Scam PACs fund their fundraisers
I mentioned a few months ago that the Service should interpret the private benefit rule to prohibit the use of revenue sharing with fundraisers and the charities for which they raise funds. Fundraisers should be paid a flat fee not a percentage of what they raise without an absolute cap. Perhaps a bonus for milestones reached, but the bonus needs to be capped at an amount certain falling within the range of reasonableness. Otherwise it is too often the case that most of what is raised on behalf of charity or other exempt organizations goes into the pockets of the fundraising outfit. This seems like low-hanging fruit that ought to be picked forthwith. Maybe its not such a big problem now on a macro level but when it gets to that point, it will have a negative impact on consumer confidence and depress donations across all sectors within Civil Society. And I should know, I’ve stayed at plenty of Holiday Inns.
ProPublica is out with an expose on “scam PACs,” organizations that exist only to raise money the overwhelming part of which is used to fund for-profit businesses. Here is an excerpt:
The American Breast Cancer Coalition, for example, has taken in nearly $9 million from donors since 2019 and has spent less than half of 1% of that on “voter advocacy and outreach.” The rest of the money — millions of dollars — goes to companies with names like Action Committee Marketing, Capital Vendor Management and Berkenbush’s Office Edge. Berkenbush’s company pulled in $222,000 just from this one organization.
The network has paid millions to a handful of other vendors, including one of Berkenbush’s former colleagues at Outreach Calling, whose company brought in more than $3.4 million in expenditures. He and his firm did not respond to requests for comment. Another man, Alan Bohms, was paid more than $575,000 by the American Breast Cancer Coalition through a company he controlled named Campaign Marketing Inc., which also did business under the names Insight Data Management and Prestige Tax & Payroll. The company has taken in close to $1.5 million from the network of nonprofits ProPublica identified. Bohms was not a member of Outreach Calling or subject to the FTC order, but he has previously paid the company millions to fundraise for one of his nonprofits. In an email, Bohms defended the money that the groups spend on fundraising, writing that the phone calls are central to “educating and engaging the community about the PAC’s mission and objectives.”
Bohms’ family members also appear to help run the nonprofits that pay his companies. His sister, Julie Forsythe, is listed as the treasurer of the National Cancer Alliance, which “works to establish the end of childhood cancer by making it a state and national priority.” Another organization, the National Coalition for Disabled Veterans PAC, reports its treasurer as Bohms’ aunt, Judith Gragert. In the last five years, these two organizations have raised over $7 million from more than 700 donors around the country.
Like all of these groups, neither used much of the money they raised in support of their stated efforts. Effectively all of the expenditures that both groups reported were for either fundraising or other administrative costs. Together, the organizations paid more than $300,000 to Campaign Marketing Inc., the company owned by Bohms.
darryll k. jones