Editorial: State laws on charities need reinforcing
Donors are being duped. More often than not, the clothing, shoes and books that they dump in the now ubiquitous collection bins do little to help the state’s needy. Instead, the bins are a ruse that allows companies or organizations to profit from people’s generosity. Duped too are the store and mall owners who donate the use of their real estate for what’s described to them as a charitable cause.
New Hampshire needs laws that strictly regulate the minimum percentage of revenue that an organization must spend for truly charitable purposes in order to qualify as a charity. The law should also require any organization that uses collection cans or donation bins to collect contributions to prominently post the organization’s state registration number, contact information, charitable mission and the certified percentage of revenue raised that’s actually used to fulfill that mission.
Do that, and several organizations that have filled the state with donation bins would fail to make the cut.
Among them, we believe, would be Planet Aid, whose yellow donation bins can be found throughout Concord, and the bins bearing the MADD logo of Mothers Against Drunk Driving. The latter was the subject of an excellent Dec. 9 story by Union Leader reporter Shawne K. Wickham and an ongoing investigation by the attorney general’s office.
The bins bearing MADD’s name are owned by CMRK Inc., a Massachusetts company that also owns convenience stores in New Hampshire’s North Country. CMRK, the AG’s Office of Charitable Trusts found, pays the state chapter of MADD $10,000 per year for the use of its name. CMRK,which is not listed with the New Hampshire Secretary of State’s corporate division, describes itself as a for-profit wholesaler of used clothing on Massachusetts state filings.
In 2003, a Hartford Courant story described a state investigation into the activities of the now defunct Holy Trinity Community Centers, which had 300 clothing collection bins in Connecticut and made millions in revenue from the overseas sale of the clothing but gave little of the money to local charities. The centers closed and transferred their assets to Fawaz El Khoury, who then entered into an agreement with the Society of St. Vincent de Paul to use the bins to collect clothing under its name. El Khoury, who is listed as CMRK’s president, treasurer, and secretary on the company’s Massachusetts filings, did not return a Monitor request for an interview.
Planet Aid, which is listed as a nonprofit with New Hampshire’s corporate division, has its roots in Denmark and its American headquarters in Hollister, Mass. It too, sells the clothing left in its boxes overseas. The organization reported revenue of nearly $36 million in 2010. Planet Aid has been the subject of press reports and regulatory investigations in numerous states.
Its track record has earned it an F grade from The American Institute of Philanthropy and a warning from the watchdog group Charity Watch, which said that by its accounting, Planet Aid spends less than one-third of its take from the sale of clothing on programs for charitable purposes.
Planet Aid disputes that figure and has repeatedly claimed that it spends the bulk of its revenue on programs, primarily in Africa. But to reach charitable percentages in the 80 percent range, Planet Aid counts the cost of buying and operating the boxes not as a fundraising expense but as a charitable activity on behalf of the environment. It bases that argument on the spurious allegation that the items dumped into its boxes would otherwise be discarded as trash, when in truth, most of the donations would find their way to local organizations like Goodwill.
The game of paying a legitimate charity a small fee for using its name to raise money for another organization or for-profit company is an old one. Tough state laws and strict scrutiny are needed to protect legitimate charities and donors from what is a highly profitable scam.