Post by Bret Walker on Feb 19, 2002 7:52:54 GMT -5
No one watching 9/11 charities
Rubber-stamp approvals by the IRS are leaving donors in the dark.
By Mark Fazlollah and Peter Nicholas
Philadelphia Inquirer Washington Bureau
In the rush to help victims of Sept. 11, the Internal Revenue Service is approving virtually everyone who wants to start a charity, allowing groups with unrealistic missions, no experience doing charitable work, or no track record raising funds to tap Americans for tax-exempt donations.
The lack of scrutiny has spawned a cottage industry in charities, some of which plan to pay their founders six-figure salaries. And donors are left largely in the dark when trying to determine what groups are worthy of contributions.
"You can't count on the regulators to check them out," said Daniel Borochoff, president of the American Institute of Philanthropy. "People will incorrectly make the assumption that . . . is legitimate, that it has been fully vetted, fully screened. It has not."
Since the terrorist attacks, 243 new charities have been approved. Three applications were denied.
Among the groups cleared to solicit donations are:
The five proposals drew criticism from the former head of the IRS tax-exempt division, who reviewed the application forms for The Inquirer.
"They're bad business plans," said Marcus S. Owens, now a private attorney. "If these were private businesses and you went to a bank to get a loan, you'd be turned down. But, in essence, the IRS is giving them a ticket to raise money from the public."
He said the IRS should reconsider the practice where, in response to a disaster, it gives expedited treatment to "these groups that from a business standpoint have little chance of success, little chance of ever even beginning charitable activities, much less actually being successful at it."
The IRS says its role is not to be a gatekeeper, but rather to get charities up and running to help the nation recover from the terrorist attacks.
"One of the things we don't do is make judgments as to whether it's a wise program, whether it is duplicative or is the most efficient program," said Marvin Friedlander, a supervisor in the IRS charity division. "We think it's part of our duty to help them create an organization that will qualify. And that's one reason for the low number of denials."
For the full story, go to www.philly.com
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Mark Fazlollah's e-mail address is mfazlollah@phillynews.com. Peter Nicholas' is pnicholas@krwashington.com.
Rubber-stamp approvals by the IRS are leaving donors in the dark.
By Mark Fazlollah and Peter Nicholas
Philadelphia Inquirer Washington Bureau
In the rush to help victims of Sept. 11, the Internal Revenue Service is approving virtually everyone who wants to start a charity, allowing groups with unrealistic missions, no experience doing charitable work, or no track record raising funds to tap Americans for tax-exempt donations.
The lack of scrutiny has spawned a cottage industry in charities, some of which plan to pay their founders six-figure salaries. And donors are left largely in the dark when trying to determine what groups are worthy of contributions.
"You can't count on the regulators to check them out," said Daniel Borochoff, president of the American Institute of Philanthropy. "People will incorrectly make the assumption that . . . is legitimate, that it has been fully vetted, fully screened. It has not."
Since the terrorist attacks, 243 new charities have been approved. Three applications were denied.
Among the groups cleared to solicit donations are:
- A California retiree who wants to raise billions to hand out as rewards for catching terrorists. He told the IRS he planned a dream team of celebrities for his board of directors: former U.S Sen. Bill Bradley, former FBI director William Webster, investing expert Charles Schwab, Microsoft co-founder Paul Allen, and country music singer Vince Gill. He had never spoken to any of them about the charity, and none had agreed to serve.
- A Utah paleontologist who told the IRS he will raise $31 million to build a World Trade Center memorial and other monuments to the attack victims. He said the IRS never asked him whether he had spoken to New York officials already considering a memorial. He told the government he will take $75,000 for himself and split another $100,000 between his brother and a friend who will serve as officers.
- A Florida man who plans to train schools and businesses to respond to terrorist attacks and wants his group to become an arm of the White House Homeland Security office. He told the IRS he wants his staff to earn as much as officials at the Red Cross and United Way. He lists his starting salary as $150,000.
- A California woman who is knocking on doors in New York City in search of airtime to provide radio counseling. She told the government that she will pay herself a $78,000 salary, and that another $78,000 will go to a friend who will handle the business end. The IRS never asked whether she had a radio station lined up and wasn't swayed by the fact that New York's September 11th Fund has underwritten counseling that has reached thousands of people.
- An Ohio woman who wants to help children orphaned in the attacks. She said there could be more than 500 orphans, but other groups put the number between zero and a dozen. She told the IRS she would take $60,000 for herself and $60,000 for a friend who will act as her vice chairman.
The five proposals drew criticism from the former head of the IRS tax-exempt division, who reviewed the application forms for The Inquirer.
"They're bad business plans," said Marcus S. Owens, now a private attorney. "If these were private businesses and you went to a bank to get a loan, you'd be turned down. But, in essence, the IRS is giving them a ticket to raise money from the public."
He said the IRS should reconsider the practice where, in response to a disaster, it gives expedited treatment to "these groups that from a business standpoint have little chance of success, little chance of ever even beginning charitable activities, much less actually being successful at it."
The IRS says its role is not to be a gatekeeper, but rather to get charities up and running to help the nation recover from the terrorist attacks.
"One of the things we don't do is make judgments as to whether it's a wise program, whether it is duplicative or is the most efficient program," said Marvin Friedlander, a supervisor in the IRS charity division. "We think it's part of our duty to help them create an organization that will qualify. And that's one reason for the low number of denials."
For the full story, go to www.philly.com
--------------------------------------------------------------------------------
Mark Fazlollah's e-mail address is mfazlollah@phillynews.com. Peter Nicholas' is pnicholas@krwashington.com.
