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December 14, 2018

Where Does $100 to Kids Wish Network Go?

by Anne Paddock

Kids Wish Network is a Florida-based non-profit 501 (c) (3) under fire for good reason:  Of the $14 million raised last year, less than $1.2 million went to grants for kids.  That’s 9%, or $9 out of every $100 in revenue raised. But, its worse than that. $1 million of the revenue raised were non-cash contributions and these non-cash contributions (toys, clothes, games, etc) were granted as wishes for kids, which means only $200,000 of the $13 million in cash raised in 2017 was spent on granting wishes for sick kids. Bottom line:  a little bit more than a dollar out of every $100 received in cash was used to grant wishes for sick kids. Shameful.

So, where did Kids Wish Network spend the actual $13 million in cash revenue raised last year?  $8.7 million was paid to professional fundraisers, $2.9 million was used for “public information and outreach,” (which also appears to be fundraising or at least related to fundraising although Kids Wish Network classifies this expense as a management expense), about $900,000 was used for compensation, and about $600,000 was used for office overhead and functional costs. About $200,000 in cash donations was used to make grants (wishes).  Cash expenses totaled $13.3 million -about $300,000 more than the organization raised. From this information, the following questions arise:

Why was so much of revenue paid to professional fundraisers?  Because Kids Wish Network depends on fundraisers to raise money for the organization but they pay dearly for it. Kids Wish Network reported raising $13 million but compensated fundraisers $8.7 million, which means that of every $100 collected, fundraisers were paid $67, leaving $33 out of every $100 to Kids Wish Network.

What fundraiser keeps more than what they raise for a  charity? Surprisingly, there are many including the following:

  • Innovaire Marketing Services of Cherry Hill, New Jersey: This organization raised $7.6 million for Kids Wish Network but retained $6.7 million, netting the charity about $900,000. Innovaire Marketing Services kept $88 out of every $100 they raised for Kids Wish Network.
  • Organizational Development Inc of Greenacres, Florida:  This organization raised nearly $870,000 for Kids Wish Network but retained about $725,000, netting the charity about $145,000. Organizational Development Inc. kept $83 out of every $100 raised for Kids Wish Network.
  • Newport Creative of Duxbury, Massachusetts:  This organization raised $831,000 for Kids Wish Network but retained $811,000, netting Kids Wish Network $20,000.  Newport Creative kept $97 out of every $100 raised for Kids Wish Network, which is the highest of the ten organizations listed.
  • An unnamed fundraising company raised $650,000 for Kids Wish Network but retained $349,000, netting Kids Wish Network $301,000. This unnamed company kept $54 out of every $100 raised for Kids Wish Network.  They look downright generous compared to the other fundraisers and yet, donors wouldn’t be happy knowing a company kept more than half of what they donated.
  • Innovative Teleservices of Allen Park, Michigan:  This organization raised $610,000 for Kids Wish Network but retained $510,000, netting Kids Wish Network $100,000. Innovate Teleservices kept $84 out of every $100 raised for Kids Wish Network.
  • Charitable Resource Foundation of Greenwood, Indiana:  This professional fundraiser raised $580,000 but retained $502,000, netting Kids Wish Network $78,000. Charitable Resource Foundation kept $59 out of every $100 raised for Kids Wish Network.
  • Directele Inc of Madison Heights, Michigan:  This telemarketing organization raised $511,000 but retained $340,000, netting Kids Wish Network $171,000. Directele, Inc. kept $67 out of every $100 raised for Kids Wish Network.
  • JAK Productions of Atlanta, Georgia:  This organization raised $497,000 but retained $427,000, netting Kids Wish Network $70,000. JAK Productions kept $86 out of every $100 raised for Kids Wish Network.
  • JADENT of Keizer, Oregon:  This organization raised $193,000 for Kids Wish Network but retained $174,000, netting the organization $19,000. JADENT retained $90 out of every $100 raised for Kids Wish Network.
  • Public Awareness (unknown office):  This organization raised $226,000 but retained $197,000, netting Kids Wish Network $29,000. This organization kept $87 out of every $100 raised for Kids Wish Network.

All in all, the above 10 organizations raised $12.6 million for Kids Wish Network but retained $10.8 million, netting Kids Wish Network $1.8 million, which equates to $14 out of every $100 raised going to the organization and $86 out of every $100 retained by the fundraiser.  From Kids Wish Network’s perspective, they didn’t have to do any work but were able to obtain $1.8 million after paying fundraiser’s fees.  These fees paid for the compensation of Kids Wish Network employees ($900,000), office overhead, travel, and other costs ($600,000), and the $200,000 in cash granted as wish to sick kids.

It is also important to point out that the Statement of Functional Expenses (Part IX) shows fundraising fees were $8.7 million and that public information and outreach fees were $2.9 million, which total $11.6 million, but the Schedule G, Part 1 shows fundraisers (listed above) were compensated $10.8 million. With the limited information on the 990, these figures cannot be reconciled.

Why was $900,000 spent on compensation for employees?  The organization reported having 29 employees, which equates to an average compensation of $31,000 each. However, two employees received more than $100,000 in total compensation:

  • $225,537:  Anna Lanzantella, President
  • $115,145:  Tam Lai Keenan, CFO

And, finally, if you gave $100 in cash to the organization last year, this is how your $100 in charitable donations was spent based on the information on Part IX, Statement of Functional Expenses:

$100:  Revenue

-$ 67:  Fundraisers

 $ 33:  Revenue to Kids Wish Network

-$ 22:  Public Information and Outreach

$  11:  Revenue Remaining

-$  7:  Compensation

-$  5: Office/Travel, Etc

-$  1:  Cash Grants to Kids for Wishes

-$  2:  Excess Cash Expenses over Cash Revenue Collected

As illustrated above, $1 out of every $100 in cash collected went towards grating wishes for sick kids. And, its not just Kids Wish Network to blame; it’s also the fundraisers. If you want more than $1 out of every $100 you give to go towards granting wishes of sick kids, don’t respond to fundraisers raising money for this organization.

To review the IRS Form 990 (2016) for the year ending May 31, 2017, click here.

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