Sweet Charity
Tucker, William
William Tucker Sweet Charity It is, when it's paid for by government. The shocking story of nonprofits feeding at the trough at your expense. C atholic Charities, the largest nonprofit...
...Like all nonprofits, we'd like to get a better balance between volunteer contributions and government grants," says Art Smith, VOA's director of communications...
...Goodwill Industries was founded in 1902 by a Methodist minister who got the idea of employing immigrants by fixing up household goods discarded by the wealthy...
...HELP provides "transitional" housing—a system in which residents are subject to a full-court press of social services...
...10 percent of income from charitable donations," says John Mcllquham, editor of NonProfit Times...
...In small communities, no collections are taken, as the gatherings are held in private homes...
...The National Charities Information Board has charged that 54 percent of Mothers Against Drunk Driving's "program" spending goes to fundraising activities...
...That's why they're all moving down here to Washington...
...In 1994, the three found their records being subpoenaed by HUD for violations of the Fair Housing Act, and faced fines of as much as $50,000 before HUD called off the investigation under a barrage of negative publicity...
...According to Cuomo, all this is done at a third of the cost to taxpayers...
...This figure has climbed steadily from 17 percent in 1992 and 8 percent in 1965...
...0 The American Spectator February 1995 41...
...Although these efforts raised $25 million last year, VOA got $198 million-69 percent of its $289 million budget—from city, state, and federal contracts...
...Working Hard for the Money Higher tax rates have made fundraising much more difficult for charities in recent years...
...While long-established organizations have slipped into government contracting, much of the real growth among nonprofits has been in the "entrepreneurial sector"—the ad hoc organizations that have never engaged in charity work, but establish themselves specifically to take advantage of government programs...
...The Association for Retarded Citizens, in Arlington, Texas, gets 66 percent of its $478 million budget from government sources...
...The municipality also guarantees to take over the mortgage if the welfare checks run out...
...Congressman Joe Kennedy II started the Citizens' Energy Corporation, which used various subsidies to provide heating oil to the poor...
...A t the national level, the main problem remains the tendency of nonprofits to develop a "vanguard" leadership that plugs into government funding and gradually loses touch with the rank-and-file...
...Construction money is acquired by securing a service agreement with the host municipality to provide HELP with a steady stream of tenants' welfare checks for a period of ten years...
...The council eventually seen today in New York City, where recent investigations have revealed that government-funded social services are beginning to dominate the local economy...
...AA once returned a check for $125,000 to a deceased member's estate...
...I t should be noted that a great number of nonprofits have eschewed the government-grant route and still raise nearly all their funds from charity...
...In a 1941 article in the Saturday Evening Post, Jack Alexander described AA's structure: "There are no salaried organizers, no dues, no officers, and no central control...
...In the tradition of the organization, he wished to remain anonymous...
...Whether this is actually saving government money or just finding new ways to spend it, HELP has become the model for "Priority: Home!," the new $1.7 billion HUD program that will set up similar transitional housing throughout the country...
...C atholic Charities, the largest nonprofit organization in the country, raised $339 million last year through an "advent appeal" to its 10 million contributors, in addition to the annual Cardinals' appeal to Catholic parishioners...
...Other charities have been criticized because their fundraising costs absorb a significant portion of donations...
...Each year NonProfit Times surveys the 100 largest nonprofit fundraising institutions in the nation...
...in 1993 these institutions received 22 percent of their income from federal, state, and local government...
...As people's discretionary income gets smaller, it's harder to get them to give," says Kay Hullings, associate director of the United Cerebral Palsy Associations and NonProfit Times' s 1993 "Fundraiser of the Year...
...The impact of nonprofits extends far beyond mere employment...
...Planned Parenthood gets 37 percent of its $446 million income from services fees at its birth-control-and-abortion clinics (Medicaid pays for abortions in sixteen states), 33 percent from government grants and contracts (mostly through the Maternal and Child Health and Social Services Block Grant Programs), and 28 percent from private contributions and bequests...
...The organization also has a $1 million grant from the Department of Transportation to consult with public-transit authorities on compliance with the Americans with Disabilities Act...
...What was little remarked on during the controversy was 40 The American Spectator February 1995 that the investigation was initiated by Housing Rights, Inc., a nonprofit organization that lives on $60,000 a year in city and HUD grants to pursue housing discrimination cases...
...Volunteers of America obtains charitable donations with their familiar Santa Clauses, who solicit pedestrians on the streets at Christmastime...
...New York's tight political machines and obscure bureaucracies have allowed politics to intrude into every form of commerce...
...As a result, dozens of the oldest and most respected charity groups have become virtual adjuncts of the government, dependent on grants, contracts, and vendor payments...
...What we're witnessing," says Fred Siegel, professor of history at Cooper Union, "is something that's never been seen before in this country—an economy in which the government is becoming the major factor...
...Members are not allowed to make contributions of more than $1,000 a year nor leave more than $1,000 in their wills...
...Only 24 percent of its funding comes from donations...
...The New Government Jobs Emerging nationwide is a budding "nonprofit–social services complex" that both imitates and rivals the military-industrial complex that caused so much concern in the 1960s and 1970s...
...In 1992, three homeowners in Berkeley, California, organized a protest against the conversion of a local motel into homeless housing...
...Still, there is a growing uneasiness that the "independent sector" may be losing its independence as it relies more and more on the government for its livelihood...
...They got 92 percent of their income from the government...
...HELP for the Future The program that is most likely to serve as a model for future nonprofits is Project HELP (Housing Enterprise for the Less Privileged), the creation of Andrew Cuomo, undersecretary of the Department of Housing and Urban Development...
...I would file the same suit again today," says Sarah Lawless, director of Housing Rights...
...A small office in downtown New York acts merely as a clearinghouse for information...
...With the rise of the welfare state and government contracting, these percentages have changed drastically...
...The project—which is being constructed with federal funds by Resources for Community Development, another Berkeley nonprofit—is scheduled to open this spring...
...The average family contribution declined from $889 in 1992 to $880 in 1993, and corporate giving, adjusted for inflation, has declined steadily since 1988...
...I don't recall anybody worrying about over-reliance on government...
...Scandals have also hurt...
...The Chicago-based National Easter Seal Society gets 38 percent of its $351 million budget from government sources, much of it through Medicaid payments for its vocational rehabilitation services...
...This money comes from the National Institute for the Severely Handicapped...
...We put an enormous amount of pressure on the city and state," says Altheim...
...HELP holds tenants to strict behavioral codes, and because 20 percent of the homeless in its program get expelled for fighting, the agency had to get a special exemption from New York's strict anti-eviction laws...
...Along the way, however, VOA lost much of its "volunteer" orientation...
...When clients are stable enough to live on their own (they are given six months), they are transferred to permanent housing usually run by other nonprofits...
...In 1993, VOA reported a $289 million budget, of which volunteer contributions and interest on endowment formed less than 12 percent of income: Public Support (streetcorner donations) $25.3 million United Way Allocations 5.6 million Government Fees and Grants 198.4 million Service fees and sales 31.0 million Investment income 3.3 million Administrative income 0.1 million Other income (mostly rents from government-sponsored housing) 25.2 million TOTAL $289.1 million Many state and local chapters of VOA, which have independent budgets, are actually far more involved in government contracting...
...Founded in 1986 during his father Mario's tenure as governor of New York, HELP has built 1,000 units of new housing and currently puts 1,800 homeless people a year through its six-month program...
...A group that relies mostly on public donations generally must spend more on fundraising than one that gets large government grants," explained Money magazine in its annual review of charities last November...
...tion...
...Fifty-four years later, AA still has the same structure...
...Whenever the subject of the balanced-budget amendment comes up in this town, there's an immediate line-up of nonprofits such as Catholic Charities and United Way to 38 The American Spectator February 1995 testify against it," says Peter Sepp, spokesman for the National Taxpayers Union...
...The United Cerebral Palsy Associations rely on government funding for 81 percent of their $462 million budget...
...Michael Morris, deputy director of UCPA, was himself a top aide to former Connecticut Senator Lowell Weicker...
...Is there any alternative to this pattern...
...Charitable Society Most people trace the beginning of the symbiosis between the government and nonprofits to the Great Society...
...This independent sector, which includes colleges, nonprofit hospitals, and religious organizations, is made up of the roughly one million organizations that have 501(c)(3) tax exemptions from the IRS...
...The proceeds are used in training handicapped people...
...But Goodwill also holds $488 million (18 percent of income) in federal contracts, with which it employs handicapped people to clean government buildings...
...When we went before the community planning board to protest the opening of a homeless drop-in shelter, we disexperienced a revolt of the rank-and-file last year when its Washington-based leadership supported the Clinton health-care program...
...As late as 1968, more than 90 percent of the organization's funds came from charity, foundation grants, United Way allocations (formerly the "Community Chest"), and income from its $13.5 million endowment...
...Since social service spending (about $330 billion) now exceeds military spending ($325 billion), the nonprofit–social services complex is a potentially more formidable power, as can be covered that a majority of the board members were also on the board of the Neighborhood Coalition for Shelter, the group that was sponsoring the facility," says Leo Frantzman, president of the West 77th Street Block Association...
...Former alcoholics and former substance abusers, who were the targets of the opponents' propaganda, are protected classes under the Fair Housing Amendments Act...
...The 550,000 charities in this sector delivered about $100 billion in goods and services in 1993 and raised only $60 billion—$50 billion from individuals and $10 billion from corporations, foundations, and bequests...
...We got the shelter and ended up with a neighborhood baby being stabbed by a homeless resident...
...Even the Girl Scouts of America, it was recently revealed, has developed an out-of-touch national leadership that absorbs all the funds raised by cookie sales while leaving local chapters to fend for themselves...
...Lutheran Social Ministries, our biggest fundraiser last year, didn't even qualify for the list this time because they no longer get even William Tucker is The American Spectator's New York correspondent...
...Money would divert us from our primary mission, which is to cure alcoholics," said a spokesman in the New York office...
...The organization is now the nation's largest provider of nonprofit housing, running 96 apartment complexes in 21 states that house 26,000 residents...
...Of its $1.9 billion budget, $1.2 billion, or 65 percent, came from government sources...
...Locally, the rents of assembly halls are met by passing the hat at meetings...
...They all speak the same language and angle for the same government grants," says Bob Huberty, research director of the Capital Research FoundaThis voluntary fundraising was dwarfed by the money that Catholic Charities received from federal, state, and local governments...
...All these government grants and contracts aren't going to come without some kind of scrutiny and regulation," says McIlquham of NonProfit Times...
...It also impairs your impetus to go out and raise funds...
...Of its $1.9 billion budget, $1.2 billion, or 65 percent, came from government sources...
...The story reported a remarkable fact: The New York social services economy now employs more people than Wall Street...
...The Legal Services Corporation has challenged these evictions, but New York's courts have declared HELP to be a "hospital," and therefore exempt from anti-eviction statutes...
...Yet this voluntary fundraising was dwarfed by the money that Catholic Charities received from federal, state, and local governments...
...Public opposition understandably mounts when it is revealed that a rooming house or abandoned building down the block is to be transformed into a homeless shelter...
...If nonprofits aren't worried, they should be...
...People within the charity world point almost invariably to Alcoholics Anonymous, the self-help movement that currently serves one million members...
...Save the Children, of Westport, Connecticut, also involved mostly in international relief, gets 41 percent of its $84 million budget from government sources...
...We told them 'We can't do this unless you let us evict people.' We couldn't let a few people ruin it for everyone...
...The Marine Toys for Tots Foundation got a bundle of bad publicity in 1994 when a $10 million direct-mail fund drive accrued no net gain...
...Adds Rick Moyers, of the National Center for Nonprofit Boards: "We just did a survey of our membership, and all of them still feel fundraising is their biggest challenge...
...The sheer explosion of these facilities has dried up the pool of buildings available for private investment and development," says Edward J. Malloy, president of the Building and Construction Trades Council of Greater New York...
...Government aid is actually restrictive because the money can only be spent in one way and it limits our activities...
...Paradoxically, these criticisms have created an atmosphere in which charities that turn to the government are being complimented for avoiding the hassles of fundraising campaigns...
...Indeed, founding a nonprofit organization has come to be a rite of passage for liberal politicians...
...Drug addicts are routed through drug clinics, alcoholics through alcoholic treatment programs, illiterates through training and education programs...
...Few people understand how incestuous the relationship between nonprofits and the government has become...
...0 ver the last decade, the long arm of the government has extended into a new area—the tax-exempt portion of the "independent sector" that includes the nation's charities...
...In 1993, 81 percent of its $295 million budget came from government contracts and only 17 percent ($50 million) from private donations...
...The remaining $40 billion came from other sources, mainly the government...
...In 1968, for example, Volunteers of America answered the call of the Johnson administration's Section 202 housing program and began building and managing apartment complexes for low-income families and the elderly...
...Based in Washington, UCPA has close ties with several key administration officials, including Robert Williams, a former UCPA executive, who is now development disabilities commissioner for the Department of Health and Human Services...
...To counter this trend, many nonprofits have begun listing fundraising activities as educational programs in order to disguise these costs—a move that has drawn rebukes from watchdog groups...
...Jimmy Carter has spent much of his post-presidential career working for Habitat for Humanity International, a home-building group that raises 91 percent of its $126 million budget from contributions and gets only 7 percent from the government...
...Today, Goodwill's 1,500 stores generate $589 million in income from donated goods...
...Many of these boards have become stacked with members from the social services economy, who regularly drive off private developers and steer properties to nonprofit organizations...
...In some neighborhoods, where politicians such as Manhattan Borough President Ruth Messinger or the South Bronx's Ramon Velez have built vast social nonprofit empires, more than half of local employment now comes through social service organizations...
...This has hampered the economic growth of the whole city...
...Last October, Crain's New York Business ran a two-part series documenting the remarkable degree to which social service agencies and the politicians who patronize them are monopolizing the city's resources...
...One principal tool has been the fifty-nine Community Planning Boards, which have advisory powers on zoning and land-use and whose entire memberships are appointed by the borough presidents with "consultation" from city council members...
...We make deductions for the bond payments, and then give them a small spending allowance...
...This shift has caused a little edginess in the agency's headquarters...
...The National Council of Senior Citizens, for example, receives 90 percent of its funds from the government and is run by a board of directors made up almost entirely of labor union leaders...
...The following charitable organizations in the NonProfit Times 100 get none of their money from government sources: Shriners Hospitals for Crippled Children, United Jewish Appeal, YWCA of USA, American Cancer Society, Christian Children's Fund, National Benevolent Association Christian Church, Muscular Dystrophy Association, and the United Negro College Fund...
...Many other major nonprofits are in similar situations: • The Catholic Relief Services, founded in 1943 to help European refugees, currently distributes emergency food and medical services in 75 countries...
...Because of its success in securing government contracts, many local chapters have cut fundraising staffs altogether...
...The Girl Scouts now claim their cookie sales are an educational activity...
...William Aramony, former president of United Way, has been charged with using contributions to pay extravagant expenses for himself, his wife, colleagues, and female acquaintances...
...Many of the newer organizations are more dependent still, having been formed specifically because of government grants in housing, child care, and mental-health services...
...In New York City, where the sidewalk Santa Clauses are a holiday fixture, the organization is 90 percent dependent on government grants...
...The money comes directly to us," explains Marc Altheim, executive vice-president of HELP...
...That's a real danger all nonprofits face—just sitting back and figuring the government will take care of you...
...CARE, which distributes international relief aid, gets 75 percent of its $451 million budget from government The American Spectator February 1995 39 sources, mostly through foreign food-distribution programs...
...The tenants never see their own welfare checks...
...New York State and New York City have pledged $85 million apiece for construction as well...
...Project HELP can only be described as a total government environment...
...HELP uses this guarantee to secure a bond rating, and then issues tax-exempt construction bonds...
Vol. 28 • February 1995 • No. 2
