Who could have imagined that in the twenty-first century, in a new millennium, humanity would be confronted with even greater global challenges and problems affecting the interests of each and every one of us. Poverty, diseases, violence, religious intolerance, threats of environmental disasters – this is the reality we are facing today. Addressing these problems is our top priority.
Indeed, the general public should be praised for not turning a blind eye. For example, in 2015 alone, private individuals, companies and organizations in US gave approximately $373 billion to charity. Moreover, the lion’s share of the money, $268 billion, came from private individuals*.
A Shadow over NGOs: where the shining of great deeds is marred by Corruption Scandals
The sums are astounding. Statistics show that charity donations amounted to 2.1% of the US GDP in 2015. This is the nationwide figure. The per capita figure makes the scale of this generosity even clearer – roughly $3000 per household .**
The contribution of the general public cannot be overestimated, and donors’ motives are pure – contributing to making this world a better place, helping fellow human beings in need, and supporting local communities. А survey found that 63% of individuals who had given significant amounts to charity indicated that their key motive was ‘giving back to the community.*** In 2015, most of the money was given to causes associated with religion (32%), education (15%), social services (12%), grantmaking foundations (11%), and healthcare (8%).****
United around benevolent causes, millions of people entrust billions of dollars to organizations, institutions and foundations, such as NGOs, whose mission is to support the needy and address the most pressing existential problems of our societies. Unfortunately, the motives of those who manage the money are not always so laudable. Financial distribution mechanisms are often opaque and sometimes even flagrantly illegal.
One of the most striking examples is the American Red Cross, an organization with an extremely important humanitarian mission to protect and assist the most vulnerable. Its accomplishments cannot be overstated. In 2013, the American Red Cross delivered various types of assistance to 1.3 million victims of floods, droughts, and military conflicts in 24 countries, according to the organization’s official data.But can we trust the data? Alas, now, only to a limited extent. In their 2015 report, NPR and ProPublica probed the integrity of one of the most famous Red Cross operations – assistance to survivors of the 2010 Haiti earthquake. As part of this campaign, the Red Cross raised over $488 million to build housing for the victims.
The charity’s published data shows that over 130,000 people received housing. However, ProPublica discovered that only six temporary houses had been built on the island. The Red Cross had carried out construction and restoration work, but on a significantly smaller scale than originally announced. In its subsequent statements, the American Red Cross specified that it didn’t intend to build new houses for 130,000 people, and was only trying to help them by building houses and temporary shelters.
Either way, the Red Cross chose not to disclose the details of the charitable operation in Haiti, which had cost hundreds of millions of dollars. But the ProPublica report shows that less money reached those in need of help than the Red Cross claimed.
The report concludes that it is unclear where almost half a billion dollars were spent, but the organization itself saw the tragedy in Haiti as a ‘spectacular fund-raising opportunity’.*****
Another outrageous, and possibly even more cynical, case of misused public donations was committed by the Cancer Fund of America and a number of affiliated organizations.In 2015, the US Federal Trade Commission filed a complaint against a group of US cancer charities, charging the organizations with misuse of donations raised to assist cancer patients.
The Commission’s data showed that out of the total $187 million raised in donations, only 3 percent was spent on chemotherapy and drugs for patients, outpatient treatment, pain medication for child patients, or palliative care programs for terminally ill patients.
А large part of the money, if not the vast majority, was squandered and assisted only those behind the sham, including the Fund’s president James T. Reynolds Sr., his ex-wife and son. This family had no qualms about spending the donation on lavishing themselves with six-figure salaries, buying luxury vehicles and cruises, or on paying for their children’s college tuition. The fraudsters also spent a large part of money that had been raised to attract further donations.
People were convinced that they were helping cancer patients, but instead their money went to pay for the carefree life of the Reynolds family and their associates.
It is deplorable that someone could treat such lofty goals as combating a deadly disease and providing disaster relief as nothing more than get-rich-quick schemes and opportunities to score political points.
Another important cause is ending poverty: it also turned out to be too valuable an opportunity not to be abused for private profiteering. For example, in 2014, William E. Rapfogel was found guilty of stealing more than $9 million from the Metropolitan Council on Jewish Poverty, a charity he had run for over twenty years. Along with other top managers, Rapfogel had been involved in a complex scheme to systematically pad insurance payments and split the surplus with the insurers. A very effective strategy to combat poverty, is it not? At the very least, a handful of people became noticeably wealthier.
Yet it has hardly helped to eliminate Jewish poverty. Unfortunately, the Metropolitan Council on Jewish Poverty is not the only organization tasked with defending the interests of an ethnic community, in fact of a people, that has strayed far away from its mission.
Another such vivid example is the oldest and most famous such organization: the World Jewish Congress.
The WJC claims to represent the whole spectrum of diverse world Jewry and have no political affiliations. However, its history, particularly more recently, fails to back up these claims.
Ronald Lauder, the WJC’s current president, came to power under the motto of ‘turning around’ the Congress, moving away from internal political and financial conflicts to start genuinely defending the vital interests of the world Jewry.
However, experts conclude that his almost ten years of leadership have failed to revitalize the WJC. A long trail of financial and corruption scandals (including involvement in real estate schemes in Hungary and money-laundering through mass media companies in Romania) that has followed Mr. Lauder is not helping the Congress to address its challenging tasks. Besides Lauder, Mr. Robert Singer, the WJC’s Executive Vice-President, who manages its cash flows and effectively runs the NGO’s operations, was also allegedly involved in a number of corruption scandals.
Lack of transparency and democracy in the Congress is also cause for concern. In contrast to Lauder’s election campaign promises, the WJC is yet again sliding into secrecy, opacity and internal squabbles; not the norm for Jewish organizations and community associations, which are usually fairly democratic. It’s hard to fathom that the WJC, which claims to be the leading and most representative organization of the Jewish community, doesn’t publish any reporting on its activities. Yet, paradoxically, this is the case. This inevitably raises many questions, because the most obvious explanation for the lack of any reporting is the pursuit of personal interests rather than those of the community, or the misuse of resources.
It goes to show that many NGOs, which are expected to exemplify properly governed institutions and set the bar for performance and openness, are highly flawed in practice. Inevitably, these failures have consequences. As the cases of the cancer charities, the Metropolitan Council on Jewish Poverty and the WJC demonstrate, when leadership appointment and decision-making systems fail to meet standards of openness and democracy, numerous opportunities appear for misuse and the pursuit of personal lucrative interests.
By raising the bar high and promoting democratic values, NGOs commit themselves to principles of transparency, and a responsibility to maintain impeccable reputations and run clean operations. If they do, no donor for benevolent causes need harbor concerns about how their money will be spent. When global values are at stake, even the shadow of a doubt is too great.
* Giving USA 2015
** The Center on Philanthropy at Indiana University
*** The 2014 Bank of America Study of High Net Worth Philanthropy conducted by the Center on Philanthropy at Indiana University
**** Giving USA 2015