In 2010, the world banded together in a humanitarian effort to help the people of Haiti by donating to the Red Cross. But five years and nearly $500 million later, the world is left asking where all that money went.

In January 2010, a 7.0 magnitude earthquake devastated Haiti, killing over 230,000 and displacing 1.5 million people from their homes. Many nonprofit organizations participated in the relief effort, but the Red Cross raised the most money with over $488 million in donations worldwide, promising to change the lives of the people affected by the earthquake. Now, Haitians are still fighting an ongoing battle for reliable shelter, food, clean water, and more. In light of several recent revelations about the practices of large nonprofits, many now wonder if the Red Cross is part of an emerging trend of misconduct.

Funds donated to the Red Cross were given with the expectation of creating a better life in Haiti. The Red Cross set goals to build and develop brand new communities for the people of Haiti during its donation campaign. The Red Cross proposed building roughly 700 homes by January 2013, each with finished floors, toilets, showers, and rainwater collection systems. A review of the Red Cross’ efforts shows that these goals do not appear to have come to fruition.

A recent investigation into the Red Cross by Propublica and NPR found unfulfilled promises to build homes, wasted donation funds, unnecessary fundraising, and exaggerated claims of success. The investigation showed that many of the Red Cross’s shortcomings in Haiti were of the charity’s own doing. According to the investigation, a lack of expertise and leadership led to inefficiency and fund mismanagement. For example in 2012, documents revealed that nine of the 30 leadership positions in Haiti, including experts on health and shelter, remained unfilled.

In its progress report, the Red Cross said it “helped 132,000 Haitians to live in safer conditions—ranging from providing temporary homes and rental subsidies to repaired and new homes.” But according Propublica and NPR, the Red Cross has actually built just six permanent houses in Haiti, nowhere near the number of new communities that they planned. The Red Cross cited a lack of land rights for its inability to build more homes, yet other charities facing the same challenges with less funds managed to build approximately 9,000 homes. In an interview with PBS Newshour, NPR Investigative correspondent Laura Sullivan said, “we went to one project that was done by Global Communities and PCI, where we saw more than 300 homes being built. In the project now, they’re building 75 homes that have running water for people.”

Mismanaged funds include unnecessary expenditures like financial perks for non-Haitian officials. For example, a project manager–a position reserved for an expatriate–was given an allowance for housing, vacations, and other expenses for about $140,000 a year. But a senior Haitian engineer–the top local position–received only $42,000 a year. Shelim Dorval, a Haitian administrator who worked for the Red Cross to coordinate travel and housing for expatriate staffers told Propublica:

For each one of those expats, they were having high salaries, staying in a fancy house, and getting vacation trips back to their countries…A lot of money was spent on those people who were not Haitian, who had nothing to do with Haiti. The money was just going back to the United States.

The Red Cross also continued soliciting money from donors well after it had collected enough for its relief plans. In contrast, organizations like Doctors Without Borders stopped fundraising when they received enough money to accomplish their goals. The investigation also revealed that the organization used some of the extra money to erase a $100 million deficit that was unrelated to the Haiti relief project. The Red Cross declined continuous requests from NPR and Propublica to disclose details of how much money went to relief projects, and what the results of each project were.

A Recurrent Trend

This recent report falls in line with many other cases of mega nonprofit organizations involved in questionable practices. The most recent were the charges brought against four well renowned cancer non-profit organizations. Last month, the Federal Trade Commission, along with 58 law enforcement partners from across the country, charged four organizations and their operators with defrauding more than $187 million from donors. One of the charges alleged that the charities used telemarketing calls, direct mail, websites, and other methods to disguise their organizations as legitimate charities only to use the money to help friends and family acquire lucrative jobs, as well as for luxuries like cars and cruises. The organizations were The Cancer Fund of America, Cancer Support Services, The Children’s Cancer Fund of America, and The Breast Cancer Society.

These organizations and many others amass millions of dollars each year from donors trying to help those in need, but instead take advantage of their status. Organizations like Kids Wish Network repeatedly accepted millions of annual donations, of which large sums were given to solicitors rather than to the individuals that the organization was supposed to help. Federal tax filings from the last 10 years show that the Kids Wish Network received $137.9 million in donations, but used $115.9 million of the donations for “fundraising costs.” Put simply, that means paying people or companies to raise money for the organization. The Cancer Fund of America, one of the four charities recently charged with fraud, also received over $86 million from donors and gave $75.4 million to solicitors. The chart below shows the amount of money given to non-profits, and how much they spent on solicitors.

The reality is that many donors still donate to these charities because of name recognition without knowing where their money really ends up. Charity navigator, America’s largest charity evaluator, encourages donors to research and ask questions about a non-profit organization before donating. Questions like whether a non-profit clearly explains its goals, the specific problems it intends to improve, and whether it regularly achieves its objectives are all encouraging steps to finding the right charity. Researching, and questioning organizations like the Red Cross is the next step in holding said organizations accountable for the millions they receive from the people.

Kwame Apea

Kwame Apea is a member of the University of Maryland Class of 2016 and a Law Street Media Fellow for the Summer of 2015. Contact Kwame at staff@LawStreetMedia.com.

The post The Red Cross: A Failure in Haiti? appeared first on Law Street.

There are two primary lens through which the American public views lobbying. On one side you have those who favor lobbying and believe that a lobbyist’s expertise might grant a policymaker a different outlook on an issue. However, there also exists a group who views lobbying as unethical, and believes the pressure exerted by interest groups on politicians is enough to gain votes in favor of their corporate interests. This could create an issue granted that the interest group may not be lined up with constituents’ viewpoints. Moreover, lobbyists are often accused of using bribery and monetary threats to guide government actions. However a larger issue is imminent–many Americans are unaware of the full scope of these back room practices.

The American Legislative Exchange Council, known as ALEC for short, is a non-profit organization founded in 1973 under close scrutiny not only by the IRS, but by the American public. ALEC identifies itself as a group of conservative state legislators and private sector representatives that draft and share model state-level legislation for distribution among state governments in the United States. As noted by the company’s mission statement, ALEC “works to advance limited government, free markets, and federalism at the state level through a nonpartisan public-private partnership of America’s state legislators, members of the private sector and the general public.” While non-profit organizations such as the ACLU generally use their revenue to further enhance their mission or purpose with the benefit of not being federally taxed, ALEC has been accused by the IRS of taking advantage and abusing its tax-exempt status.

In April of 2012, Common Cause accused ALEC of being a lobbying organization, while objecting to ALEC’s tax status as a nonprofit organization, alleging that lobbying accounted for more than 60 percent of its expenditures.

Although ALEC formally denied lobbying, previous ALEC chairwoman Dolores Mertz expressed in the Daily Beast that  she was “concerned about the lobbying that’s going on, especially with [ALEC’s] 501(c)3 status.” Former Republican state senator and current vice chairman of the New Jersey Ethics Commission William Schluter, has also criticized ALEC in the past for its lobbying practices, telling nj.com,

When you get right down to it, this is not different from lobbying. It is lobbying… Any kind of large organization that adds to public policy or has initiatives involving public policy should be disclosed—not only their name, but who is backing them.

In fact, 2012 was not the only year ALEC was accused of taking advantage of its non-profit status. Most recently the organization has been discovered collecting money from lobbyists and corporations, and using the capital to subsidize costs for legislators to attend private “educational” meetings. Media Matters produced a video exposé on ALEC’s back room dealings and its results were truly outstanding. Not only did they find that legislators are wined, dined, and taken on golf outings; they are also given substantial wads of cash for miscellaneous purposes. What’s even more shocking are the decisions being made in the closed rooms, which the general public is denied access to.

During its investigation, Media Matters interviewed Georgia Senator Nan Orrock, a former ALEC member, who called ALEC a “corporate bill mill which cranks out legislation.” Moreover she divulged alarming information on the proceedings of the meetings wherein corporations and legislators have equal say on a piece of legislation.

The investigation  also uncovered that there are bills which need only initials by legislators and have been entirely drafted by corporations. One example is the Asbestos Claim Priority Act, which prevents asbestos victims from suing corporations. Noteworthy is the fact that although the bill passed in Georgia’s capital, it was first approved in Las Vegas, according to the video. Media Matters uncovered records indicating that three Georgia senators who sponsored the bill received over $22,000 in the year before, during, and after the bill was passed in “scholarship money” to attend resort meetings by ALEC.

For more detailed information on ALEC conferences please refer to this video.

In this context, the question arises of whether ALEC is complying with legal standards or not. Certainly the notion of filtering money between corporations and legislators through ALEC is not ethical, however do they breach any sort of law? It is tough to say granted that each state differs in terms of ethical rules and laws. Some states such as Wisconsin require legislators to fund their own trips to events. Other states, however, permit organizations such as ALEC to sponsor or grant “scholarships,” to legislators for said trips.

Regardless of whether any actual laws are being violated or not is yet to be determined, however it is clear that the operating system of the supposed NPO is being further observed not only by the general public concerned with fair legislative practices, but also larger actors. Mega corporations who once played a prominent role in ALEC, such as Coca-Cola, are showing their concern with the way ALEC handles legislative practices, as seen by Coca-Cola’s recent disaffiliation from the organization. It is only a matter of time before the continued allegations turn into large disputes, potentially leading to a landmark legal case.

Symon Rowlands

Symon Rowlands is a member of the University of Miami Class of 2016 and was a Law Street Media Fellow during the Summer of 2015. Symon now blogs for Law Street, focusing mostly on politics. Contact Symon at staff@LawStreetMedia.com.

The post ALEC: The True Indicator of Legislative Decisions? appeared first on Law Street.

Charleston Law School has had a tough few years. It was established in 2003–right when that big law school boom was starting– and its first class graduated in 2007. The school began as a way to fill a gap in legal education that existed in Charleston; despite the fact that it’s the second largest city in South Carolina, there was not a law school there when Charleston Law began operating.

In 2013, the school began dealing with a company called InfiLaw, which eventually purchased the school pending approval by the American Bar Association (ABA) and South Carolina’s commission on higher education.

InfiLaw is part of Sterling Enterprises, a private equity company from Chicago, and it operates for-profit law schools. Currently there are three in InfiLaw’s collection–Florida Coastal School of Law, Arizona Summit Law School, and the Charlotte School of Law. Charleston Law would be the fourth. The company’s reputation within the law school field isn’t particularly stellar. There are concerns that InfiLaw is a scam, and predatory–after all, it takes students who can’t get into other law schools, puts them into massive debt, and then those students have a very difficult time finding jobs that can pay off said debt. In an in-depth piece on for-profit law schools that focused heavily on InfiLaw, the Atlantic attempted to pinpoint the company’s motivation:

A Florida Coastal faculty member who is familiar with the business strategies of private-equity firms told me that, in his view, the entire InfiLaw venture was quite possibly based on a very-short-term investment perspective: the idea was to make as much money as the company could as fast as possible, and then dump the whole operation onto someone else when managing it became less profitable.

Regardless of whether or not those are actually InfiLaw’s practices, actually taking over Charleston Law could lead to serious changes at the school.

That’s where this all gets very, very messy. Those two entities that have to approve the sale–the ABA, and the South Carolina Commission on Higher Education (CHE)–have a few different moving parts. It’s a confusing mess, but essentially what’s happened is that one committee of the ABA, the accreditation committee, has approved the sale; however, another part that needs to give its approval, the Council of the Section of Legal Education and Admissions to the Bar, has deferred making a decision. They’re waiting on the CHE, who have their own set of problems with which to contend.

Now CHE is caught in the middle. One of Charleston Law’s founders, a man named Ed Westbrook, doesn’t want the school sold to InfiLaw. He’s in the minority, as the other two founders want to see it go to InfiLaw. Westbrook claims that he can successfully operate it as a non-profit, without taking any money from the state. He’s made vague statements about using his own money to do so. Now, both Westbrook and his lawyers, and InfiLaw and its lawyers are reaching out to the CHE with conflicting proposals and information. Westbrook’s optimism is admirable, I guess, but Charleston Law as it stands seems a bit like a sinking ship. For example, the school’s new President, Maryann Jones stepped down in November. She lasted in the job for a grand total of eight days. Her reasoning was described in an email she sent when she resigned:

The level of vitriol, with all sides making me a lightning rod for an unfortunate situation that was not of my making, makes this truly a situation that I am unwilling at this stage of my life to undertake.

Back to the CHE approval though, which appears to be the lynchpin to this deal. Want to be even more confused? There are 15 seats on the CHE. Four are vacant, and eight are being held by people whose terms have technically expired. Governor Nicki Haley is trying to fill those seats–but that would be in January at the earliest.

So, will InfiLaw succeed in its takeover of the Charleston School of Law? I have absolutely no clue. This tangled web of players, committees, and arguments is a mess–perhaps symbolic of the messy relationship between the ABA, for-profit law schools, and students. Whatever happens, it’s now in the CHE’s hands…and I for one do not envy them.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post InfiLaw’s Attempt to Purchase Charleston Law is a Giant Mess appeared first on Law Street.