Watchdog Cites Failures at Charity

President Clinton’s charitable foundation failed to meet at least six of 19 accountability standards established by the Better Business Bureau, according to a recent report from the watchdog group.The report, issued in June, said the Clinton Foundation lacks policies requiring performance reviews for its chief executive officer and for the organization as a whole. The Better Business Bureau review also observed that the foundation’s annual reports and Web site do not contain detailed financial statements or information about the charity’s board of directors.In addition, the bureau’s charity evaluation service, called the Wise Giving Alliance, said it could not establish whether the foundation was observing five other good-governance practices regarding board meetings, conflict-of-interest policies, budget issues, and donor privacy.“There are a number of concerns here,” the head of the alliance, Bennett Weiner, said in an interview. “We didn’t get a copy of the audited financial statement. They did have an annual report, but it didn’t include specifically the board roster and the summary of finances that is recommended.”Mr. Weiner said nonprofit groups that seek money on the Internet should post detailed financial reports online.A spokesman for Mr. Clinton, Jay Carson, said the foundation is working to address the concerns raised by the watchdog group. “In terms of the things brought up in the report, they are all either in place now or will be in place by the end of 2005,” he said.Mr. Carson noted that the foundation, which was established in 1997, has been a small operation focused on raising funds to build and endow Mr. Clinton’s $165 million presidential library in Arkansas. The spokesman said some of the procedures recommended by the bureau, such as program reviews, will make more sense as the foundation turns greater attention to its ongoing projects, such as efforts to reduce racial strife abroad, to provide drug treatment for HIV/AIDS, and to offer advice to small-business owners in New York.The foundation’s most recent report to the Internal Revenue Service, released on Friday, showed borrowing of $38.5 million last year to cover expenses related to the library, which opened in November. The presidential charity’s Web site still lacks financial data, but a link to e-mail a request for the federal filing was posted recently.Mr. Carson described as “unfortunate” the bureau’s decision to use financial data from 2003. Due to an arcane accounting requirement, tens of millions of dollars spent on the library’s construction that year were not included as expenses, the spokesman said. That led to the watchdog group’s finding that the foundation failed to devote at least 65% of its total expenditures to programs.Mr. Weiner said his organization often deals with charities involved in building or capital campaigns and will make adjustments to its standards as appropriate. “That’s fine,” he said when told about the construction project. “All they need to do is at least respond to us. In this case, we wrote them more than once about these issues, and I don’t know why we didn’t receive a response.” He said the Clinton Foundation was sent a draft of the report and a follow-up letter, both via certified mail.A leading authority on governance of nonprofit groups, Marion Fremont-Smith, said Mr. Clinton’s charity should place itself beyond reproach. “One would have hoped to have seen an organization like this, a charity like this, living up to the highest standards of disclosure, or if there are reasons for not, that they would have explained them,” she said.President Bush recently tapped his father, George H.W. Bush, and Mr. Clinton to lead efforts to raise funds to help rebuild areas devastated by Hurricane Katrina. Some of the $96 million raised in recent weeks will pass through the Clinton Foundation, while other money will go to a charity designated by the elder President Bush, the Greater Houston Community Foundation, according to the Web site for the relief fund.Ms. Fremont-Smith, who is a senior research fellow at Harvard University’s Hauser Center for Nonprofit Organizations, said the high-profile, White House-backed mission underscores the Clinton Foundation’s obligations. “Even before they took on this new project, one would have hoped they would be an example to other charities. It’s even more important now that they are taking on this major role,” she said.Ms. Fremont-Smith said she concurred with many of the watchdog group’s recommendations about disclosure of financial information, but believes it is unwise to suggest that all charities should meet certain ratios between spending and fund-raising each year. “I’m always concerned about looking at raw percentages,” she said.Some aspects of the failure of communication between the foundation and the charity assessment service are baffling. For example, the watchdog group said it could not obtain an audited financial statement from the foundation, even though the charity is required to file such a report with regulators in several states. “I can’t imagine why that isn’t available,” a Philadelphia attorney who writes a newsletter for nonprofit groups, Donald Kramer, said.Mr. Kramer called the standards established by the Wise Giving Alliance “one-size-fits-all rules” that might not be suitable for every group. “It’s not an illegitimate approach. It’s not the only approach,” he said.The attorney added that the standards themselves don’t guarantee that a charity will be well run. “It’s wonderful to have a policy to review your chief executive,” he said. “The question is: Do you do it?”Mr. Weiner said the charity review service, which maintains a Web site at www.give.org, has examined about 500 charities that fund-raise nationally. None of the foundations that support other presidential libraries has been reviewed, but some organizations with presidential ties have been.A charity associated with President Carter, the Carter Center, did not meet five of 16 applicable standards, according to the bureau. A substance abuse treatment center founded by the wife of President Ford, the Betty Ford Center, missed four of 19 standards, the bureau found.Mr. Weiner said the scrutiny given to Mr. Clinton’s foundation is not the result of political bias. “We’re a nonpartisan organization. We have absolutely no interest one way or the other,” he said.Among the charities found to be in full compliance with the bureau’s standards were the American Cancer Society, Catholic Charities, Habitat for Humanity, the Jewish National Fund, Mothers Against Drunk Driving, and Oxfam America. Some charities, including Islamic Relief and the National Organization for Women Foundation, are reported to have refused to respond to all of the bureau’s inquiries.

Watchdog Cites Failures at Charity

Watchdog Cites Failures at Charity

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