KNOXVILLE (WATE) – Americans gave more than $300 billion dollars to charities last year and Tennessee is the fourth most charitable state in the country, but not all charities are created equal. A 6 News investigation found one local non-profit is giving very little money to the people it promises to help.
The Tampa Bay Times and the Center for Investigative Reporting reported in 2013 on the 50 worst charities in America. That’s what led 6 News to take a deeper look at Knoxville charities.
After looking at IRS forms for hundreds of charities in our area, we decided to take a closer at the non-profit Heart Support of America.
The organization sits in a non-descript office, tucked away in a shopping center off Tazewell Pike. Founded in 1991, the organization says their mission is “to promote and provide education, financial assistance, aid and support to heart patients with limited or depleted financial resources. To provide grants, commodities and gifts-in-kind to hospices and other health care providers.”
On their website, you’ll find profiles of young children and senior citizens suffering from heart disease. One of those children is Nickolas Flatt who was born with several major heart defects. He and his family started receiving assistance when he was just a baby.
“By helping a little bit with his diapers and formula and things like that, the normal things you have with a child, that freed up some money so we were able to take care of his medical problems,” explained Larry Flatt, his father.
The Flatts live in Nashville and receive a $50 gift card each month from HSA. Nickolas is almost 21 now and his heart is doing well, but he still takes medication for his condition several times a day. The monthly donation helps make a difference in their lives.
Bill payment is just one of the services Heart Support of America says they help with. What we found was very little money actually goes to that service.
We pored over the charity’s IRS forms and what we found was shocking.
In 2012, the most recent year the tax forms are available, Heart Support of America raised $2.6 million using two Virginia-based soliciting companies. They paid those companies a combined $2.4 million dollars for their services.
That means only $135,000 went to HSA.
Related link: Heart Support of America’s IRS 990 Form
“It means they’re not a true charity. Standards from the bureau is 65 percent go to the cause, or you’re not considered a charity,” explained Jerry Tipton with the Knoxville Better Business Bureau.
The Better Business Bureau recommends charities spend no more than 35 percent of their money on fundraising. Heart Support of America paid 95 percent to for-profit solicitors in 2012.
“Most of those [non-profits] don’t solicit locally for obvious reasons. It’s easier to slap their hands if they’re local,” explained Tipton.
We found other cities are putting out warnings for the Knoxville-based charity.
“The BBB wants you to watch out for one of those charities, Heart Support of America,” warned a St. Louis, Mo. news station in 2013.
Related link: BBB warns about organization collecting charity money, keeping 90 percent (KMOV)
KMOV in St Louis warned their viewers after people there received mailers asking for donations.
As we dug deeper into the IRS records of HAS, we found only $64,737 went to assistance to organizations or assistance to individuals. What that means is for every dollar donated, only two cents went to people in need.
“It’s a drop in the bucket. It’s very little,” said Tipton.
The BBB says oftentimes, charities play off a well-known charity, in this case the American Heart Association. We sat down with the Knoxville chapter to talk about how a reputable charity operates.
“We are very proud of our brand and it’s something were very protective over because of the work we do,” explained marketing associate for the American Heart Association Katie Erpenbach.
The American Heart Association spends 12 percent of their revenue on fundraising, making them one of the top-rated charities by the Better Business Bureau.
“We’re very conscious about our donor dollars, and we want to be good stewards of our donor dollars and make sure all of the money we raise, we can put as much of it to towards that cause because that’s what we’re here for,” said Erpenbach.
Much of American Heart Association’s donations come from event fundraisers where as all of Heart Support of America’s come from telemarketers and direct mailing.
Related link: American Heart Association financial information
“We weren’t aware that telemarketers were involved,” said Krys Flatt, who was shocked to hear the percentage of donor dollars that go towards fundraising.
The president of Heart Support of America is Laura Perry of Clinton. We reached out to her for an interview by calling, leaving messages and stopping by her office. She wasn’t available anytime we asked.
She did respond to an email, declining an interview but adding: “We assist heart patients across America in many ways, but our two primary types of assistance are individual and grant assistance. Through our individual assistance we focus on medication assistance but also assist with utilities, housing, nutritional help and many other everyday assistance. Through our grant assistance we help indigent patients through social workers at hospitals across America. We have provided a list of what our grants have provided.”
She did not respond to our questions about why they use for-profit solicitors or what they are doing to deal with the financial situation of the charity.
According to their 2012 IRS forms, the non-profit is operating in the red with a deficit of more than $2 million.
Perry makes a salary of $65,480, or roughly the same amount donated by the organization to individuals and organizations.
With so little money going to heart patients, we wanted to know if this is legal.
“They’re just asking for money and if you want to give it to them, that’s not illegal,” said Tipton.
The Flatts say while they were concerned with what they heard, they have nothing but positive things to say about Perry and HSA.
“We definitely need an organization like Heart Support out there, so hopefully things will get turned around,” said Flatt.
Charities are regulated by the state but there’s little the state can do. A decade ago, the Supreme Court ruled charities could pay for-profit solicitors anything they want because of the First Amendment.
So how can you know your money is going where to help people? Do research.
Charity Navigator is just one of the tools out there that will give you a great picture about a charity.
Related link: Charity Navigator
By typing in a charity, it will give you access to their IRS records which provide you a wealth of information. If the charity makes more than $1 million in revenue, the site will give you an overall score of the charity.
For example one of the exemplary charities in Knoxville is Second Harvest Food Bank. They are rated 66.46 out of 70 in terms of finances, accountability and transparency. It will show you the percentage of what they spend on fundraising and what they spend on program services. They spend just four percent on fundraising, but oftentimes you have to take a deeper look into the IRS forms to get the full picture.
The BBB says the best thing to do before you give is do research online and on the phone. Call the charity and ask straight out what percentage of your donation goes to the cause. Legally they must tell you. If there is hesitation or they don’t provide you their IRS information immediately, take that as a red flag.