Little Money of Children’s Cancer Charity Goes to Main Programs

Since recovering from lung cancer in 1985, Greg Anderson has written more than a dozen books on holistic approaches to fighting cancer and built an international network of nonprofits to help children and adults diagnosed with the disease.

Mr. Anderson formally established his flagship group in 1990 to help cancer sufferers by advancing care that focuses not only on the body but also on the mind and spirit.

Renamed in 2010 the Children’s Cancer Recovery Foundation, its goal is to “assist children under the age of 18 and their families who are battling the hardships of a cancer diagnosis.”

Since 2000, Mr. Anderson has started affiliates in Britain, Canada, France, and Germany, along with an umbrella group, Cancer Recovery Foundation International. His daughter runs a related charity, the Breast Cancer Charities of America, in the Woodlands, Tex.

Mr. Anderson’s charities look very efficient—a virtue he asserted when his Children’s Cancer Recovery Foundation, in Harrisburg, Pa., appeared last year on the New Jersey Attorney General’s top-10 list of most inquired-about nonprofits.

“We take pride in the fact that our sponsors’ donations will be spent on charitable programs as opposed to fundraising or management costs,” Mr. Anderson said in a statement posted on the charity’s Web site last February. The Web site and the attorney general’s top-10 list state that the group devoted more than 81 percent of its $11.9-million budget in 2011 to program services.

But a detailed examination of the Children’s Cancer Recovery Foundation by The Chronicle tells a more complicated story.

Where the Money Went

On its Web site, the children’s cancer charity says its work focuses on three main programs: camp scholarships, financial aid, and a project distributing toys to children in hospitals.

But of the cash it raised from donors, the group spent less than 15 percent on that work, according to its tax returns from 2011, the last year available.

It spent more than five times as much, roughly $3.7-million, on businesses that perform mailings, telemarketing, and other services. Mr. Anderson told The Chronicle that much of that money paid for the companies’ efforts to educate the public about cancer and his approach to battling the disease, which he said is a key part of his groups’ missions.

The bulk of what the Children’s Cancer Recovery Foundation counted as program services in 2011 is based on the value it attributed to two shipments of medicines, totaling $7.1-million, that it says it received from other nonprofits and then sent overseas.

Critics say the group devotes little cash to what it describes as its main programs. It appears efficient, they say, thanks to loose accounting rules that govern how nonprofits record donated medicines in their financial statements and a longstanding accounting principle that allows the charity to include some of its spending on activities that involve both fundraising and education as program costs.

“These groups spend very little money providing care to cancer sufferers,” Daniel Borochoff, president of CharityWatch, says of Mr. Anderson’s U.S. charities, to which his group gives “F” ratings. “Donors would be wasting their charitable dollars if they gave to these groups.”

For-Profit Spending

In an e-mail to The Chronicle, Mr. Anderson said critics like Mr. Borochoff are wrong.

He said that much of his charities’ spending on for-profit companies is key to advancing the groups’ main program goals: educating people about Mr. Anderson’s holistic approach to cancer care and encouraging them to exercise, eat well, embrace a positive attitude, and take other steps to avoid disease.

“Public education is at the heart of reducing cancer incidence,” he wrote. Mr. Anderson added that his organizations are transparent with donors about their medicine program and that his charity accurately valued and recorded its drug donations under accounting principles followed by nonprofits.

His groups stepped up their work sending medicines overseas in 2003 because those programs are critical to his efforts to help cancer patients “without geographical restrictions,” he wrote.

“Using a variety of sources, we confirm values assigned by the donor,” Mr. Anderson said. “These program services do not employ questionable accounting practices nor are these program services done to obscure our fundraising ratios.”

Donated Medicines

The medicine shipments through the charity’s “international aid” project made up nearly three-quarters of the Children’s Cancer Recovery Foundation’s spending on charitable programs in 2011.

Such noncash items, known as “gifts-in-kind,” have been the subject of a growing discussion among aid groups—and increasing scrutiny from regulators because they are difficult to value, and flexible accounting rules have enabled charities to record goods as donations when the groups may play little role in their procurement or delivery.

The children’s group’s donations of medicines in 2011 were:

• Approximately $4.1-million worth of Gardasil HPV vaccines, which the children’s cancer group says it received from a nonprofit called World Help and then donated to a charity in Ghana, the Rural Women’s Initiative for Development and Empowerment.

In an e-mail to The Chronicle, Mr. Anderson said his charity “has complete and audited documentation that these gifts were received directly from World Help.”

He said his charity worked with another group in Ghana, Kibasibi Foundation, and that in November his group’s “representatives met with Dr. Issifu Harruna, president, who reported to us on the distribution of Gardasil to over 33,000 young women in this unprecedented effort to prevent cervical cancer.”

Officials overseeing the Gardasil program in Ghana said they were unfamiliar with Mr. Anderson’s group or the Kibasibi Foundation.

Mariana Rodrigues, an official from Axios, which manages the Gardasil Access Program, said the vaccines were donated directly from her organization to Rural Women’s Initiative for Development and Empowerment. According to an application submitted to her group, a different U.S. group, Catholic Medical Mission Board, helped to oversee the project and also received assistance from “its partner World Help.” She said vaccinations began this month.

Barbara Wright, a spokeswoman for the Catholic Medical Mission Board, also told The Chronicle she was not familiar with the children’s cancer group. She said that World Help has helped her charity with shipping items.

Deb Wambold, a spokeswoman for Merck, the manufacturer of Gardasil, said that besides the Rural Women’s Initiative for Development and Empowerment, “there are no other charities distributing Gardasil in Ghana that we’re aware of.”

What seems to have happened is that a consultant for World Help recorded the goods as donations to his charity and then passed ownership of the items on paper to other groups that may have paid shipping costs.

This fall, World Help ended its contract with Clifford Feldman, the consultant who ran its medicine program, accusing him of grossly exaggerating the value of donated items and recording some gifts from donors who said they never made them.

Vernon Brewer, the nonprofit group’s president, told The Chronicle that Mr. Feldman had transferred goods on paper to other charities in exchange for paying shipping.

Before he stopped working with Mr. Brewer’s group, Mr. Feldman told The Chronicle that accounting guidelines allow nonprofits to account for goods in various ways and that World Help was making every effort to record items properly.

Recording goods as revenue for which a charity’s role is to pay shipping costs doesn’t meet guidelines put forward by the Accord Network, a group of Christian charities.

Accounting guidelines from the Financial Accounting Standards Board say that charities may count the value of goods in their books if they have complete control over where the items will be sent. And in January 2012, the Internal Revenue Service sought to penalize another U.S. nonprofit, Food for the Hungry, over the practice of recording donations it helped to ship and other accounting methods.

Food for the Hungry says it followed accounting practices and is contesting the charges.

Mr. Anderson said his charity had properly recorded the donation. He said that any suggestion that his charity was not involved with the Rural Women’s Initiative for Development and Empowerment or the vaccine program is false.

“Our management and control policies and practices ensure these gifts are properly received, titled, documented, transported, delivered, and ultimately reach the intended recipients—cancer patients in need,” Mr. Anderson wrote.

Kibasibi’s U.S. group did not return calls from The Chronicle.

Another medicine donation:

• Nearly $3-million worth of penicillin and other antibacterial drugs the Children’s Cancer Recovery Foundation says it received from another nonprofit, Global Assistance, in Lake Oswego, Ore.

Norman Young, president of Global Assistance, told The Chronicle that his organization had purchased the medicines from a Dutch drug company, Amstelfarma, which sells pills at rates far below the values at which charities then record them as donations in their books. He said a second nonprofit, Medical Education Training and Development, or Metad, helped to arrange the deal.

The items were shipped to a Honduran charity, Zion Ministries, to which Mr. Young said he introduced the cancer group.

Mr. Anderson told The Chronicle that his charity had recorded and valued the items correctly.

Gifts to Children

When Mr. Anderson started his flagship group in 1990 under the name Cancer Conquerors, its mission was to “provide education, training, and support in mind/body/spirit wellness to cancer patients and family members,” according to its establishing documents.

Today, the group—first renamed Cancer Recovery Foundation of America and in 2010, the Children’s Cancer Recovery Foundation—says on its Web site that it is the “largest supplier of gifts to children with cancer in North America.”

Testimonials on the charity’s Web site from 20 hospitals express gratitude for the group’s gifts of plush animals, video games, dolls, coloring books, and other items.

“Thank you so much for your generosity, especially in a year that has been so economically difficult for everyone,” says a message from Katy Field, a certified child specialist at the Presbyterian Blume Pediatric Hematology and Oncology Clinic.

In an e-mail to The Chronicle, Ms. Field said that her hospital had received several boxes of toys from the charity and that its staff members were “very pleasant.”

Companies that volunteer with the charity helping to assemble its gift bags say they’ve been impressed with the group’s work.

“We felt like we were making a big difference,” said Jennifer Goss, community-relations manager at the Hershey Company, which has given the Children’s Cancer Recovery Foundation $10,000 a year since 2009 for various programs.

After learning that The Chronicle had contacted Ms. Goss, the charity’s lawyer, Seth Perlman, told the newspaper to refrain from calling additional donors and “in any way alluding to information that has defamatory implications.”

“We cannot allow you and your publication to adversely impact sick children,” Mr. Perlman wrote in an e-mail.

Online Application

By contrast, Hannah Nokes, executive director of EZCorp Foundation, said her group’s only contact with the cancer charity had been through fundraising firms.

She said her fund awarded the charity $1,000 last year based on information provided in an online application. But when the foundation tried to deliver the grant money, it could only get in touch with Contract Communications, a fundraising company that had filled out the grant application.

“It was off-putting,” says Ms. Nokes, who says her group will not give to the charity again.

Outside Fundraisers

Mr. Anderson’s U.S. groups rely on businesses to do much of their outreach to donors.

Mr. Anderson said in an e-mail to The Chronicle that such outreach is key to his charities’ missions of helping to reduce the incidence of the disease.

“Winning people to our holistic integrated cancer prevention and recovery programs, then empowering them with the knowledge to act, is a central objective of these marketing partnerships,” he wrote. “We employ 50 or more cancer prevention and survival messages and calls to action that are included in our Community Outreach program.”

The Children’s Cancer Recovery Foundation therefore allocates about 58 percent of its spending on activities that involve fundraising jointly toward its program, management, and general costs, using a longstanding accounting principle known as “joint-costs allocation.”

Nonprofits are permitted to classify expenses that involve some fundraising activities jointly as program costs if the messages are designed to educate and inspire action in support of their mission. Defenders say it can be more efficient for groups to combine multiple goals into a single campaign.

But some watchdogs say the practice can result in a charity’s fundraising costs appearing lower than they would otherwise be and can make it difficult for donors to know how their contributions will be used.

In 2011, the charity spent $3.8-million on activities that involved both fundraising and educational campaigns, according to its tax returns. Of that amount, it allocated about $2.2-million toward program and management expenses and the rest to fundraising.

Robert Tigner, general counsel at the Association of Direct Response Fundraising Counsel, says it’s unusual for a charity to count such a large share of activities that involve fundraising jointly as charitable work. “It’s very aggressive,” he says.

Mr. Anderson said his charity accurately recorded its expenses and that much of the companies’ activities involved education and calls to action, not fundraising.

“Fundraising is often incidental to the educational objective,” he wrote.

Contact With Donors

Some experts, meanwhile, raise questions about the cancer charity’s contract with Associated Community Services.

Under the contract, the cancer group is prohibited from soliciting donors cultivated by Associated Community Services until two years after the contract’s termination, pending written approval from the telemarketing firm.

“I can’t think of any circumstances under which this would be an acceptable deal for a nonprofit,” says Mr. Tigner, who says the terms don’t appear to meet his group’s guidelines for contracts with nonprofits because they give the firm too much control over the charity’s relationship with donors.

Mr. Anderson said his charities’ arrangements with fundraising firms have enabled the groups to build long-term relationships with donors.

“We have been able to negotiate unique agreements with marketing partners that allow our member organizations to deal directly with newly acquired donors,” his e-mail states. “When viewed in total and measured by overall return, we believe that the marketing partner expenses represent a wise and effective investment of resources.”

Started Small

Mr. Anderson’s charity network, known as Cancer Recovery Foundation International, has its roots in his 1984 cancer diagnosis. Told by a doctor that he had 30 days to live, Mr. Anderson says he began “from his deathbed” to seek out other survivors. He soon began promoting proper nutrition and spirituality as ways to fight cancer.

Until the late 1990s, his group was a small organization raising less than $20,000 a year and run by Mr. Anderson and his wife, Linda. In some years, the Andersons did not pay themselves salaries.

In an e-mail to The Chronicle, Mr. Anderson said he “never intended to start an international movement.” But after the 1999 publication of his second book, Cancer: 50 Essential Things to Do, his charity began to receive inquiries from people overseas. The charity first worked with a professional fundraising company in 2000, its tax returns show, and later began loaning money to establish affiliates overseas.

Last year, the most recent for which information is available, Mr. Anderson was paid $171,750 from his Cancer Recovery Foundation International, the umbrella group of which his other charities are members. It reports that he received $6,000 from other affiliated groups.

Breast-Cancer Group

In 2009, Mr. Anderson’s daughter started an affiliated group to take her father’s “integrated care” approach to help people suffering from breast cancer.

On its Web site, the charity says donations will be spent conducting research on the link between breast cancer and nutrition, educating the public and health-care professionals about integrated cancer care, and for a fund that provides food, clothing, shelter, and other aid to women in need.

Like the children’s cancer group, Breast Cancer Charities of America spends most of its cash on for-profit businesses while devoting much of its spending to program services thanks to donated medicines and other supplies it ships abroad.

Donated Goods

In 2011, the group spent 95 percent of its cash on businesses that performed outreach, education, and fundraising, according to its tax returns. Less than 1 percent went to the fund supporting women with breast cancer.

More than half the group’s revenue, $8.8-million, came from the estimated value of medicines it says were sent to Africa and Central America.

The charity did not specify on its tax forms who gave the goods or which groups received them, and it is not required by law to do so. But its 2009 tax filings included additional details.

That year, the Breast Cancer Charities of America says it donated more than $1-million worth of “water-purification systems” and “medical supplies” to another group, Water Missions International. The grant accounted for 92 percent of the breast-cancer group’s spending on program services that year.

In a 2011 report on noncash gifts, CharityWatch, Mr. Borochoff’s group, says the Breast Cancer Charities of America paid $5,000 in shipping costs to send a container that included items from a number of charities, including Water Mission’s purification systems and medicines donated by another charity to the breast-cancer group.

Taylor Hall, a spokesman for Water Missions International, told The Chronicle that the Breast Cancer Charities of America’s role was to assist with shipping freight to Honduras through a for-profit company. The shipment included his charity’s water-treatment equipment along with donated medicines his group’s Honduran affiliate helped to distribute.

Disclosure Rules

Mr. Anderson said the breast-cancer charity properly recorded the transaction.

“In addition to being the shipper, the Breast Cancer Charities was the owner of the water purification system and the medicines,” he wrote to The Chronicle. “Complete records verify this gift.”

While Mr. Borochoff says charities like those established by Mr. Anderson point to the need for more disclosure, the cancer survivor says his groups’ work delivering medicines “is completely transparent to the many proud partners who support us.” He said his charity reached more than 2 million people with its services last year alone.

“We see ourselves as servants to people impacted by cancer,” he wrote to The Chronicle. “We take seriously our opportunities and responsibilities to serve with compassion, hope, and love.”

Doug Donovan contributed to this article.