Uncharitable charges

Watchdog reports cancer charity shorts patients

Each year, the Texas branch of the American Cancer Society receives $21 million and change in donations from the state's good citizens--individual and corporate--to fund the fight against one of the nation's leading killers.

Who, after all, can turn their back on cancer victims?
But after the society's expenses are covered, things like salaries, travel and car payments, a bit less money is left to help those actually suffering from various forms of the disease.

About $20 million less.
Although it bills itself as one of the most efficient charities in the country, and therefore one of the most deserving of public support, the American Cancer Society is coming under fire from two economics professors who wonder why a charity with so much money has so little to spare when it comes to helping real cancer victims.

After years of studying large, nonprofit charities, Professors James Bennett of George Mason University in Virginia and Thomas DiLorenzo of Loyola College of Maryland have launched a broadside against the cancer society.

In "Unhealthy Charities," a book published last year and due out in paperback soon, the two men argue that the charity--and particularly the Texas division of ACS--is more adept at filling up its bank accounts and taking care of its employees than getting help to the cancer sufferers who need it most.

"What the cancer society is really good at is raising buckets of money," says Bennett.

Cancer society responses to Bennett's attacks approach paranoia. Officials allege, with no proof to offer, that Bennett is a stooge of the tobacco industry bent on destroying them for no discernible reason.

"We can't really say for sure, but we know his political beliefs differ greatly from those of the people who run the cancer society," says Dan Ingram, vice president for communications of the Texas ACS division. "I honestly feel that he has some unknown agenda."

Not so, Bennett claims. He just wants to know why a nonprofit charity like the Texas ACS division owns more than $8 million worth of office buildings and real estate and has a fleet of 56 Fords. And why the Texas ACS usually has between $8 and $10 million in the bank and can afford to pay six-figure salaries to its top executives.

"They're the ones who go around claiming that they are in desperate need of money for programs and so forth," Bennett says. "My point is, these groups could do a great deal more with their money than they are currently doing."

Central to the dispute is the cancer society's own financial statements, which are read differently by the professor and charity officials.

Nationally, there are 57 divisions of the Cancer Society, including the one in Texas. Each division raises its own money and then funnels about 40 percent of it to the national headquarters in Atlanta. The national office parcels about two-thirds of that out in research grants.

Each division is left with about 60 percent of its money to spend on programs in its area. In Texas, roughly $14 million is left after the 40 percent contribution to national headquarters.

In its annual reports, the Texas ACS would lead potential donors to believe that virtually all of the money goes into programs and a mere fraction is used for overhead and fundraising.

The Texas ACS distributes reports showing that only 16 percent of its total budget--including the money sent to the national headquarters--is spent on "supporting services" like management and fundraising.

All the rest of the money, the Texas division claims, goes into "program services," such as public and professional education, patient services, and community programs.

But Bennett, who studied the financial records of 10 ACS divisions including Texas, reads the same financial statements more skeptically.

Taken together, Bennett says, the salaries and fringe benefits for the Texas ACS' 200-plus employees eat up 45 cents of every dollar donated. Add in travel, car payments, and other expenses, and the actual amount spent on direct services to cancer victims is only 22 cents of every donated dollar.

For the fiscal year ended Aug. 31, 1994, the Texas ACS lists just $934,641 spent on "specific assistance to individuals."

During the same year, in contrast, the agency spent $469,861 on "meetings and conferences," and another $374,770 on what is simply reported as "Other Travel."

What the agency does, Bennett says, is lump its payroll, travel and other overhead costs in "program services," misleading potential donors into believing that ACS uses most of its funding to directly benefit cancer victims.

The Texas cancer society, he contends, has become a self-perpetuating fiefdom more intent on piling up wealth and ensuring its own comfort than serving the needy.

The society's Ingram steadfastly disputes that characterization. Bennett, Ingram says, is oversimplifying the society's operations.

Money for the 14 office buildings and a few parcels of land that the Texas ACS owns, he says, was collected from donors who specified that their money be used for bricks and mortar. In some cases, the buildings themselves were donated, he says.

Giving money to individual cancer sufferers, Ingram says, is not what the society was set up to do.

Rather, its large paid staff is needed to coordinate thousands of volunteers across the state, who sponsor workshops, distribute posters with the warning signs of cancer, encourage youths to avoid smoking, and entreat women to have regular breast cancer exams.

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