The BBB Wise Giving Alliance’s Wise Giving Wednesday last week featured the “Donate With Honor” press conference held at the Washington DC office of the Federal Trade Commission (FTC) along with state Attorneys General and state charity regulators. Among other things, the conference sought to educate donors by helping them avoid misleading charity appeals and find trustworthy charities. This week, we’ll take a closer look at one of the featured cases: VietNow National Headquarters. This Illinois-based veterans charity was forced to stop operations after a November 2017 action collectively taken by 24 states led by Illinois Attorney General Lisa Madigan.
Problems regarding appeals by VietNow has roots that go back 25 years. Back in 1991, the Illinois attorney general charged a telemarketing firm, a professional fund raiser for VietNow, with civil fraud. Under its contracts with the charity, the fundraising company received 85-90% of the funds raised. At the time, the Illinois courts ruled that this case was in conflict with prior U.S. Supreme Court Decisions (Schaumburg, Munson and Riley) which held that government restrictions on charity fundraising costs infringed on the First Amendment rights of charities. Illinois appealed to the U.S. Supreme Court. The case of Illinois ex rel. Madigan v. Telemarketing Associates, Inc. had oral arguments before the Supreme Court in 2002. The BBB Wise Giving Alliance filed a friend of the court brief (amici curiae) in support of Illinois and pointed out, among other things, that its report on VietNow showed that the charity did not meet several of the BBB Charity Standards. In May 2003, the U.S. Supreme Court ruled in Illinois’ favor noting that the state may address a fraud action when fundraisers make misleading representations. The First Amendment does not protect solicitations that provide a false or misleading impression on how contributions will be used.
Apparently VietNow never really learned its lesson. Twenty-five years later they were still engaged in hiring outside fundraising companies that received the lion’s share (88% of the $1.9 million of contributions received in the fiscal year ended June 2016.) The Michigan Attorney General’s Cease and Desist Order filed in February 2017 accused VietNow of distributing solicitations that falsely claimed that a percentage of funds were to be spent to help Michigan veterans address Post Traumatic Stress and other health issues. What little money that was spent on programs involved activities such as distributing sandwiches to homeless veterans.
Prior to the November 2017 state action, BBB WGA issued a report on VietNow indicating that it sent repeated written requests to VietNow but it did not disclose any of the requested information.
In the government action that involved 24 states in 2017, the charity was ordered to dissolve, the board of directors was removed and the charity’s officers were banned from future fundraising. Remaining assets were then distributed to other veterans charities identified by the court.
There are steps donors can take to avoid being taken by misleading appeals, one is to verify if the charity meets the 20 BBB Standards for Charity Accountability. See last week’s blog for a list of 26 veterans and military service charities that meet these standards.
For more information or to view a video interview with Barry S. Goldberg, Deputy Bureau Chief, Charitable Trust Bureau, Office of the Illinois Attorney General regarding the states’ case against VietNow, click here.