Uncharitable charges

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.

The large fleet of cars the society owns, Ingram says, is necessary in a state as big as Texas.

Rather than parceling out money to individual cancer victims for treatment, Ingram says, the society must use its limited resources to serve as a "catalyst" for research, public education, and lobbying for such things as higher cigarette taxes.

"If we gave individuals financial aid, we wouldn't be able to serve 10 percent of [the number now]," Ingram says. "It's a decision of how we can help the most people with the resources we have. We would like to be all things to all people, but that's just not possible."

The National Charities Information Bureau, a New York-based private watchdog group that monitors organization finances and helps donors weed out the bad charities from the good, has regularly given the Cancer Society's fiscal practices a clean bill of health.

Daniel Langan, the watchdog bureau's director of public information, says Bennett is out of line in how he reads the financial numbers.

"It's just not accurate," Langan says. "According to Bennett, no salaries can be counted as being program services, and they very definitely are."

Large charities like the cancer societies, Langan says, need large adequately paid staff to manage and coordinate their programs.

"I don't look at it as perpetuating a bureaucracy," he says. "You have to figure out how you are going to spend your money. Suppose you had a cancer charity where someone threw darts at a board to see who would get grants? You would have an organization where everything would be 'program costs.' But would that be smart?"

Although Langan says the Cancer Society generally meets national standards for financial reporting, Bennett says those standards themselves are "fantasyland."

If salaries are counted as direct services to the public, Bennett points out, then if the cancer society doubled all its salaries, on paper it would appear to have doubled its level of service.

"What I'm trying to do is simply to assess these organizations based on what they claim to be doing in their fundraising vis a vis what they're actually doing," Bennett says. "If there was less of a gap between the fundraising rhetoric and the reality of their programs, I don't think I'd have anything to say."

There is little question that cancer society officials would like Bennett to shut up. Ingram and others infer that Bennett is somehow tied to the tobacco industry, although they concede they have no proof of that. Bennett denies any connection whatsoever to the tobacco industry.

Ingram and other society officials point to an incident in Bennett's office as proof of his unreasoned hostility towards their charity. Two cancer society officials visited Bennett at his college office while the professor was compiling his research, offering to explain financial documents to him.

During the meeting, Ingram says, Bennett lit up a cigarette. "He blew smoke in their faces," Ingram says.

"Fifty million Americans smoke," Bennett responds. "Senator McCarthy, call your office."

Bennett says he has been called a kook, a stooge, and a hack, among other things. "You might as well throw in that I'm a lousy golfer and I was baptized Presbyterian but don't go to church as much as I should," he jokes.

The point remains, he says, that donors to the cancer society probably don't know what their money is being used for, and how little of it goes to directly help cancer victims.

"I think people, when they give to a charity, expect people who are not as well off as themselves to be helped," Bennett says. "But the primary beneficiaries of this system are the health charities themselves--the executives and staffs. They are the people in control, and they're not going to change a good thing."

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David Pasztor