Who could have imagined
that in the twenty-first century, in a new millennium, humanity would be
confronted with even greater global challenges and problems affecting the
interests of each and every one of us. Poverty, diseases, violence, religious
intolerance, threats of environmental disasters – this is the reality we are
facing today. Addressing these problems is our top priority.
Indeed, the general public should be praised for not
turning a blind eye. For example, in 2015 alone, private individuals, companies
and organizations in US gave approximately $373 billion to charity. Moreover,
the lion’s share of the money, $268 billion, came from private individuals*.
The sums are astounding. Statistics show that charity
donations amounted to 2.1% of the US GDP in 2015. This is the nationwide
figure. The per capita figure makes the scale of this generosity even clearer –
roughly $3000 per household .**
The contribution of the general public cannot be
overestimated, and donors’ motives are pure – contributing to making this world
a better place, helping fellow human beings in need, and supporting local
communities. А survey
found that 63% of individuals who had given significant amounts to charity
indicated that their key motive was ‘giving back to the community.*** In 2015,
most of the money was given to causes associated with religion (32%),
education (15%), social services (12%), grantmaking foundations (11%), and
healthcare (8%).****
United around benevolent causes, millions of people
entrust billions of dollars to organizations, institutions and foundations,
such as NGOs, whose mission is to support the needy and address the most
pressing existential problems of our societies. Unfortunately, the motives of
those who manage the money are not always so laudable. Financial
distribution mechanisms are often opaque and sometimes even flagrantly illegal.
Lately,
we have increasingly witnessed how individual executives exploit public
donations for lucrative purposes. Unfortunately, even those organizations whose
role is unquestionable and whose reputation ought to be impeccable have become
embroiled in corruption scandals.
American Red Cross
controversy
One of the most striking examples is the American Red
Cross, an organization with an extremely important humanitarian mission to
protect and assist the most vulnerable. Its accomplishments cannot be
overstated. In 2013, the American Red Cross delivered various types of
assistance to 1.3 million victims of floods, droughts, and military conflicts
in 24 countries, according to the organization’s official data.
But can we trust the data? Alas, now, only to a
limited extent. In their 2015 report, NPR and ProPublica probed the integrity
of one of the most famous Red Cross operations – assistance to survivors of the
2010 Haiti earthquake. As part of this campaign, the Red Cross raised over $488
million to build housing for the victims.
The charity’s published data shows that over 130,000
people received housing. However, ProPublica discovered that only six temporary
houses had been built on the island. The Red Cross had carried out construction
and restoration work, but on a significantly
smaller scale than originally announced. In its subsequent
statements, the American Red Cross specified that it didn’t intend to build new
houses for 130,000 people, and was only
trying to help them by building houses and temporary shelters.
Either way, the Red Cross chose not to disclose the
details of the charitable operation in Haiti, which had cost hundreds of
millions of dollars. But the ProPublica report shows that less money reached
those in need of help than the Red Cross claimed.
The report concludes that it is unclear where almost half a billion
dollars were spent, but the organization itself saw the tragedy in
Haiti as a ‘spectacular fund-raising opportunity’.*****
Cancer Fund Fraud
Another outrageous, and possibly even more cynical,
case of misused public donations was committed by the Cancer Fund of America
and a number of affiliated organizations.
In 2015, the US Federal Trade Commission filed a
complaint against a group of US cancer charities, charging the organizations
with misuse of donations raised to assist cancer patients.
The Commission’s data showed that out of the total
$187 million raised in donations, only
3 percent was spent on chemotherapy and drugs for patients, outpatient
treatment, pain medication for child patients, or palliative care programs for
terminally ill patients.
А large part
of the money, if not the vast majority, was squandered and assisted only those
behind the sham, including the Fund’s president James T. Reynolds Sr., his
ex-wife and son. This family had no qualms about spending the donation on
lavishing themselves with six-figure salaries, buying luxury vehicles and
cruises, or on paying for their children’s college tuition. The fraudsters also
spent a large part of money that had been raised to attract further donations.
People were convinced that they were helping cancer
patients, but instead their money went to pay for the carefree life of the
Reynolds family and their associates.
It is deplorable that someone could treat such lofty
goals as combating a deadly disease and providing disaster relief as nothing
more than get-rich-quick schemes and opportunities to score political points.
Another important cause is ending poverty: it also
turned out to be too valuable an opportunity not to be abused for private
profiteering. For example, in 2014, William E. Rapfogel was found guilty of
stealing more than $9 million from the Metropolitan Council on Jewish Poverty,
a charity he had run for over twenty years. Along with other top managers,
Rapfogel had been involved in a complex scheme to systematically pad insurance
payments and split the surplus with the insurers. A very effective strategy to
combat poverty, is it not? At the very least, a handful of people became
noticeably wealthier.
Yet it has hardly helped to eliminate Jewish poverty.
Unfortunately, the Metropolitan Council on Jewish Poverty is not the only
organization tasked with defending the interests of an ethnic community, in
fact of a people, that has strayed far away from its mission.
Another such vivid
example is the oldest and most famous such organization: the World Jewish
Congress.
The WJC claims to represent the whole spectrum of
diverse world Jewry and have no political affiliations. However, its history,
particularly more recently, fails to back up these claims.
Ronald Lauder, the WJC’s current president, came to
power under the motto of ‘turning around’ the Congress, moving away from
internal political and financial conflicts to start genuinely defending the
vital interests of the world Jewry.
However, experts conclude that his almost ten years of
leadership have failed to revitalize the WJC. A long trail of financial
and corruption scandals (including involvement in real estate schemes in
Hungary and money-laundering through mass media companies in Romania) that has
followed Mr. Lauder is not helping the Congress to address its challenging
tasks. Besides Lauder, Mr. Robert Singer, the WJC’s Executive Vice-President, who
manages its cash flows and effectively runs the NGO’s operations, was also
allegedly involved in a number of corruption scandals.
Lack of transparency and democracy in the Congress is
also cause for concern. In contrast to Lauder’s election campaign promises, the
WJC is yet again sliding into secrecy, opacity and internal squabbles; not the
norm for Jewish organizations and community associations, which are usually
fairly democratic. It’s hard to fathom that the WJC, which claims to be the
leading and most representative organization of the Jewish community, doesn’t
publish any reporting on its activities. Yet, paradoxically, this is the case.
This inevitably raises many questions, because the most obvious explanation for
the lack of any reporting is the pursuit of personal interests rather than
those of the community, or the misuse of resources.
Given the rapid growth of anti-Semitic
sentiments worldwide, many experts on interethnic and interreligious relations
view the current situation in the WJC as extremely dangerous for world Jewry.
It goes to show that many NGOs, which are expected to
exemplify properly governed institutions and set the bar for performance and
openness, are highly flawed in practice. Inevitably, these failures have
consequences. As the cases of the cancer charities, the Metropolitan Council on
Jewish Poverty and the WJC demonstrate, when leadership appointment and
decision-making systems fail to meet standards of openness and democracy,
numerous opportunities appear for misuse and the pursuit of personal lucrative
interests.
By raising the bar high and promoting democratic
values, NGOs commit themselves to principles of transparency, and a
responsibility to maintain impeccable reputations and run clean operations. If
they do, no donor for benevolent causes need harbor concerns about how their
money will be spent. When global values are at stake, even the shadow of a
doubt is too great.
* Giving USA 2015
** The Center on Philanthropy at Indiana University
*** The 2014 Bank of America Study of High Net Worth Philanthropy conducted by the Center on Philanthropy at Indiana University
**** Giving USA 2015
***** ProPublica
** The Center on Philanthropy at Indiana University
*** The 2014 Bank of America Study of High Net Worth Philanthropy conducted by the Center on Philanthropy at Indiana University
**** Giving USA 2015
***** ProPublica
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