Disabled Veterans National Foundation Under Congressional Investigation
A prominent Washington D.C.-based veteran’s charity, the Disabled Veterans National Foundation, is the subject of a congressional investigation for misuse of federal tax-exempt status. The organization, founded in 2007, came under scrutiny in 2010 after independent charity ratings organization CharityWatch.org issued them a failing grade.
CharityWatch went through the DVNF’s public filings, and reported that almost none of the $55 million-plus donations the charity took in actually went to benefit needy disabled veterans. Instead, CharityWatch says that nearly all the money raised was going to a private vendor, Quadriga Art, LLC. According to CharityWatch analyst, the DVNF’s agreement with Quadriga Art allows Quadriga to keep every dollar it raises for the DVNF until its debts are paid off. And the DVNF still owes Quadriga another $5 million, according to CNN. Which means Quadriga is entitled to keep the next $5 million that the DVNF raises.
Amazingly, CharityWatch says that less than 1 percent of the charity’s 2008 budget actually went to aiding charities. Everything else – 99 percent of the then $16 million budget – went to fundraising and mailing costs, according to CharityWatch, citing the DVNF’s own filings. According to DVNF, the organization’s expenditures on salary and compensation for staff were modest for an organization of its size: $70,750 in 2010, and $208,122 in 2011.
Since CharityWatch’s 2010 report, CNN picked up the story, and discovered that the DVNF had claimed credit for millions in “in-kind” donations of junk and stale candy to other veterans groups – leaving it to these groups to handle distribution.
"Up to $2 billion is raised in the name of veterans in this country and it's so sad that a great deal of it's wasted," said CharityWatch Director David Borochoff in a CNN interview. "Hundreds of millions of dollars of our charitable dollars intended to help veterans is being squandered and wasted by opportunists and by individuals and companies who see it as a profit-making opportunity."
From there, things get pretty weird. CNN documents a claim by the charity to have sent “badly needed items by the truckload” to veterans’ charities that were badly affected by a tornado – a claim that left one local veterans’ charity director baffled:
“They sent us 2,600 bags of cough drops and 2,200 little bottles of sanitizer,” he said. “And the great thing was, they sent us 11,520 bags of coconut M&Ms. And we didn’t have a lot of use for 11,520 bags of coconut M&Ms."
CNN also obtained a bill of lading for another donation – this one to US Vets, in Prescott, Arizona. The contents: hundreds of chef’s coats and aprons, and cans of acrylic paint. According to CNN, the charity estimated the value of the shipment at $234,000. Therefore, it reported an $838,000 contribution to the IRS.
In the wake of the CharityWatch and CNN reports, Senators Max Baucus and Richard Burr, both members of the Veterans Affairs Committee, announced they were launching a Congressional investigation, and posted an open letter to the organization, asking a number of questions about their leadership, activities and financial relationships with board members. Executive director Prescilla Wilkewitz, a politically-connected Viet Nam veteran and former Louisiana state veterans affairs coordinator responded publicly. However, there was nothing in the document that addressed the discrepancy between the assessed market value of their donations in kind and their tax deductions – nor did the document address how it was that hundreds of chef uniforms or hundreds of pairs of Navy dress uniforms could pass as a “badly needed item” or an appropriate and prudent use of donor money.
A representative from Senator Burr’s office was not immediately available for comment, and calls to the Disabled Veterans National Foundation were not returned at press time. However, the DVNF has a history of being unresponsive to press inquiries.
Reporters’ note: Although the DVNF is not talking much beyond Ms. Wilkewitz’s open letter, it appears that the charity, newly formed in 2007 by six women who were also former state veterans issues committee chairwomen, was faced with the daunting problem of how to quickly create a large donor base from scratch. In 2007 and 2008, they entered into a debt arrangement with Quadriga Art, LLC and a few other vendors, who fronted them enough money or services – millions of dollars’ worth – to jumpstart a major national fundraising effort. However, as a severe recession took hold in 2008-2010, the charity’s fundraising efforts foundered on the debt payments. The recession hurt the efforts of many charities, including veterans’ charities. But because the DVNF was very new, and deeply in debt, the economic downturn affected them more severely than it did more established charities. However, no one at the organization was willing or available to go on record to discuss the financial arrangements with vendors in more detail.
This, of course, doesn’t explain CNN’s story on the strange contents of the supply shipments to veterans’ charities in Prescott, Arizona and in Alabama, if accurate.