Fighting Nonprofit Abuses: CharityWatch’s Top Triumphs

Charity fundraising after the terrorist attack (2001)

How CharityWatch responded: Daniel Borochoff, CharityWatch’s founder, was among the most vocal critics of the American Red Cross following the September 11 attacks, charging that the Red Cross and other charities raised more money than they needed to help victims of the attacks and their families and diverted it to other programs.

How charities and lawmakers responded: A House panel invited Mr. Borochoff to testify at a hearing. Some charity leaders criticized him for fueling a distrust of charities, but the Red Cross asked for his advice when it redesigned its fundraising practices.

Veterans charities (2007)

How CharityWatch responded: CharityWatch (then the American Institute of Philanthropy) issued a report showing that many veterans charities spent only a small percentage of money on charitable programs, while directing big portions to direct mail and overhead.

How lawmakers responded: The House oversight committee conducted an investigation relying heavily on Mr. Borochoff’s research and invited him to testify at a hearing. However, while lawmakers expressed outrage at the hearing, none followed up with legislation or other action.

Central Asia Institute (2011)

How CharityWatch responded: Mr. Borochoff appeared on an episode of the television program “60 Minutes” that raised serious questions about the Central Asia Institute, a charity that builds schools in Afghanistan and Pakistan and was co-founded by Greg Mortenson, co-author of the widely acclaimed book Three Cups of Tea. Mr. Borochoff voiced concerns that Mr. Mortenson was profiting improperly from book royalties and speaker’s fees.

How regulators responded: Montana’s attorney general investigated the accusations and in April ordered Mr. Mortenson to pay the charity $1-million.

Disabled Veterans National Foundation (2012)

How CharityWatch responded: Mr. Borochoff worked with CNN on a story about the Disabled Veterans National Foundation, a charity that has high fundraising costs and spends little of its money on programs for veterans.

How lawmakers responded: The Senate Finance Committee opened an investigation asking the charity to provide information about the money it pays to Quadriga Art, a direct-marketing firm, and its subsidiaries. It cited the group’s F grade from CharityWatch.