Senator Wants Inquiry of Charity, Fund Raiser

By Harvy Lipman

An influential Republican Senator who has been raising tough questions about federal regulation of charities

has urged three top Bush administration officials to investigate Children’s Wish Foundation International, a charity in Atlanta, and its telemarketing company, Reese Brothers, of Pittsburgh.

Senator Charles E. Grassley, the senior Republican on the Senate Committee on Finance, asked Attorney General John D. Ashcroft and the heads of the Internal Revenue Service and Federal Trade Commission to look into claims that the charity and its telemarketer engaged in misleading and unscrupulous fund-raising activities.

The request is the latest in a string of investigations Mr. Grassley has requested into federal regulation of nonprofit organizations. In July the Iowa Republican asked the investigative arm of Congress to examine how well the Internal Revenue Service monitors the way charities raise and spend money. The General Accounting Office’s report on that question is expected to be released by the end of this month. The senator’s staff has also been looking into possibly fraudulent charitable activity in the wake of the September 11 terrorist attacks.

In his letter, the senator posed questions specifically to the IRS, asking how many referrals and other complaints it has received from state agencies that regulate charities in the past five years, and what action the IRS took in response; how the service reviews charity informational tax returns; and whether the IRS would support efforts to change federal tax laws to make it easier for federal and state authorities to work together to fight fraud.

In the case of Children’s Wish Foundation International, Mr. Grassley cited charges brought against the charity in October 2000 by the Pennsylvania Secretary of State’s office and information uncovered by the senator’s staff. Pennsylvania authorities have alleged that the charity made false statements on its Form 990 informational tax return significantly overstating the value of in-kind gifts it made to hospitals and other nonprofit groups. The state also has accused charity officials of using donated funds to pay for first-class airfare, luxury hotels, and expensive gifts (The Chronicle,October 19, 2000).

A hearing in that case was held in November and December before an administrative law judge, who will soon receive briefs from lawyers for both sides.

Mr. Grassley said his investigators have also learned of “three instances where U.S. citizens have received telephone solicitations from telemarketers who claimed to be located in the Philippines and who fraudulently misrepresented themselves as affiliated with Make-A-Wish Foundation of America.” When follow-up written material was sent to one of those people, the senator wrote, it came from Children’s Wish International and was mailed from the Pittsburgh address of Reese Brothers. Mr. Grassley added that Make-A-Wish officials say they do not use telemarketers.

Linda Dozoretz, executive director of the Children’s Wish Foundation International, denied the charges. “It’s unfortunate the senator’s office never contacted us or tried to get the absolute facts, because there’s an awful lot of wrong information in his letters,” Ms. Dozoretz said.

Mr. Grassley has asked the IRS, FTC, and Department of Justice either to investigate the allegations of deceptive fund raising and misleading financial reporting by Children’s Wish Foundation International or to explain to the senator why they would not do so. The senator added that last fall he asked the IRS Criminal Investigations unit to look into Pennsylvania’s allegations, but has received no response. Neither the FTC nor the IRS would comment on the senator’s letters.