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February 18, 2019

Where Does $100 to the Veterans Support Foundation Go?

by Anne Paddock

The Veterans Support Foundation (VSF) is a 501 (c) (3) operating out of the same office as Vietnam Veterans of America (also a 501 (c) (3) that is a “related tax-exempt organization”) in Silver Spring, Maryland.

VSF has two functions:  provide funds (grants) to other non-profit organizations supporting “community-based veteran-related projects; and, manage four residential properties (3 which they own and operate in concert with the VA) that provide housing for up to 30 veterans.  Unfortunately less than $8 out of every $100 was allocated to grants and only $21 out of every $100 was used to support the organization’s other mission. $67 out of every $100 was given to professional fundraisers.

The IRS For 990 for the year ending September 30, 2016 reveals the organization reported $4.5 million in revenue, most of which ($4 million) was raised by professional fundraisers who were compensated $3 million, netting VSF $1 million. The remaining revenue came from government grants and fundraising campaigns.

Expenses totaled $4.3 million (96% of revenue) and were categorized as follows:

  • $3.0 million (or 67% of revenue):  Professional Fundraisers – Telemarketers and Direct Mail
  • $0.5 million (or 11% of revenue):  Other Fees for Services (primarily administrative but also management, legal, act)
  • $0.4 million (or 8% of revenue):  Grants
  • $0.2 million (or 5% of revenue):  Compensation-related Expenses (for 5 employees)
  • $0.2 million (or 5% of revenue):  Office-related Expenses (including advertising and travel)

As illustrated above, the single largest expense was to professional fundraisers who raised most of the revenue for the organization. Three professional fundraisers (listed below) raised a total of $4,045,634 and retained $2,925,650 (72% of what they raised), netting VSF $1,119,984 (28% of what they raised).

  • Jak Productions, a telemarketing company in Atlanta, Georgia raised $2,430,459 but retained $2,057,275 (85% of what was raised), netting VSF $373,184 (15% of what was raised).
  • Associated Community Services, a telemarketing company in Southfield, Michigan raised $1,568,542 but retained $827,542 (52% of what was raised), netting VSF $741,000 (48% of what was raised).
  • Community Services Appeal, a direct mail company in Southfield, Michigan (same address as Associated Community Services) raised $46,633 but retained $40,833 (87% of what was raised), netting VSF $5,800 (13% of what was raised).

In terms of total revenue, $67 out of every $100 reported was retained by telemarketers and direct mail companies.

Based on the above information, $100 (which was primarily raised by telemarketers or through direct mail) was spent as follows:

 $100:  Revenue

-$67:  Professional Fundraisers

 $ 33: Remaining Revenue

-$ 11:  Other Fees for Services

-$  8:  Grants

-$  5:  Compensation-Related Expenses

-$  5:  Office-Related Expenses

-$ 29:  Subtotal Expenses

 $   4:  Revenue Remains:  To Net Fund Balance

Approximately $8 out of every $100 was spent on grants (most of which was granted to a related organization in the same office – Vietnam Veterans of America). $21 out of every $100 was used to compensate employees, office-related expenses and other fees for services (described as administrative expenses) to support the residential properties housing the veterans.

The bottom line is that if you want your donations dollars to go to help the veterans living in the homes supported by this organization then do not make a donation by phone or mail to the telemarketers and direct mail companies raising funds for this organization.

To read the IRS Form 990 for the year ending September 30, 2016, click here.

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