Finances With Wolves

Telemarketers rake in millions of dollars by telling donors they're helping Native Americans. But the biggest beneficiary by far is the charity itself.

A few months ago, a telemarketer working out of a west Phoenix office made her pitch to an elderly Pennsylvania woman.

"I'm calling from the American Indian Relief Council," Sharon A. began, her accent straight out of New York City. "Currently, we are working on our food-baskets program. For $35, you will be able to fill a full basket of food for the children . . ."

"You can always send me the information and I'll think about it," the potential mark replied politely.

The gentle rejection left Sharon undaunted.
"Thank you very much," she continued. "The reason we do need a small contribution is that we are a nonprofit organization and, of course, our postage and printing are very expensive. We do get back 85 to 90 percent of your donated dollars back into the program. We're only asking for a contribution of even $15 to defray some of the information we do send you."

That did the trick. The woman promised to send Sharon a $15 check to a post office box in Apache Junction, a town whose name resonates for the uninitiated with images of tepees and smoke signals.

If things went according to plan, the woman received a "gift-reply envelope" with a personalized form letter from the charity's president, Brian J. Brown.

"For a lot of Indian families on the reservation," his note says, "the basic nutritious food we supply is often the first well-balanced meal they've had in weeks or even months. Without the gift you consider, I don't know how we would be able to meet the needs of these people--especially the old folks and children. They're the ones who are hurt the worst by such grinding poverty. Please take a minute now to write your check and send it to the address above. God Bless You."

Most of those contacted don't fall for the pitch, delivered weekdays by 40 or so solicitors (depending on the season) from a nondescript office at 23rd Avenue and Mescal.

But many, many people do make a donation--more than 500,000 in 1995, according to former American Indian Relief Council officials. Federal tax records indicate its parent firm, the nonprofit National Relief Charities, collected $5.47 million last year from citizens convinced they were helping poverty-stricken Native Americans.

The pitches do sound sincere and convincing--the only thing missing is violin music. But the causes they claim to benefit appear to be selected more for their sales potential than legitimate need.

If the charity has accomplished what its salespeople claim, the Virginia-based firm's presence in Phoenix since March 1995 would be cause for pride, not concern. Unfortunately, allege attorneys general in three states and national watchdog groups, National Relief Charities is a scam.

A lawsuit filed in December 1993 by Pennsylvania's attorney general accused American Indian Relief Council and Brian Brown of "exploiting Native Americans in South Dakota and caring Americans nationwide by collecting millions of dollars on the pretext of feeding starving tribes, while pocketing all but about 4 percent of the proceeds."

To be fair, National Relief Charities doesn't strictly serve itself. New Times confirmed that the charity in 1995 sporadically dispensed money, clothing and food to Native Americans on several Arizona reservations.

A spokesman for the Gila River Indian Community says the charity donated about $6,000 for food this year during the federal government shutdown. It also delivered some food and supplies to several remote Navajo communities, an official of that tribe says.

But federal tax documents filed by the charity belie Sharon A.'s promise that "85 to 90 percent" of a donation reaches the needy.

Instead--by National Relief Charities' own filing with the IRS--only about a nickel of every dollar donated to National Relief Charities in 1995 ended up where promised. That's far less than the 60 percent minimum recommended by national watchdog organizations.

An auditor hired by the charity listed its net assets of $1.42 million at the end of 1995. In early 1996, however, National Relief Charities' telemarketers and direct-mail solicitations referred to "our empty warehouses" and to "a major food crisis with the winter that has been so severe."

(New Times obtained tapes of dialogue between telemarketers and potential donors from a former employee of the charity.)

Courts and the accounting industry allow nonprofits great leeway--"a license to steal," says Karon Krause of the Phoenix Better Business Bureau. An example: The U.S. Supreme Court since 1987 has forbidden states from setting limits on what percentage of contributions a charity must spend on programs.

On top of that, savvy nonprofits routinely shift and mask their costs in reports--called Form 990s--they must file annually with the Internal Revenue Service.

It's not easy to assess what a charity truly is up to.
But National Relief Charities' tax filings prove it's not close to meeting the watchdogs' wise-giving guidelines.

"Something's way out of whack," says Ken LaDeaux, business manager for the 18,000-member Rosebud Sioux tribe of South Dakota, which suffers from the nation's highest Indian infant mortality rate, among other woes. "Some fund raising is very ethical. But I tried to get answers from [National Relief Charities] just before Thanksgiving about where their money goes. All I got was an answering machine, man. It's impossible to tell what they're doing."

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This comment is posted by National Relief Charities for clarification and accuracy. ** David and Bernice Myers founded the Famine Relief Fund in Virginia in 1998. It closed in 1990, the same year David Myers started AIRC in South Dakota (SD). He operated as a call center with Native Americans raising funds used in turn to provide services for Native people. In 1992, Myers resigned as President of AIRC on short notice. He brought in Brown as President and took a service contract with AIRC during the transition.

In 1993, the Pennsylvania Attorney General brought a case against Brown, Myers and AIRC by association, related to alleged misuse of funds/payments to Directors and exaggerated claims in fundraising. The settlement agreement in this case clearly states “no finding of wrongdoing” and AIRC incurred no fine. AIRC ended the case by offering a settlement to stop the drain on legal fees – AIRC’s federal 990 form includes this information. However, AIRC asked that the settlement funds be directed to aid specific tribes in need that AIRC was already serving.

The form 990s for the early years show program percentages started high (60%) but declined (40% to 25%) as the organization attempted to expand and in doing so incurred higher fundraising costs. However, at no time was the percent of donations at the 2% or 4% level as mentioned in this article. Nor did the SD office close when the Arizona (AZ) office opened; rather, SD expanded to serve more Plains tribes, even as AZ was growing.

The early 990s also show AIRC served 15+ tribes in the Plains and Southwest. Resources benefited many people and communities – not just a single tribe. AIRC’s early income is also misperceived. AIRC had no gift-in-kind products to distribute at the time; all services were cash-based and income ranged from $1.5 to $5M. Program expenses ranged from about $1 to $1.5M and included job services (10-45% of program expense), self-help programs (housing, gardening, 10-40%), substance abuse (about 10%), and a Native crafts make-sell program (about 10%). Roughly, 45% was grants, 25% specific aid to individuals, 10% substance abuse, 10% crafts and 10% self-help.

Today, AIRC is one of eight programs of National Relief Charities, a 501(c)(3) nonprofit in good standing. NRC is a GuideStar Gold Exchange Member, representing the highest level of transparency, and a Top-Rated Nonprofit. NRC’s headquarters and telemarketing center is located in Texas. NRC serves 65 reservations in 11 states, benefiting 250,000 Native Americans each year. We invite you to review NRC’s 2012 annual reportand form 990 for accurate information and to contact us at 800-416-8102 or if you have any questions.

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