By Ray Stern
By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
But Heywood defends the charity purchases as legitimate, saying that she was given an award for her community service by the Crohn's and Colitis Foundation (she was one of seven local women honored), and that a $1,000 donation to the Parkinson's disease Fight Night went directly to service animals, rather than to tickets at the Fight Night event.
In any case, the board apparently never voted to allocate the money. Susan Heywood says she has discretion to spend up to $5,000 at a time. That's written in Scratch & Sniff's "policies and procedures," she says. She refuses to provide a copy to New Times.
The final straw for Gustafson came, she says, when she saw a letter Heywood had written to PETsMART on June 19, soliciting funds. In the letter, Heywood claims that 70 percent of Scratch & Sniff's funds go back into the community.
In a vaguely worded letter dated June 28, Christine Gustafson resigned her position on the Scratch & Sniff board.
"I've been around for a long time and I've looked at a lot of books," she says now. "I've never seen anything as slipshod and as Worldcom as this. I've never seen another charity run as badly in my whole life."
Keely Moran's resignation letter, which followed on July 11, was not at all vague.
Susan Heywood says that Moran was asked to resign her seat on the Scratch & Sniff board because she had agreed to join another animal rights board, but Moran tells New Times she was never asked to resign.
Moran refused to answer further questions, but her letter clearly states her position. Moran reiterates her concern that only about $200,000 of Scratch & Sniff's $650,000 was donated directly to animal charities. She questions the organization's education goal and the justification for $115,000 in salaries to Heywood and an assistant.
Moran also questioned why it cost $111,000 to produce a 10-minute video and a newsletter. And she expressed concern regarding a donation from Kax Herberger. Herberger had donated $136,000 in 2001.
Susan Heywood tells New Times that money was to be used first to produce a newsletter, and then for the organization's "public information and education" goal. Gustafson and others say that Heywood told them at a board meeting that $100,000 of the money was to be devoted to her salary. And the June 19 PETsMART letter mentions that her salary is coming from restricted money, although it does not mention Herberger by name.
The day after Moran resigned, Judd Herberger, Kax's son, who'd caught wind of the controversy, sent a letter to Heywood making clear the money was not necessarily intended for her salary. "The reasoning behind the $136,000 was that $36,000 was to be used to launch your newsletter and that $100,000 was to be used for the general funding of purposes determined by your board in its normal course of its operation."
Judd Herberger, who provided the letter to New Times, says Susan Heywood didn't understand the letter.
"Susan called me and said, 'Explain it to me,' and I said, 'Read it three times.'"
Kari Crown says she resigned her seat in mid-July. But again, Heywood wouldn't let her go so easily. Her resignation letter finally went out on September 10.
Moran and Gustafson's questions provided the board with the perfect opportunity to delve into problems and make the organization even better, Crown wrote. "I saw instead a lot of private correspondences, spin control and more importantly the board was never called together [to] discuss the very serious chain of events. I have made it clear that Susan's censorship and very public chastising of Keely were not befitting an executive director of a public charity."
Keely Moran's resignation from Scratch & Sniff is perhaps the most significant, since her husband is Bob Moran, president and chief operating officer of PETsMART. Scratch & Sniff has a request pending with PETsMART's foundation for a large grant. PETsMART has requested an independent audit of Scratch & Sniff's finances -- a typical request in such cases, Susan Heywood says.
The Heywoods are eager to see the audit, which they say should be ready next month.
The former board members are just as eager.
Other than some filing requirements, there's very little regulation of charities in Arizona. There's no agency that routinely audits or checks into how charitable donations are collected or spent by a nonprofit organization like Scratch & Sniff.
Anyone with a concern can file a consumer fraud complaint with the state attorney general. But often the fraud never comes to light.
And nonprofits can get away with a lot, under the law. Three times, the United States Supreme Court has ruled that nonprofits can't be forced to pass on a certain percentage of what they take in, leaving it to the charity to decide how much it needs for administrative costs and overhead.
Several watchdog groups have suggested guidelines for donors who want to make sure their money is actually getting to the group that needs it. The Better Business Bureau Wise Giving Alliance recommends that fund raising and administrative costs should not exceed 50 percent of the total amount raised.
Valley of the Sun United Way, for instance, says it passes on 90 percent of the money it collects to the organizations it funds, spending only 10 percent on administrative costs. United Way, like Scratch & Sniff, exists mainly to raise money and pass it on to other organizations.