For the many people
who have heard it, the catchy Kars4Kids jingle is difficult to forget.
The charity behind the Kars4Kids fundraising campaign, J O Y for Our Youth
(JOY), has spent millions on advertising to ensure the jingle is heard
far and wide. In addition to sponsoring an internet video jingle
contest, JOY runs radio ads like the one we frequently hear in Chicago
enticing potential donors with offers of "maximum" tax deductions as
well as a "free vacation" in return for car donations. The commercials
make car donation seem as easy as dialing a memorable phone number, but
are vague about where the raised money will go, or how it will benefit
kids.
JOY has the same New Jersey address and the same principal officer, Eliyohu Mintz, as another charity, Oorah.
According to the Attorney General in Pennsylvania, JOY "has contributed
substantially all of the funds it has raised to Oorah in the past."
According to Oorah's website, "Oorah, which
means 'Awaken,' was founded in 1980 with the goal of awakening Jewish
children and their families to their heritage." The site is full of
articles, stories and testimonials which seem to imply that the physical
and spiritual support and private religious education offered by Oorah
are intended to persuade secular Jewish families to take on a more
Orthodox Jewish lifestyle.
Of course many charities promote religious
ideology, but when the religious mission of a charity is not disclosed
in advertisements to potential donors, ethical and regulatory issues may
arise. Legal settlements in 2009 with regulators in Pennsylvania and
Oregon require JOY and Oorah to be more up front with their Kars4Kids
advertising-at least in those two states.
Pennsylvania's Attorney General accused JOY
of publishing "advertisements that did not limit benefits to any
particular group of children when, in fact, substantially all donations
were remitted to Oorah, whose programs benefit a particular group of
children." In Pennsylvania, JOY was fined $45,000 in restitution to be
distributed to various children's charities in the state plus $20,000 in
penalties and investigative costs. JOY was also required to add
detailed disclosures to all Pennsylvania solicitations revealing the
religious nature of its programs.
In Oregon, the charity was required to pay
$65,000 and "change its misleading solicitation practices." The Oregon
Department of Justice took issue with the charity's vacation voucher
incentive, saying JOY "failed to disclose that its 'free vacation' offer
was designed to recruit people to attend timeshare presentations." Also
at issue was a failure "to disclose that the organization did not
benefit needy children generally, but instead directed its efforts to a
narrow religious purpose." In addition to paying the fine, JOY is now
required "to clearly and conspicuously disclose that any offers of
vacation vouchers are not applicable in Oregon" and to include
disclosure of its religious purpose in solicitations in that state.
When money passes from one charity to
another, typically an additional layer of overhead cost takes a second
bite out of donations, leaving less cash available to be spent on the
programs donors intend to support. For example, based on these
charities' 2008 overhead rates, a $100 donation to JOY that is then
granted to Oorah would result in $35 left to help children. In its 2008
tax form, JOY reports spending just over $14.6 million, or 65% of its
$22.5 million budget, on programs-which at face value appears to be a
reasonable amount. However, nearly all of this program spending, $14.5
million, consisted of a grant to the charity's affiliate organization,
Oorah. This grant made up most of Oorah's funding in 2008, according to
that charity's tax form, on which it reports spending 46% of its budget
on overhead. Donors who only look at JOY's reported program spending
without taking Oorah's overhead expenses into account might get the
impression that more of their charitable donations are going to benefit
kids than is actually the case.
Donors should also be aware that according
to its 2008 tax form and audited financial statements, JOY spent $118 in
fundraising and advertising costs to obtain each donated car, and the
average car was resold for less than $400.
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