By Amy Silverman
By Olivia LaVecchia
By Monica Alonzo and Stephen Lemons
By Chris Parker
By Michael Lacey
By Weston Phippen
To retain its nonprofit status, The Open Door Shelter is required to report its income and expenditures to the Internal Revenue Service every year. Beyond that, the organization has no accountability to anyone except its board of directors. And that can be dangerous, charity watchdogs warn.
Rick Moyers, a spokesman for the National Center for Nonprofit Boards in Washington, D.C., says it's common that a charismatic leader will start a charity and pull in vast sums of money.
He says, "That leader often goes out and recruits the board of directors from scratch and that leader is the primary person who has the vision and puts the energy into making the organization go, and I think the board then defers to that person."
That is precisely what happened in the case of The Open Door Shelter. All three board presidents--founder Lola Laswell-Daniels, Audrey Rounding and Janice Goldstein--appointed friends and associates to the board.
Because the shelter has only accepted private donations, there has never been any oversight from the state Department of Economic Security or other agencies that usually monitor such facilities.
Moyers says the IRS has the ability to revoke an organization's nonprofit status, but it happens rarely. "We're talking a couple of organizations a year out of 300,000 to half a million charities in the country," he says.
In 1994, according to its unaudited financial statements, The Open Door Shelter spent $191,000 on program services and $161,000 on fund-raising costs. Observers say this is an outrageous--albeit legal--ratio.
There is no state or federal law--including tax laws--that limits what a charity can spend on fund raising, says Betty Vermillion, the coordinator of charitable solicitations and marketing programs for the Arizona secretary of state.
Discerning givers can investigate a charity before making a donation.
The Better Business Bureau keeps tabs on local charities. Karon Krause, the Arizona BBB's director of Business and Charity Research, says The Open Door Shelter is not in good standing because it has not submitted audited financial statements.
The bureau requires that at least 50 percent of a charity's total income be devoted to an organization's programs. No more than 35 percent should be spent on fund raising.
"We had some suspicious calls on Open Door over the years," Krause says, adding that none of the complainants "would put anything in writing--I don't know what they're afraid of."
Another way to monitor a donation is to contribute to a United Way agency. Charities must submit audited financial statements to qualify for funding through the United Way.
But United Way donors can choose to go outside the list of United Way-sanctioned charities and donate to any human-service charity in the Valley. In 1994, Open Door received about $3,500 from the United Way in just that fashion. United Way officials say they warn donors that outside charities are not monitored.
One former Open Door employee says the lack of oversight has driven her from charity work forever.
"I will pose naked on the cover of your newspaper if I ever get back into nonprofits," she says. "There's no way."--Amy Silverman