Pickpocketing the Public: Part 2
You're sitting down to dinner, slicing into that juicy red steak, and the phone rings. A sincere yet persistent voice tells you he's calling on behalf of your local firefighters. Those men and women who risk their lives vanquishing fires and saving lives. The kind of brave rescuers who lost their lives in Manhattan on 9/11. The public servants who seem scarcely compensated for their work. The voice isn't asking for any kind of big donation, just enough to show you really do support the firefighters.
So you give them $20, and a few days later, you receive a letter from the Broward County Council of Professional Firefighters.
"Our organization represents over 2,500 of your friends and neighbors who are professional firefighters in Broward County; not as a charity, but as a nonprofit professional organization," the letter reads. But rest assured, the letter continues, your money is going toward many good causes, among them: the Children's Cancer Caring Center, Jerry's Kids, the Firefighters' Benevolent Association, and "better safety laws for the citizens of Florida."
Don't bother settling back in your armchair in self-satisfaction, however, because most of your donation will never leave the hands of the for-profit fundraiser. In the case of the Broward firefighters council, that's Xentel, a Fort Lauderdale-based company that has garnered numerous complaints across the United States in past years for its rapacious soliciting. The Broward firefighters council paid out $567,922 for Xentel's fundraising in 2003, the most recent year a disclosure has been filed with Florida's Division of Consumer Affairs. That represents almost 78 percent of the council's annual expenses.
Many private telemarketing companies vie for a piece of this lucrative market, which relies on the public's good will toward its police and firefighters to whip up huge profits. In many cases, the companies keep 70 to 80 percent of each dollar donated. That's significantly more than the 35 percent suggested by the Better Business Bureau's Wise Giving Alliance.
In the case of the Broward firefighters council, the charity picture gets worse. Most of the money they keep goes toward administrative costs, such as rent and salaries. So what do the likes of Jerry's Kids get? A minuscule $5,500 in 2003, or less than 1 percent of the council's total expenses. (The council did not return phone messages left by New Times at its office.)
Mind you, none of this is against the law. "You can have 99 percent go to fundraising and 1 percent to programs and there's no shutting anyone down for that," laments Marina Pavlov, president of the Florida Association of Nonprofit Organizations. "When this is done, it makes all the nonprofits look bad. Our belief is that the more money you put in programs, the better organization you are."
The state maintains a database of fundraisers and charities at www.800helpfla.com/giftgiversguide, which indicates the amount and percentage paid out for fundraising. But that doesn't do much good as a fundraiser presses you on the phone for an immediate donation. Not that you can't try to get forthright financial information from the perky-sounding caller.
Recently, a New Times writer received a call shortly after dinner from Frank, a young man with an enthusiastic yet slightly unsure voice, who quickly launched into a pitch for the Florida Association of State Troopers. The din of a busy calling center resonated into his mouthpiece.
"By helping to support the officers," he said, hurriedly reciting the script, "you'll receive the new window decals and support materials. It's important that you stand behind over 1,500 front-line officers here in Florida. I'm giving you a call to make sure the officers can count on your support and to mail you the official pledge envelope."
Asked for whom he worked, Frank said he was with Community Services.
"We call on behalf of them," Frank said. "We deal with donations."
Is it a for-profit company?
"No, we're a nonprofit organization."
What percentage does your company get out of this?
"The company?" Frank muttered, almost to himself, then took a shot in the dark, still hoping to bring home a commission. "I'm not sure what we make, but the troopers get 45 percent of what we make. The other percentage goes to children who are in hospitals; the troopers have their own, like, pledge things." The money buys "stuffed animals" for children in hospitals, he said.
Well, that's about as clear as a Broward canal.
One more try: What percentage does your company make?
Frank called out to someone else in the boiler room: "Jason, what percentage does this company make? Forty-five? I thought the troopers made 45." He returned to the phone. "We get 45 too."
He resumed his spiel, with a higher whine factor: "You can't even help out with a ten-dollar pledge? It goes a long way, sir."
Frank was certainly right about that. The trooper association took in $3.5 million in revenues in 2003, the most current year disclosed, and a whopping 77 percent, $2.66 million, went to paying Community Services for fundraising -- though the company isn't listed in the state's online registry of fundraisers, nor is it registered with the Florida Secretary of State.
Xentel, on the other hand, has left a dirtier trail to follow. According to the company's website, the Canadian company has been in business for 20 years. Florida apparently became its U.S. headquarters when in 1999 it bought the Gehl Group, a Fort Lauderdale-based fundraising firm, and made Joseph E. Gehl its president.
The Gehl Group, however, had displayed a penchant for misleading donors, particularly in Minnesota, Oregon, Tennessee, and Iowa, where it paid fines and promised no future violations. In 1997, Joseph Gehl signed a consent judgment in Iowa that prohibited his company or any of its successors from misrepresenting either the caller's affiliation or the way proceeds would be used.
Xentel apparently also acquired the Gehl Group's shoddy ethics. During its operations in 1999 and 2002 in Pennsylvania, one of a number of states where the laws against misrepresentation are stronger than those in Florida, Xentel's telemarketers posed as local firefighters seeking funds to maintain and update safety programs. Callers also told potential donors that the proceeds from concert tickets they were selling would all go to charity. In fact, most of the money went to Xentel. The state's attorney general sued the company, which in late 2002 agreed to pay $20,000 in restitution, civil penalties, and investigation costs but denied any wrongdoing.
In a similar case, Iowa's attorney general filed a consumer fraud suit against Xentel in November 2003, claiming it had tricked Iowans into believing that solicitors were firefighters and that all donations went directly to local departments. "In sum," Attorney General Tom Miller intoned at a news conference, "we allege that Xentel uses carefully crafted deceptions and the justifiably positive public image of firefighters to divert charitable dollars to its own benefit -- dollars that might otherwise go to far more worthy recipients, including local fire departments."
What raised the hackles of Miller and a throng of Iowans was Xentel's deal to pay the Iowa Professional Firefighters Association (IPFA) $12,000 a month and then keep all donations over that amount. In 2002, that amounted to $447,811 -- 76 percent of donations to the IPFA. In March 2004, the company agreed to settle the case by paying the state $30,000 without admitting to any of the allegations. It also agreed to stop sending pledge cards to people it knew had never promised to donate. (Xentel did not return phone messages left by New Times at its office.)
Joseph Gehl is no longer an officer of Xentel. State records indicate he's now operating Center Stage Attractions in Fort Lauderdale, another professional fundraising company. But he hasn't strayed far from those profitable firefighters or from Xentel: His company has been hired to do fundraising for the Broward County Council of Professional Firefighters.
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