The American Cancer Society must be the most corrupt \"charity\" in America. The vast majority of donations go to lavish salaries, expenses, investments, retirement plans, PR campaigns, political lobbying etc. As far as I know, all the money they put into research\r\n(about 25%) goes to man-made, patentable, money making treatments that board members often have a vested interest in. People think that they are giving money to help cancer victims when, according to Dr. Samuel Epstein (see ?The Politics of Cancer Revisited?), only about 16% (see\r\nthe #3 story in ?Project Censored? 2000 edition)of donations go directly to patient care. What a disgrace, profiting from cancer patients under the guise of a \"charity.\"
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\r\n\r\n\r\nCHARITABLE TAKING THE ARIZONA DIVISION OF THE AMERICAN CANCER SOCIETY EATS UP 95 PERCENT OF ITS BUDGET WITH SALARIES AND OVERHEAD. CANCER VICTIMS GET THE LEFTOVER CRUMBS.
\r\nJohn Dougherty
\r\n1.26.95<\/p>
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\r\n\r\n\r\nJerry Brock slowly leans over and to his right, stretching slightly to reach the candy jar stashed behind his office desk. Very deliberately, he opens the wrapper to a piece of hard candy, and precisely places the morsel in his mouth. The ritual gives him a moment to contemplate disturbing information.<\/p>
\r\n\r\n\"It's amazing. I'm shocked,\" Brock says in the restrained and measured voice of a successful businessman, someone who attained financial security one hour at a time over 30 years, with a \"pay as you go\"\r\nphilosophy. A self-educated man who made a fortune in the automobile-salvage business, Brock decided a few years ago that he wanted to make a\r\nsignificant financial contribution to a worthwhile cause. \"I don't know why. But it was something in here,\" he says, gesturing toward his heart. As fate would have it, a friend asked him to join the East Valley board of directors of the American Cancer Society.<\/p>
\r\n\r\nHis experience on the board led him to believe the society was a model charity, one that devoted a vast amount of its resources to battling a dreaded disease and to helping those afflicted with it. More important,\r\nthis good work appeared to be accomplished efficiently, with just 15 percent of donors' funds allocated to management, fund raising and overhead.<\/p>
\r\n\r\nBefore long, Brock and his wife, Shirley, began considering donating\r\n$100,000 to the society--a contribution that would put them at the pinnacle of philanthropists in the state. At first, their donations were much smaller, but still in the thousands. In thanks, the society\r\ngave the Brocks a set of kachinas, which sit on a credenza behind his desk. Finally, in 1994, the Brocks decided to go for broke. They pledged an additional $91,000 to the Arizona division of the American Cancer Society to finance a cancer telephone hot line for three years. The society awarded the designation \"Lifetime Excalibur\" to the Brocks.\r\nIt is the society's highest donor honor.<\/p>
\r\n\r\nThe magnitude of the Brocks' donation is matched in Arizona only by contributions from syndicated writer Erma Bombeck's Family Partnership\r\nand from a foundation created by real estate magnate Harold Grossman. The donation was not something Brock took lightly. Even so, he did no\r\nresearch into how the society's Arizona division actually spends its money, other than reading the division's scanty, one-page annual report.<\/p>
\r\n\r\n\"I guess you could call it blind faith,\" Brock says of his trust in the society.<\/p>
\r\n\r\nThat faith has been rocked by a scathing report on the Arizona division prepared by two economists whom the American Cancer Society has\r\nlabeled, without providing any proof, tobacco-company propagandists.<\/p>
\r\n\r\nBut the numbers used by George Mason University's James Bennett and\r\nLoyola University's Thomas DiLorenzo have nothing to do with tobacco.\r\nThey speak for themselves. They come right out of the Arizona\r\ndivision's audited financial statements--statements reviewed by New\r\nTimes--and paint an astounding picture.<\/p>
\r\n\r\nContrary to its popular image as a bootstrap operation scraping by only\r\nwith the help of volunteers, the American Cancer Society's Arizona\r\ndivision is more than well-off. It has some $4.6 million in cash and\r\nsecurities on hand.<\/p>
\r\n\r\nIt is a large organization, with 75 full-time and part-time employees.\r\nIt spends nearly 22 times as much on salaries and overhead as it does\r\non delivering direct services to Arizonans.<\/p>
\r\n\r\nIt is an enterprise that pays its top executive $119,000 per year, plus\r\n$15,000 more in insurance and retirement benefits.\r\n\r\nEven though its mission is to \"diminish suffering\" from cancer, it is \r\ncharity that has seen its total assets increase by 42 percent since\r\n1988, to $10.9 million.<\/p>
\r\n\r\nIt is a politically active group, spending $24,000 of contributors'\r\nmoney to spearhead a tobacco-tax initiative approved by voters last\r\nNovember, and using more donation dollars this year to lobby the\r\nArizona State Legislature.<\/p>
\r\n\r\nBy any financial measurement, the Arizona division of the American\r\nCancer Society is a wealthy entity. Yet last year, this powerful\r\ncharity, which pays no taxes, spent a paltry $47,183 on \"specific\r\nassistance\" for thousands of Arizona cancer patients and their families.<\/p>
\r\n\r\nThese numbers leave Brock stunned.\r\n\"Things may have been different with my gift had I known that,\" he says\r\nsolemnly.<\/p>
\r\n\r\nJerry Brock is interested in learning more about the Arizona division's\r\nfinances, but other current and former cancer society board members are\r\nreluctant to delve deeply into the financial numbers.<\/p>
\r\n\r\nBobbi Casano of Tempe has spent ten years working as a cancer society\r\nvolunteer, and is adamant in her support of the organization,\r\nregardless of what the fine print may reveal. A current ACS-Arizona\r\nboard member, Casano says she saw the 1994 audited financial statement\r\nand remembers discussing it generally at a board meeting. She admits,\r\nhowever, that she has not \"gone over it with a fine-tooth comb.\"<\/p>
\r\n\r\nNevertheless, Casano says she's confident that the money is well-spent,\r\nand that donors should rest easy. She believes spending on salaries and\r\noverhead is at a reasonable level. \"I'm very comfortable with the way\r\nwe are doing our accounting and with what the public is getting for its\r\ndonations,\" she says.<\/p>
\r\n\r\nAnother longtime volunteer, John Waters of Tempe, at first expressed\r\ninterest in learning more about Bennett and DiLorenzo's report, but\r\nlater tempered his comments. In the meantime, he had discussed the\r\nreport with ACS staff members in Phoenix.<\/p>
\r\n\r\n\"I'm not enough of a research person to pass judgment on what Professor\r\nBennett has done,\" says Waters, who was named Volunteer of the Year by\r\nthe American Cancer Society in 1993 in recognition of his outstanding\r\nfund-raising efforts.<\/p>
\r\n\r\nCasano's and Waters' reluctance to review the society's finances with a\r\ncritical eye is not surprising; many people are hesitant to discuss\r\nproblems in a charitable organization they support. Most donors, and at\r\nleast some board members, operate on the same principle as Brock: blind\r\nfaith.<\/p>
\r\n\r\nAnd, in fact, there is very little oversight of any other kind when it\r\ncomes to major health charities such as the American Cancer Society.<\/p>
\r\n\r\nState and federal regulators generally take a hands-off approach to\r\nregulating health charities. Arizona only requires charities to file a\r\nbrief disclosure statement and a copy of audited financial statements\r\nwith the secretary of state.<\/p>
\r\n\r\nBennett believes that health charities like the American Cancer Society\r\nreceive little scrutiny from donors, volunteers and government agencies\r\nbecause they cast an aura of \"doing good.\" Few want to question a\r\ncharity--the cancer society, for example--because it may be construed\r\nthat they are against good works, such as finding treatments or a cure\r\nfor cancer.<\/p>
\r\n\r\nThis reluctance to hold charities accountable is what allowed the\r\nformer national president of the United Way of America, William\r\nAramony, to live a life of royalty for years, Bennett says.\r\n<\/p>
\r\nAramony traveled the world in first-class comfort while providing jobs\r\nin the United Way empire for family and friends. All of this was\r\npossible, according to a 1992 report, because there simply were no\r\npolicies outlining the appropriate expenditure of travel funds.<\/p>
\r\n\r\nThe solution to preventing future United Way-style scandals, Bennett\r\nsays, is to require all charities to open their books to public\r\ninspection.<\/p>
\r\n\r\nCharities are exempt from state and federal taxes, and are able to\r\navoid many workplace regulations. They are provided these benefits\r\nbecause the public believes charities are providing service to the less\r\nfortunate.<\/p>
\r\n\r\n\"In return for this subsidy, they [charities] should make the details\r\nof all expenditures available to any interested party,\" Bennett says.\r\n<\/p>
\r\nThe American Cancer Society's Arizona division refused to open its\r\nbooks for inspection by New Times. The society also declined to provide\r\ndetailed salary information on its ten highest-paid employees. Division\r\nofficials also refused to explain other specific spending listed in the\r\ncharity's financial statements, including $83,000 labeled \"other\r\ntravel\" and a long-standing, fully collateralized $1.5 million bank\r\nloan.<\/p>
\r\n\r\nThe society did release copies of its audited financial statements for\r\nthe last three years. Those statements show that 95 cents of every\r\ndollar spent by the charity in Arizona last year went to salaries and\r\noverhead.<\/p>
\r\n\r\nVoluntary health charities, such as the American Cancer Society, are\r\nrequired to file annual financial statements with taxing authorities.\r\nThose statements are available for public review. They also must\r\nprepare annual reports under a set of guidelines created by a coalition\r\nof major charities.<\/p>
\r\n\r\nThese guidelines, however, allow charities to lump together the cost of\r\nproviding a service, including salaries and overhead, with the actual\r\nvalue of the product or service delivered. This blending of expenses\r\nmakes it extremely difficult to determine how, and where, a charity\r\nspends donations.<\/p>
\r\n\r\nFor example, if a charity says in its annual report that it spends $1\r\nmillion on public education, it could mean the charity gave $1 million\r\nto a public school system. It could also mean the charity's management\r\nspent $990,000 to deliver $10,000 in tangible services and products to\r\npublic education.<\/p>
\r\n\r\nThere is no way to tell from a charity's annual report.\r\n\"There is nothing illegal about reporting it this way,\" says\r\nBennett. \"I'm just saying this is fantasy land. You can't tell if a\r\ncharity is good, bad or indifferent.\"\r\n\r\nThe only way to gain more insight into a charity's finances is to\r\nexamine its audited financial statement. These statements, which are\r\nnot widely distributed, have somewhat more detail about how money is\r\nspent than annual reports.<\/p>
\r\n\r\nAudited financial reports provide a starkly different picture of ACS-\r\nArizona's spending from what is displayed in the group's annual report.\r\nIt is the annual report that is widely distributed and frequently used\r\nin fund-raising efforts.<\/p>
\r\n\r\nThe American Cancer Society, like other health charities, divides\r\nspending into five general categories--public education, community\r\nservices, professional education, patient services and research.\r\n<\/p>
\r\nThe Arizona division's 1994 annual report states that it spent $1.1\r\nmillion on public education, $733,000 on patient services, $389,000 on\r\ncommunity services, $194,000 on professional education and $3,660 on\r\nresearch.\r\n\r\nNowhere in the annual report, however, does it state that expenditures\r\nin these five categories also include salaries, payroll taxes, employee\r\nbenefits packages and general overhead expenses--in addition to the\r\nactual product or service delivered to the public.\r\n\r\nIn fact, the annual report would lead a casual reader to believe those\r\nexpenses are all included under a category labeled \"management and\r\ngeneral,\" which totaled only $322,000.<\/p>
\r\n\r\nBennett's accounting exercise reveals a stunningly different ACS-\r\nArizona from the one so benevolently portrayed in its annual report.\r\nRather than the society spending $733,000 on patient services in 1994,\r\nas the annual report states, the actual amount of money going directly\r\nto patients was only $71,000, according to Bennett's methodology. Of\r\nthis, $47,000 was spent on \"specific assistance to individuals.\"<\/p>
\r\n\r\nThe balance of the $733,000 booked as patient services actually was\r\neaten up by $443,000 in salaries, taxes and benefits, plus another\r\n$219,000 in overhead.\r\n\r\nThe story repeats itself in ACS-Arizona's four other major spending\r\ncategories. While the division tells supporters in its annual report\r\nthat it spent $1.1 million on public education in 1994, more than 90\r\npercent of that spending was devoted to salaries and overhead. Only\r\n$70,400 went to direct services, mostly in the form of films and\r\npublications.<\/p>
\r\n\r\nThe division spent $194,700 on professional education in 1994, with\r\n$107,000 going to salaries and $69,000 going to overhead. Only $18,600\r\nwas actually directly delivered to Arizonans.<\/p>
\r\n\r\nCommunity services spending totaled $389,000, but the actual amount\r\ndirectly delivered to the public was $13,700. Salaries absorbed\r\n$218,000 and overhead $104,000.\r\n\r\nOverall, the division spent $3.74 million in 1994 in Arizona, with\r\n$3.57 million, or 95.4 percent, going to salaries and overhead. Only\r\n$174,000--just 4.6 percent of all spending--benefited Arizonans\r\ndirectly. Last year was not an anomaly for the Arizona division. In\r\nfact, ACS-Arizona has a seven-year trend of spending more money on\r\nsalaries and overhead and less on direct services.<\/p>
\r\n\r\nSince 1988, the Arizona division has increased salaries to its staff by\r\n25 percent while slashing direct services to cancer patients and the\r\ngeneral public by 51 percent. During the same period, total\r\ncontributions from all sources rose by 51 percent--to $8.6 million in\r\n1994. \"This is Robin Hood in reverse,\" says Bennett.<\/p>
\r\n\r\nBennett's analysis of the ACS-Arizona division focuses only on how the\r\ndivision spends money in the state. ACS-Arizona is just one of 57\r\nAmerican Cancer Society divisions scattered across the country that are\r\nrequired to send back 40 percent of the money raised annually to\r\nsociety headquarters in Atlanta, Georgia.\r\n\r\nIn addition to the $3.74 million the division spent in Arizona last\r\nyear, the division also transferred $3.6 million of contributions\r\ndirectly to ACS headquarters in Atlanta.\r\n\r\nThe money sent to Atlanta was combined with funds from the other ACS\r\ndivisions. Last year, those payments to the national cancer society\r\nheadquarters totaled $144.6 million. The annual transfers have helped\r\nmake the society's headquarters one of the nation's wealthiest\r\ncharities, with $500 million in available funds.\r\n\r\nThe ACS in Atlanta returns some of this money in the form of research\r\ngrants. Last year, the University of Arizona received six grants from\r\nACS headquarters worth $1 million. Arizona State University received a\r\n$100,000 grant.\r\n\r\nACS officials criticize Bennett's analysis for not taking into account\r\nthe money raised and transferred by ACS-Arizona to national\r\nheadquarters. Bennett says the amount of money sent to Atlanta is\r\nirrelevant to how the Arizona division spends its share of\r\ncontributions locally. He considers the transfer a tax the Arizona\r\ndivision must pay to the national organization in order to be\r\nconsidered an American Cancer Society affiliate.\r\n\r\n\"My interest is not what the national office is doing with its 40\r\npercent share,\" Bennett says. What's important, he says, is how the\r\nArizona division controls its money.\r\n\r\n\"That is how you must judge them, on how they spend the money they have\r\nto spend,\" he says.\r\n\r\nFor the past 24 years, Matthew Madonna has made a career of working for\r\nthe American Cancer Society.\r\n\r\nAfter working at several other cancer society divisions, he came to\r\nArizona in 1989 to become executive vice president, the top paid ACS\r\nofficial. Madonna's pay last year to oversee the collection and\r\ndistribution of about $8 million in contributions came to $119,000,\r\nplus benefits.\r\n\r\nHe says he has a small cadre of top assistants, with a \"couple of\r\npeople\" making $50,000 or more, two more being paid in the $40,000\r\nrange and \"several\" in the $30s. The vast majority of ACS-Arizona\r\nemployees is in relatively low-paying positions, he says.\r\n\r\nBut cancer society officials refused to release a list of the ten\r\nhighest-paid ACS-Arizona employees.\r\n\r\nUnder Madonna's watch, the amount of money spent locally on salaries\r\nhas jumped by 25 percent while money spent on direct services has\r\nfallen by 51 percent.\r\n\r\nWhile Madonna contests the magnitude of the decline in direct services,\r\nsaying the accounting doesn't measure all the work done by society\r\nvolunteers, he acknowledges there have been reductions.\r\n\r\n\"We have done a significant amount of cutting back the last few years,\r\nas dollars have been tight,\" Madonna says during an interview inside\r\nthe Arizona division's spacious, $1 million headquarters in east\r\nPhoenix.\r\n\r\nBut finances haven't been so tight that staff salaries were\r\nreduced. \"We still need to hire as high a quality of staff as we can,\"\r\nMadonna explains.\r\n\r\nMadonna doesn't contest that salaries and overhead make up the vast\r\nmajority of the expenses associated with delivering products and\r\nservices to the community--just as Bennett's analysis shows. Madonna,\r\nhowever, contends that Bennett's analysis is not an accepted way of\r\nmeasuring a charity's performance. It is an analysis, Madonna says,\r\nthat paints an unfair picture of the charity's operations.\r\n\r\nBesides, Madonna says, he has no interest in adopting Bennett's\r\nmethodology. \"I'm not going to reinvent the accounting standards for\r\nnonprofits.\" Madonna says Bennett's opinions are just those of one man--\r\na man many in the American Cancer Society suspect of being a lackey for\r\nthe tobacco industry.\r\n\r\nIt is a charge Bennett strongly denies, but one he's grown accustomed\r\nto hearing since the release last year of a book he co-authored,\r\nUnhealthy Charities.\r\n\r\nThe tobacco connection is frequently tossed about by ACS officials.\r\nThey provide no compelling evidence for the charge.\r\n\r\nInstead, ACS officials, including Madonna, make associations. For\r\nexample, Madonna labels Bennett an \"ultraconservative\" who lives and\r\nworks in Virginia, which Madonna considers to be a \"tobacco state.\"\r\n\r\n\"Part of his motivation,\" Madonna says, \"is to protect the tobacco\r\nindustry.\" Madonna claims the economist and his university receive\r\ntobacco-tainted money.\r\n\r\nACS headquarters in Atlanta, meanwhile, points to Bennett's association\r\nwith a Washington, D.C., think tank called Capital Research Center as\r\nevidence that Bennett is being paid by the tobacco industry to\r\ndiscredit the cancer society and other charities that campaign against\r\nsmoking.\r\n\r\nThe ACS says Bennett is a board member of Capital Research Center,\r\nwhich receives \"substantial\" contributions from Philip Morris\r\nCompanies, Inc.\r\n\r\nCapital Research president Terry Scanlon, however, says Bennett has\r\nnever been a board member of the think tank, although the group\r\nfrequently publishes his work.\r\n\r\nScanlon confirms that Philip Morris contributed funds to the\r\norganization, but says it amounts to less than 1 percent of the group's\r\n$1 million in contributions.\r\n\r\nEven though ACS officials continue to suggest a Bennett-tobacco link,\r\nthe organization has acknowledged in writing that Bennett is not under\r\ntobacco's thumb.\r\n\r\n\"We do not believe that Bennett's opinions or activities are inspired\r\nor directly controlled by tobacco companies--but they must certainly be\r\napplauding them,\" Steve D. Dickinson, the American Cancer Society's\r\nvice president of public relations, wrote last December 27 to a\r\nconcerned contributor.\r\n\r\nThe ACS-Arizona division is always looking for new sources of revenue.\r\nThe last few years have seen individual contributions from donors\r\ndecrease, although contributions from all sources have risen because\r\nthe division has received out-of-state foundation grants.\r\n\r\nACS-Arizona is not alone in feeling a contribution pinch. Many\r\nnonprofit organizations have reported a decline in contributions, some\r\nas much as 25 percent.\r\n\r\nThe cancer society didn't have to look far to find a possible pipeline\r\nof future revenue. Four years ago, California passed a 25-cent-per-pack\r\ncigarette tax that has had a profound impact.\r\n\r\nThe tax has also raised tens of millions of dollars per year for\r\nantismoking campaigns, triggering a titanic struggle for control of the\r\nfunds.\r\n\r\nAlthough the cancer society has not taken California tax money, other\r\nmajor charities--including the American Heart Association and the\r\nAmerican Lung Association--have dipped into the tax pool, Bennett says.\r\n\r\nEarly last year, the ACS-Arizona division joined forces with the local\r\ndivisions of the heart and lung associations a<\/p>\n","contact":"freee95@yahoo.com","link":"","address":"","phone":"","parent_id":0,"mime_type":"text\/html","summary":"The American Cancer Society spends most of its donations on lavish salaries, expenses, investments, retirement plans, PR campaigns, political lobbying etc. Little left for cancer victims.","numcomment":0,"fileurl":"\/uploads\/2001\/10\/the_acs_ri.html","filesize":"24.9 kibibytes","article_url":"\/news\/2001\/10\/12534.php"},"attachments":[],"comments":[]}