of John G. Bennett, Jr. who was able to scam roughly 150 charities out of more than $100 million prior to being caught in 1995.

The NonProfit Times described the scam as "a promise to double organizations' investments after a six-month holding period through anonymous matches. It was later discovered that the anonymous donors didn't exist. At its most basic, a Ponzi scheme pays off original investors by using the funds from new recruits. Eventually new recruits dry up and the scheme collapses."

Amazingly, Bennett was able to raise over $500 million from 1100 donors and embezzle $135 million of it - mostly from Christian religious organizations and charities in the Philadelphia - before being discovered by Albert Meyer, an accounting teacher at a college in Michigan.

After Meyer was able to get the attention of a reporter at the Wall Street Journal, the foundation declared bankruptcy and many prominent nonprofits in a terrible financial situation.

According to the PA Attorney General's complaint, the victimized charities included the Boy Scouts of America, the Environmental Defense Fund, Haverford College, Harvard University, Princeton University, The Nature Conservancy, One to One Partnership Inc., Planned Parenthood, the Philadelphia Orchestra, Stanford University Medical School, the United Way and Yale Law School. Other organizations included:

Academy of Natural Sciences, Philadelphia, PA, $2.7 million
Biblical Theological Seminary, Hatfield, Pa., $5.8 million
CB International, Wheaton, Ill., $4.6 million
Covenant College, Lookout Mountain, Ga., $5 million
Detroit Institute of Arts, Detroit, Mi., $4 million
Houghton College, Houghton, N.Y., $4 million
John Brown University, Siloam Springs, Ark., $4 million
International Missions, Reading, Pa., $5 million
International Teams, Prospects Heights, Ill., $5 million
King College, Bristol, Tenn., $5 million
University of Pennsylvania, $2.1 million
Wheaton College, Wheaton, Ill., $4.6 million

The NonProfit Times also reported that "victimized charities later recovered more than 90 percent of their losses in an unprecedented bankruptcy settlement orchestrated by leaders at ECFA who formed the United Response to New Era, according to officials familiar with the settlement."

Bennett faced 82 federal counts of money laundering and wire, mail and bank fraud. He planned to claim in his defense that he had been possessed by "religious fervor", but the judge did not allow this. In the end Bennett pleaded no contest to all the charges in March of 1997. Though federal sentencing guidelines indicated a sentence of 22 to 27 years, the judge gave him 12.

What's most interesting is that Bennett was originally slated to be released next month - in March of 2008, but I've been unable to determine through research if this bastard ever got out of jail early on good behavior.

If you want to read more about this scam, I recommend this article.

Google Custom Search covering foundations

Lucy Bernholz shared this post yesterday from the NTEN listserve:

"To assist E-Democracy.Org's grant prospecting efforts I put together a little (big actually) Google Custom Search covering foundations, somegovernment funding sites, and sites with fund raising advice fornon-profits. Why not share it with the world? Try it out from:

http://www.google.com/coop/cse?cx=008992915104785064737%3Aq7jehshqp3g

Google Custom Search has a nifty option where you can say search all of the sites or partial sites to which a certain pages links. The main area where the search can be improved is by adding pages with links tosmaller community foundations. I've opened up the search engine to volunteer contributions."

She then goes on to make this wise observation:

I remember several years ago being asked by a 20-something nonprofit executive why anyone would need the Foundation Center. "Can't I just Google everything I need to know?" he asked. The question, and the search engine above, reveal a lot about how things have changed. There is such experienced-based assurance among Internet users that they can find what they need to know, by themselves. There is good reason to believe that many relevant funders can be found on the Web - though I don't know if anyone has counted foundation websites (which would be found by Google) and compared it to the 10,000 foundation database maintained by the Foundation Center or the larger universe of grants and funders catalogued by FoundationSearch. Savvy users of any search engine must always wonder what they are not finding, but so should users of industry sources such as the Foundation Center.

I've often said that there are some fundraisers who are cool enough to be "on the bus," and then there are others - like Lucy - who are so cool that they are literally helping to drive the bus.

Make-A-Wish Foundation Bankrupted by Greedy Kid

The folks at The Onion produced this excellent satirical video claiming that a 8-year-old Boston boy who "took advantage of some bureaucratic loophole" in the charter of the Make-A-Wish Foundation by asking the organization to provide him with unlimited wishes.

Apparently, Chad's "non-stop" wish fulfillment" has grown to include "nine trips to Walt Disney World for himself and his family of five," "a real live F-14 Tomcat (which had to be decommissioned from Afghanistann)," and "daily hot dog lunches with Yankee slugger Johnny Damon," with the result that Chad alone has cost Make-A-Wish Foundation five times its annual budget.


Child Bankrupts Make-A-Wish Foundation With Wish For Unlimited Wishes

The spoof has been so popular, it even got an official response on Snopes..

If you want to give a gift to Make-A-Wish Foundation, you can go here.

Thanks to a loyal reader of Don't Tell the Donor who lives in Israel for sending me an email about this story... and congrats to Jeff Brooks for beating me to this post :)

James Brown's children fight late singer's charitable trusts

According to an Associated Press story on Time.com:

Five of James Brown's children say their late father's will should be invalidated because his former advisers used undue influence to get him to create charitable trusts that the advisers would profit from, according to court documents filed this week.

The New York Times adds this:

Five Brown children are challenging the will in Aiken County Probate Court. They claim Brown's longtime advisers Buddy Dallas, Alford Bradley and David Cannon convinced the soul singer to create the trusts so the advisers would profit from managing the two charities after Brown died.

Just how much money is involved in Brown's estate is unclear. In October, Forbes reported Brown made an estimated $5 million in 2005 alone. But attorneys have said Brown's accounts do not have the money they expected.

Did Paris Hilton get screwed or was it a play to avoid taxes?

When Paris Hilton's billionaire grandfather announced on Christmas day that he plans to give away 97% of his fortune, the news coverage was almost giddy. Was the controversial heiress going to become a pauper?The Guardian Unlimited reported that the 80 year old Barron Hilton is worth over $2.3 billion thanks to the recent sale of the Hilton Hotels Corporation and from the coming sale of Harrah’s Entertainment.

Jerry Oppenheimer, author of House of Hilton, said that Barron Hilton "was, and is, extremely embarrassed by how the Hilton name has been sullied by Paris. He now doesn't want to leave unearned wealth to his family."

Seriously?

Call me cynical, but it seems like the media is ignoring the fact that the mega-rich often use charitable donations to manipulate tax laws. So, let's take a closer look:

First, since most of this wealth was generated in 2007 as the result of two huge sales of almost a billion dollars in assets, you can be sure that Barron was facing some serious taxes. By placing $1.2 billion in a charitable trust this year, he gets immediate tax relief. Convenient, right?

Now, I guess the foundation does do some good work. But don't forget, it also paid Steven Hilton more than a quarter million dollars in 2006. The most recent IRS Form 990s for th Conrad Hilton Foundation show three other Hiltons on the payroll, in addition to a group of investment managers who received over $2,300,000 in 2006.

It sure makes those claims that Barron wrestled millions intended for the poor from his dead father's estate look more interesting.

If you've ever been to Erie, PA

An anonymous donor gave $100,000,000 to the Erie Community Foundation which is to be split between 46 local charities.

Each of the charities will get about $1 million to $2 million. The recipients include a food bank, a women's center, a group for the blind and three universities.

The city — and the entire county of 280,000 — could clearly use the money. There is a poverty rate of 19% in this industrial city on the shores of Lake Erie.

UC gets $420 million gift

The University of Cincinnati received a $420.7 million gift thanks to the hard work of two people who see the world very differently.

Sam Anand, mechanical engineering professor at UC's College of Engineering and Brigid O'Kane, an associate design professor in the College of Design, Art, Architecture and Planning, or DAAP, began applying for the donation about two years ago. They submitted a 90-page proposal that focused on the collaboration between the two colleges, which will be the prime benefactors of the donation.

The gift is the largest in the school's history.

The gift of in-kind contributions of cutting-edge computer software, hardware and technology support comes from PACE, or the Partners for the Advancement of Collaborative Engineering Education, a consortium of General Motors, Inc., EDS, Hewlett-Packard Co., Siemens PLM Software and Sun Microsystems, said Greg Hand, UC spokesman.

Chapman-Moore said demonstrating "the great collaboration" between the two colleges was critical to UC being chosen for the donation.

Is NOZA about to launch a free foundation grant research database today?

Don't Tell the Donor received a tip that NOZA, Inc. is set to launch a free private beta of a new foundation grant research database at the CARA Conference in Orange County, CA later today.

If true, the announcement is sure to send shockwaves through the multi-million dollar industry that currently charges nonprofits to research potential foundations who may (or may not) be interested in reviewing grant applications. Why, you ask?

Several weeks ago Waddy Thompson had an article in the Nonprofit Times profiling the differences between five different products:

* The Foundation Center's Foundation Directory Online
* FoundationSearch
* GuideStar's Grant Explorer
* GrantStation
* Prospect Research Online (aka PRO Platinum)

Toward the end of the article he offers this as part of his conclusion, "With fees ranging from $19.95 for one month to nearly $2,500 for a year (with no monthly option), price definitely becomes an issue." In addition to the financial costs, I know many fundraisers who spend lots of time traveling in order to research foundations.

In fact, one industry insider told me that nonprofits collective probably spend well over $20 million a year for foundation research. How will the Foundation Center and other nonprofits react when this revenue stream is threatened? What will this mean for the for-profit businesses of Metasoft and the Chronicle of Philanthropy's grant lookup product?

If fundraisers could find close to one million grant records when the free foundation database launches at nozasearch.com - that certainly will be a game changer.