Questionable Indian Charities

Do the Research Before You Give!

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by RICK WILKING/REUTERS

They target well-meaning Americans with direct mail and telephone calls describing conditions of poverty, hunger and despair in Indian country. Inevitably, the pitch ends with a plea for potential donors to open their hearts and wallets to a charity or relief organization that claims to address these dire conditions. But donors should be wary of a growing number of charities that purport to alleviate poverty in American Indian communities but instead use donated funds to stuff their own coffers. 

"There are many, many non-Indian operations that use Indians as a way of garnering revenue," says Jerry Reynolds of the First Nations Development Institute, a Fredericksburg, Virginia-based nonprofit. The number of Indian-themed charities has been increasing steadily over the past 10 years, and the money has been flowing to non-Indian organizations in record amounts. 

Charitable organizations are latching on to Native American causes because they are an easy sell. Americans feel guilty about their nation's treatment of Native peoples, and they give money with the intention of correcting history's wrongdoings, says Daniel Borochoff, president of the American Institute of Philanthropy. "These charities exploit the tremendous reservoir of goodwill that exists worldwide for Indian people," agrees Vernon Bellecourt, an American Indian Movement leader. 

The location of reservations in America's rural outposts keeps shoddy charity programs hidden from scrutiny. "There are so many needs out there that it leaves the door open for opportunistic ventures. There's a lack of oversight from the funding agencies to see if these groups are legitimately serving native communities," says Donna Chavis, executive director of Native Americans in Philanthropy, a North Carolina-based advocacy group. 

American Indian communities are among the nation's poorest, so donated goods and services are usually welcomed regardless of how they are obtained. "People aren't knowledgeable about the full amount that's being raised. It's real difficult when you're dealing with any kind of poverty stricken area; any kind of assistance is looked at as very beneficial," explains Ken LeDeaux, a former business manager for the Rosebud Sioux tribe who says he keeps a close eye on charity activities in the area. Shady operations also may proliferate because government oversight of charities is sorely lacking. The Supreme Court has forbidden states from setting limits on what percentage of a charity's contributions must be spent on programs, and the majority of charities have gross receipts of less than $25,000--making them exempt from releasing their tax information to the public. For that reason, the inner-workings of two-thirds of American charities remain a mystery.

One rogue charity, the Rapid City, South Dakota-based American Indian Relief Council (AIRC), gained notoriety in the early '90s when it was accused of dumping useless textbooks and outdated gardening seeds on the Sioux reservation as part of its relief program. One of the AIRC's largest services was its employment-training program, which consisted of hiring Native Americans to make fundraising calls. Employees blew the whistle on the organization's dubious fundraising pitches, which they said were manipulative exaggerations and lies. They complained that the money the AIRC raised for Native Americans wasn't making it to the reservations. 

Eventually the Pennsylvania Attorney General's office sued the AIRC in 1993 for lying to donors about certain reservations, claiming they were hit by catastrophic natural disasters and needed funds to prevent famine and death. The lawsuit also charged that the AIRC overvalued the prices of goods it donated to tribes--like the expired seeds--listing them at market value. In 1999, AIRC President Brian Brown settled the lawsuit and agreed to pay the state $350,000. 

But instead of shutting down the AIRC, Brown--who had previously been sued by the attorneys general of Connecticut and Pennsylvania in 1991 for inflating commodity values and deceiving donors--discreetly downsized the group's South Dakota operations and shifted its focus to the American Southwest. The AIRC has been born anew under a different parent organization, National Relief Charities (NRC), which operates two new subsidiaries--the Council of Indian Nations and Southwest Indian Relief--in Apache Junction, Arizona. Brown keeps a low profile in his current office, tucked away in a nondescript industrial park outside of Portland, Oregon. 

However, the charity's makeover is entirely superficial. The NRC is still distributing a pitiful portion of its revenues to the constituency it purports to serve. According to the NRC's 1999 federal tax filings, it earned more than $8.3 million in donations last year, but only 30 percent was spent on programs. In contrast, Brown's salary has hovered at about $120,000 for the past two years. The National Charities Information Bureau, an Arlington, Virginia-based watchdog group, suggests charities should spend a minimum of 60 percent of total expenditures on programs and services, with the available balance going to fundraising and administration. 


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From CharityWatch.org
Indian Charity Accused of Lying 

The American Indian Relief Council (AIRC), AKA National Relief Charities, and codefendants last year entered into a $395,000 consent agreement with the Commonwealth of Pennsylvania to settle allegations that "they intentionally exploited the plight of Native Americans to obtain donations–and then used the contributions to primarily benefit certain officers and directors of the charity," according to Attorney General Mike Fisher. 

The state accused the charity of using false claims in its mail solicitations during July 1991 to December 1993. A.G. Fisher, in a news release last June declared: "We contend that this organization's intent was to deceive potential donors and play on every human emotion imaginable to extract dollars. Consumers were told that Native Americans, on several South Dakota reservations, were suffering from widespread famine and other life threatening conditions that we determined either never existed or were greatly exaggerated." 

In the consent agreement AIRC and its codefendants admitted no wrongdoing but are required to: 

1) Pay $350,000 in restitution, $15,000 in civil penalties, and $30,000 for the cost of the attorney general's investigation,
2) Maintain an autonomous board of directors, and
3) Maintain AIRC's existing level of program services benefiting Native Americans in South Dakota, in addition to the restitution mandated. 

AIRC President Brian J. Brown told AIP that the consent agreement speaks for itself and that AIRC continues its relief activities in compliance with the agreement. He also said that it was "nice to win that case." 


Mark Pacella, chief of the Attorney General's Charitable Trusts and Organizations Section, reported that AIRC paid $175,000 of restitution after the agreement was signed last summer. His office distributed the funds to relief programs in the Pine Ridge, Rosebud and Cheyenne River Sioux Tribe reservations in South Dakota. The distribution of the money falls within the scope of AIRC's charitable purposes, Pacella said. The remaining $175,000 in restitution is due this summer. 

AIRC's direct mail solicitations did change after the consent agreement," Pacella told AIP. Pacella added that AIRC is "doing a better job now. Our case in no small measure contributed to this." A.G. Fisher in his office's June release said, "Our legal action has stopped this charity from using half-truths and outright lies to obtain donations and has resulted in increased funding for Native Americans living on three reservations in South Dakota." 

When asked about the term "widespread famine" that A.G. Fisher said the charity used in solicitations that triggered the Pennsylvania suit, Brown replied that its meaning depends on the definition of hunger. When AIP pressed on other elements of the agreement and AIRC's current operations, Brown ended the conversation, saying, "I'm busy." 

AIRC states in it IRS Form 990 that its primary purpose is "To focus public attention upon the needs, concerns, and conditions of those people in need." This charity receives an "F" grade from AIP because in our opinion in 1998 it spent only 34% of its budget on program services and spent $62 to raise each $100 of contributions.


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December 15, 2000
Charity Scams: Making Big Business Out of Native American Poverty

by Koren Capozza
special to COLORLINES magazine and www.colorlines.com 

As Christmas season approaches, charities are gearing up for a holiday push in fundraising and American households will soon be bombarded with direct mail and telephone solicitations asking them to donate dollars to various causes. But donors should be wary of a growing number of charities that purport to alleviate poverty in Native American communities but that instead use donated funds to stuff their own stockings.

This practice became apparent to Eleanor McMullen, chairwoman of the Port Graham tribe in Northern Alaska, when she learned that 1,000 pounds of beef liver were en route to her tiny coastal village. The donation was made in 1991 by American Indian Heritage Foundation (AIHF), a charity in Falls Church, VA, which had solicited funds on behalf of the Port Graham tribe but had not consulted with the Port Graham people.

McMullen was offended and demanded that the beef be returned to sender. "We weren't looking for any donations, we were just trying to adjust to being without what we normally have." The Port Graham Aleuts were hard hit by the Alaska oil spill that year. "I found out that this occurred amongst many people and that a lot of that money went to [the AIHF president's] program, her wage, her staff."

My investigation showed similar dubious practices by the National Relief Charities, the Native American Heritage Association, the Southwest Indian Foundation, and the Southwest Indian Children's Fund.


For Sale: Native Poverty

The incident at Port Graham is not, unfortunately, an isolated one. "There are many, many non-Indian operations that use Indians as a way of garnering revenue," says Jerry Reynolds, associate director of information services for the First Nations Development Institute, a Fredericksburg, VA-based non-profit organization.

Ken LeDeux, a former business manager for the Rosebud Sioux tribe, says he keeps a close eye on charity activities in the area. "It's real difficult when you're dealing with any kind of poverty-stricken area," LeDeux says. "Any kind of assistance is looked at as very beneficial." But charitable organizations are latching on to Native American causes because they are an easy sell, says Daniel Borochoff, director of the American Institute of Philanthropy. Americans feel guilty about their nation's treatment of Native peoples, he says, and they give money with the intention of correcting history's wrongdoings.

"These charities exploit the tremendous reservoir of goodwill that exists worldwide for Indian people," agrees Vernon Bellecourt (Ojibwe), an American Indian Movement leader.

Shady operations may also proliferate because government oversight of charities is sorely lacking. The U.S. Supreme Court has forbidden states from setting limits on what percentage of a charity's funds must be spent on programs. The majority of charities fall into two categories--religious organizations and charities with gross receipts less than $25,000--both of which are exempt from making IRS tax information available to the public. The inner workings of two-thirds of American charities remain a mystery for that reason.


Scandalous in South Dakota

One rogue charity, the American Indian Relief Council (AIRC) in Rapid City, SD, gained notoriety among Sioux activists in the early 1990s when it dumped useless textbooks and outdated seeds on the reservation as part of its relief program. Employees blew the whistle on the organization's dubious fundraising pitches, which they said were manipulative exaggerations and lies. AIRC workers also complained that the money they raised for Native Americans wasn't making it to the reservations.

Eventually the Pennsylvania Attorney General's office sued AIRC in 1993 for lying to donors that certain reservations were hit by catastrophic natural disasters and that funds were needed to prevent famine and death. The lawsuit also charged that AIRC overvalued the price of goods donated to tribes--like the expired seeds--which it listed at market value. AIRC settled in 1999 and paid $350,000 to the state.

AIRC's president, Brian Brown, had been a private accountant for six large national charities. Four of his clients were sued in 1991 by the Attorneys General of Connecticut and Pennsylvania for willfully conspiring to inflate commodity values and deceive donors.

In 1993, when Brown's AIRC scam was laid bare by the media, the charity discreetly downsized its South Dakota operations and shifted its focus to the American Southwest. Today the charity has been reborn under a different parent organization, National Relief Charities (NRC), which operates two new subsidiaries, Council of Indian Nations and Southwest Indian Relief, both in Apache Junction, AZ.


Despite its makeover, NRC is still distributing a pitiful portion of its revenues to the constituency it purports to serve. According to NRC's 1999 federal tax filings, it brought in over $8.3 million in donations last year but only 30 percent were spent on programs. In contrast, Brown's salary has hovered at about $120,000 for the last two years. The National Charities Information Bureau, a Washington, DC-based watchdog group, suggests charities should spend at least 60 percent of donations on programs and services.

Brown's tactics are par for the course among a few other large charities like the Native American Heritage Association (NAHA), a sibling of AIRC.

The couple at the helm of NAHA, Dave and Bernice Myers, were co-defendants in the Pennsylvania lawsuit against AIRC. That's because the Myers actually created AIRC in 1990, then gave it to the board of directors who elected Brown as president. The sweetheart deal guaranteed the Myers a $10,000 "bonus for past services" and a $650,000 award for a contract to deliver future services to Native Americans. No services were ever rendered with that money. Both charities have consistently received failing marks from watchdog groups. One, the American Institute of Philanthropy, gave NRC an "F" grade and NAHA a "D" for its fundraising and service delivery performance.

A former NAHA employee, Dennis Running Shield, told the newspaper Indian Country Today in 1997 that the charity only donated used goods to tribes and that Meyers asked employees to do personal errands for him, like paint his house. A closer look at the organization's federal tax filings for 1999 shows that barely 43 percent of its funds were spent on programs and services. But even this figure is a liberal one--a considerable portion of this amount is spent on salaries, compensation and benefits for NAHA fundraisers and staff. Last year, Meyers took a salary of over $143,000 as president.


Surprisingly, although NAHA and NRC's policies may seem unethical, they're not illegal. That's because charities that distribute donated goods--surplus food, used clothes, textbooks--can count them as a program expense at up to market value according to current regulations. Accounting rules are unclear about how these "gifts-in-kind" should be appraised. Moreover tucking money back into charity operations by shifting fundraising overhead costs into program expenditures is a common practice and does not violate any accounting guidelines. And a 1998 statement of position from the American Institute of Certified Public Accountants allows charities to account for part of their fundraising costs as a program expense if the fundraising material has an educational bent. In this case, some charities say their solicitation pitch educates the public about the situation of poor Native Americans.

Impostors At the Helm

Princess Pale Moon is the personality behind the American Indian Heritage Foundation (AIHF), the charity that sent the unwanted beef liver to Alaska. Pale Moon claims Native ancestry and says she created the organization so that young American Indians wouldn't have to feel ashamed--the way she supposedly did--about their heritage. The only problem is that no records support Pale Moon's claim to be Native American. She's not registered with any federally recognized tribe and was actually asked to leave the 1992 World Expo in Spain by U.S. intelligence when it discovered she was a fraud.

"We remind her that we don't have any royalty," says Vernon Bellecourt. "They've always got to be 'princesses' or something or other. It's a white woman masquerading as an Indian and, of course, she has some Indians on her board to give her a cover."


Pale Moon has nonetheless had a great deal of success as a Native American spokesperson. She sang the national anthem at two Republican conventions and has raised millions of dollars for Native causes. Unfortunately, those causes are often aimed at her own self-promotion. Of the $197,000 AIHF spent on programs in 1998, $24,566 was spent on "TV and public appearances to present cultural values and to educate the non-Indian public of the aspirations and needs of Indian people," according to the charity's 1998 IRS filings.

Religious Charities: The Great Unknown

The inner workings of some Native American charities are a mystery because of federal laws that protect church-related organizations from government meddling. Southwest Indian Foundation (SWIF), a charity in Gallup, NM, is not a church but still doesn't have to make its financial statements available because it was founded by a Catholic priest.

The SWIF raises funds through its mail order catalog, which it says features the arts and crafts of Native artists. In fact, SWIF gives as little as one quarter of the funds it raises to programs, says Borochoff of the American Philanthropy Institute (AIP). The charity received an "F" rating from AIP this year. In 1999, the charity made $12.3 million and says it distributed $7.4 million to charitable causes, but Borochoff says those figures should be taken with a grain of salt.


"They're spending only 33 percent on bonafide charitable programs," says Borochoff, who was able to obtain the charity's 1997 tax information. "They're making a claim that, by selling this jewelry, this is an employment program. They make a claim that they're improving the economy of a poor area that Indians live in by increasing volume at the post office."

Another charity enjoying similar anonymity is the Don Stewart Foundation, an evangelist group that runs several charities including the Southwest Indian Children's Fund (SWICF). A SWICF representative says the charity works primarily with the Gila River tribe near Phoenix, AZ, which is by most accounts an unusual pick for a relief recipient. The tribe is flush with money after it developed two gaming operations, a golf course and a five-star resort hotel. But even more strange is the fact that the Gila River tribal government office doesn't know of the charity. "I haven't heard of that group at all," says Gary Bohnee, executive assistant to the tribal lieutenant governor.

SWICF representatives in the charity's Phoenix headquarters admit that only 15 percent of donations go to programs. So, what happens to the other 85 percent? The IRS wondered the same thing and revoked the charity's tax-exempt status in 1997, citing misuse of funds. Investigators listed a down payment on Don Stewart's house, costs associated with his wedding reception, and expenses to visit former girlfriends as examples of ways Stewart bilked charity funds for personal use. Stewart petitioned the IRS decision and is currently still accepting contributions to the charity.

Give, But Give Wisely

Given the track record of these not-so-charitable organizations, it's easy to become cynical and simply withhold support for charities in general. But before donors turn a cold shoulder to solicitors that come knocking this season, they should remember there are plenty of charitable operations doing important and much needed work on reservations, says Bellecourt. One of the first things to look for is whether the charity makes outlandish claims about the dire situation of Native peoples. "If they're claiming that Indian people and Indian kids are starving or without food, they're probably not legitimate," says Reynolds of the First Nations Development Institute. "There's a great deal of dignity on reservations, and I can't think of a single Native American-controlled organization that would be able to retain the support of its constituents by making claims like these." Donors can also weed out suspect charities by looking at their spending habits, which are listed online by a number of charity watchdogs (see below).

In fact, it's precisely because some charities don't serve the interests of Native Americans that bonafide programs need all the more help. Says Donna Chavis, executive director of Native Americans in Philanthropy, "There's a tremendous need out there and I'm reminded of that constantly by Native people."


Charity Watchdog Groups:

American Institute of Philanthropy
www.charitywatch.org

National Charities Information Bureau
www.ncib.org

Philanthropic Research Inc.
www.guidestar.com


Koren Capozza is a San Francisco-based freelance journalist who has reported regularly on Native American issues for Public Radio International and National Native News. Her writing has also appeared in the Seattle Times, Utne Reader, Salon.com, and the San Francisco Examiner.

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March 12, 2005
Church, school sued by tribe 
By JAN FALSTAD
Of The Gazette Staff 

The Northern Cheyenne Tribe filed a lawsuit in Billings Friday against the Roman Catholic Church and the St. Labre Indian School Educational Association alleging that the school has used the tribe's "plight" and "financial need" to operate one of the most successful fund-raising enterprises in American history. 

Today only a small percentage of students at St. Labre Mission are Northern Cheyenne, the lawsuit said, yet the school continues to raise money by marketing the tribe's poverty. 

Northern Cheyenne President Eugene Little Coyote and the tribal council, which voted unanimously to authorize the lawsuit, allege that the school had "reaped enormous financial revenue and benefit" during the past 50 years. 

"We're trying to make sure there is a more equitable distribution of the funds raised on the Northern Cheyenne reservation," Little Coyote said. 

In just two of the past four years, St. Labre has reaped $57 million while poverty is rampant throughout the reservation, the lawsuit stated. 

The lawsuit filed in Yellowstone District Court was first considered in 1998. 

Billings attorney Cliff Edwards and his law firm are representing the Northern Cheyenne. St. Labre officials could not be reached for comment late Friday. 

"It is not known to the Northern Cheyenne where these tens - probably hundreds - of millions of dollars have gone," the lawsuit stated. 

The tribe is demanding that St. Labre open its books for the past half century through "forensic accounting" and pay all compensatory and punitive damages due under Montana law. 

Other charges against St. Labre and the Catholic Church include:

Trespassing on tribal lands 

Not compensating the tribe for the school's "impressive buildings and facilities" just outside Ashland

Imposing church values and religion on the tribe 

Using without permission "the faces, stories and symbols of the Northern Cheyenne" 

St. Labre Mission School was started on the reservation in 1884 to educate and to help the Northern Cheyenne. The small mission school has grown into a 100-acre modern campus. 

The school raised money through mass marketing. It built a factory at Ashland in the early 1960s where tribal members made plastic items, including Indian dolls and costume jewelry, which were sent to donors. 

The lawsuit names The Roman Catholic Church, the Dioceses of Great Falls/Billings, St. Labre Indian School Educational Association and St. Labre Home for Indian Children and Youth. 

Jan Falstad can be contacted at (406) 657-1306 or at jfalstad@billingsgazette.com

Copyright © The Billings Gazette, a division of Lee Enterprises.