Once they took in cash to help kids with leukemia. Now, a national children’s cancer foundation is being sued for nearly ten million dollars. Worse, they are being charged with fraud. That five-letter word can be the ultimate Scarlet Letter for nonprofits in any industry.
According to allegations from the New York attorney general’s office, the National Children’s Leukemia Foundation raised $9.7 million from donors across the United States. But they spent the lion’s share of those funds on fundraiser salaries, not on cancer research. How much exactly? Well, according to court documents, about 83 percent of all funds raised went to professional fundraising companies hired by the foundation’s founder Zvi Shor.
But the bad news doesn’t end there. Of the roughly 17% left over, the charity spent only about 1% of those funds on direct cash assistance to leukemia patients. All this when the company’s messaging promised to fulfill the wishes of terminally sick kids.
And there’s more. The foundation is alleged to have falsified audit reports, lied about how its donations were being spent and tried to hide the actual destination of the cash flow.
Perhaps the most shameless … according to reports, the founder paid himself an annual salary of almost $600,000 plus another hundred grand toward a pension. Not exactly subtle.
Now, despite the foundation’s attempts to keep these details secret, the information is out and easily accessible online. Donors realize they were duped, and Shor’s in hot water with just about everyone who cares about kids with leukemia.
As the state attorney general begins proceedings to shut down the foundation, the PR fallout is only beginning. National Children’s Leukemia Foundation is far from the only organization that uses fundraisers – who, in turn, pocket the lion’s share of the cash – to keep the money coming in. Still, with all this negative attention and the specifics of the allegations in the case, they may very well become the poster children for this sort of thing.
Still, other nonprofits have faced similar scrutiny and come out on the other side and live to fight another day. But there’s no doubt it will be an uphill battle