National Federation of the Blind
1800 Johnson Street
Baltimore, Maryland 21230
OPEN LETTER TO
As organizations in the field of philanthropy know, the National Information Bureau holds itself out to be a watch dog to prevent abuses by charitable organizations and as an authority to which the general public may turn to know whether it is wise or foolish to give to this or that worthy cause. In fact, NIB's monthly publication is called the "Wise Giving Guide." The National Information Bureau, Inc. is a New York State not-for-profit corporation, exempt from income tax under Section 501(C)(3) of the United States Internal Revenue Code. It is not a governmental agency and has no legal authority to require anyone to report to it. Yet, through a combination of pressure and publicity it persuades a great many charitable organizations to provide it with data and seek its blessing.
The National Federation of the Blind has begun a thorough investigation of the activities of the National Information Bureau. We have done so because (despite NIB's vehement claims to the contrary) it has become clear to us that the National Information Bureau fails to act with objectivity or fairness or to meet its own published standards for charitable and philanthropic organizations. Certain of our concerns relate to NIB's practices in connection with its own financial reporting and disclosure. Since NIB has tax exempt status as a charitable organization under section 501(C)(3) of the Internal Revenue Code, we believe that NIB should follow the same "standards" by which it purports to evaluate other philanthropic organizations. Our preliminary review of NIB's financial reports and our observation of its operation indicate that such is not the case. Attached to this document are various pertinent materials, including a copy of our letter to M.C. Van de Workeen, Executive Director of NIB, detailing our concerns in this area, and asking him to supply information and explanations. NIB has often stated: "In order to determine that an agency meets NIB's eight basic standards, NIB requires that the agency supply, on request, reasonable evidence of its compliance with those standards. NIB expects responsible organizations to supply such information."
Since NIB is a charitable organization (exempt under Section 501 (c)(3) of the Federal Internal Revenue Code, as are other charitable organizations of the type it purports to evaluate by its standards), NFB is anxious to learn whether NIB will meet its own definition of "responsibility."
We are also concerned about the nature of the reports NIB publishes about charitable organizations. Our attention was first called to this problem by the factual errors, distortion by omission, innuendo by choice of words and positioning of sentences, and general bias in tone contained in NIB's draft reports on the National Federation of the Blind and on the American Brotherhood for the Blind. (The NFB is interested in the report on the American Brotherhood for the Blind [ABB] because the current President of the Federation is the Executive Director of the ABB.)
We have now received quite a number of NIB reports on widely divergent kinds of organizations, and we intend to review more such reports as part of our ongoing investigation of NIB. The pattern we have found is, to say the least, extremely disquieting. For this reason we feel that it is necessary to share our findings with others in the field and with the public-at-large.
NIB sprinkles its reports quite liberally with opinionated value judgments&emdash; sometimes blatantly and sometimes subtly. It is fond of saying something to this effect: "________ organization provides a number of useful services in the are of ____________." It is interesting to note, however, that (almost without exception in the reports reviewed) those organizations deemed by NIB to "provide a number of useful services" are the ones which also provide data to NIB. Those which choose not to participate in NIB's "Voluntary" rating system somehow never seem "to provide a number of useful services." One cannot help but conclude that NIB judges an organization's worth largely by how deferential it is to NIB and how willing it is to accept NIB's authority.
Another technique frequently employed by NIB to communicate its personal value judgments to the reader is its selective use of the declaratory and quoted forms of statements. Thus: "American Red Cross operates a blood collection and processing program, and provides services to armed forces members and veterans...." Whereas: "The Wildlife Society states that it is 'the professional association dedicated to specialization in wildlife conservation, management, and enhancement," and "The National Federation of the Blind has stated that it is 'essentially an advocacy group....."
One must either assume that no editing standards and policies exist as NIB (which in itself would be not only slipshod and irresponsible but also unbelievable) or that the alternate formats are deliberately intended to convey the tone which they do convey &emdash; one of deliberate bias.
Of one organization NIB stated, "Question arises as to whether national fundraising on behalf of single, local, or regional institutions is appropriate." In disapproving the Blinded Veterans Association, NIB states, "In view of the number of other organizations serving veterans, the number serving the blind, and the small percentage of the population both categories, question arises as to whether the need for a separate organization soliciting funds from the general public to service blinded veterans has been clearly demonstrated." We view with real alarm NIB's attempt to impose its personal value judgments not only as to the "how" of public solicitation but also the "who" as well. Recent U.S. Supreme Court actions (notably the Schaumberg decision and the pending Munson case) have gone to great length to protect charitable organizations in the exercise of their constitutionally guaranteed rights of free speech. We are concerned when a private organization, such as NIB, accountable to no constituency and operating outside the framework of governmental protections of due process and equal treatment, presumes to dictate its notions of social good to the rest of society.
We also are troubled by the religious bias exhibited by NIB in its report on the Christian Record Braille Foundation, Inc. (CRBF), which happens to be connected with the Seventh-day Adventist Church. NIB first complains that "Only some of CRBF's promotional materials make it clear that CRBF's board and Executive Committee are comprised of members of the Seventh-day Adventist denomination." Then NIB states that it "believes that contributors have the right to know the facts about CRBF and its relation to the beliefs of the Seventh-day Adventists." Finally, NIB proceeds to list fifteen "major tenets of the organization" followed by five "major practices that result from these beliefs."
Although NIB reports on a number of organizations with connections to various religious denominations or groups, we know of no other instance of such emphasis on disclosure of the religious beliefs and practices of the sponsoring organization. Again, we view with alarm NIB's propensity to inject its personal values and biases into its evaluation and reporting process.
Then, there is the matter of "Unordered Merchandise" and NIB's treatment of that subject, which can only be described at best as whimsical and sanctimoniously opinionated: a penny (which costs 1 cent) is unordered merchandise; decorative seals (which generally cost more than 1 cent) are not; decals (which cost less than seals) are; personalized certificates (which cost more than paper calendars) are not; calendars are and so it goes. NIB tells us that its definitions of unordered merchandise make some contribution toward ethical fundraising practices. NFB wonders what deal was made with the seal mailers. Then, adding arrogance and sanctimony to its other shortcomings on the matter, NIB states: "This method of fundraising [unordered merchandise] has been considered for years a practice which does not meet standards in philanthropy ..."
What NIB means, of course, is that the practice does not meet National Information Bureau standards&emdash;its tortured definitions (the difference between pennies and seals, decals and certificates, calendars and photographs, etc. etc.). NIB fails to point out that the Council of Better Business Bureaus does not disapprove the method, taking instead the more enlightened route of judging the total effect and cost effectiveness of the mailing. NFB finds NIB's behavior in the matter to be simply one more instance of whimsical, unethical bias.
Perhaps the full extent of NIB's capacity for deliberate distortion and biased reporting can best be shown by a review of NIB's reports on the National Federation of the Blind and the American Brotherhood for the Blind in comparison to NIB's treatment of some of its favorites&emdash;United Way (which contributes substantial sums of money to NIB), The National Accreditation Council for Agencies Serving the Blind and Visually Handicapped (in which NIB's Executive Director, M. C. Van de Workeen, holds high official position), and the American Foundation for the Blind, which contributes more than 50 percent of NAC's total financial support each year.
Except for United Way, which has at least some activity in the blindness field, this group of reports which we have selected for analysis deals with organizations involved in work with the blind. We have chosen organizations dealing with blindness because this is an area in which we have expertise and are in a position to know the accuracy of the so-called "facts" presented, as well as being able to supply additional data, the convenient omission of which by NIB causes distortion and bias. We have seen enough of NIB's pattern of action to believe that similar lack of objective reporting and favored treatment of "pet organizations" occurs across the board. We urge those of you who have expertise in a given field to analyze and compare NIB's reports on organizations about which you have in-depth knowledge. We would be most interested in your findings.
It is necessary for the reader to know certain background data concerning political and philosophical relationships among organizations and agencies involved in work with the blind before it is possible fully to understand both the subtle and overt bias, distortion, and innuendo contained in the NIB reports.
1. The National Accreditation Council for Agencies Serving the Blind and Visually Handicapped was created in 1966 by the American Foundation for the Blind. Its initial funding and staff came from the Foundation. Although claims of independence from the Foundation have been vehemently made, today (in 1983, nearly twenty years after its creation) NAC continues to receive substantially in excess of 50 percent of its funding from the American Foundation for the Blind.
2. NAC's policies and practices have been extremely controversial in the field of work with the blind. The National Federation of the Blind, the largest organization of blind people in the nation, has taken the position that accreditation of an agency by NAC bears a negative relationship to quality services to blind persons, and the Federation has published voluminous material in support of its contention. As an example, a number of NAC accredited organizations and their officials have been exposed for violations of state and federal laws while their NAC accreditation has continued uninterrupted.
3. Federal funding of NAC was terminated in 1975 pursuant to congressional direction to the Secretary of Health, Education and Welfare to resolve public dissatisfaction over federal funding of NAC and NAC's inability to achieve credibility within the Field.
4. Prior to 1973 NAC held entirely closed board meetings. Strong congressional intervention eventually resulted in the admittance of consumer observers to NAC board meetings. Transfer of real governing control to NAC's Executive Committee immediately followed. To this day, the Executive Committee meetings are closed, and no minutes are made public. The full board meets only once a year and is mere window dressing.
5. A significant number of NAC accredited agencies pay blind workers less than the federal minimum wage&emdash;a practice which (although legal under certain prescribed circumstances) has recently come under intense congressional scrutiny because of widespread violations of the safeguards in the law designed to protect blind workers from abuse.
6. The NFB has led the movement to make illegal payment of sub minimum wages to blind workers.
7. The National Accreditation Council for Agencies Serving the Blind and Visually Handicapped, the American Foundation for the Blind, and the National Information Bureau are all New York based organizations.
8. In 1979 the New York Attorney General's office investigated an organization called Industries for the Blind of New York State, whose board of ten members contained top officials of seven NAC accredited agencies. The investigation disclosed abusive use of funds generated by the work of blind laborers (lavish entertainment, unnecessary out of state travel, purchase of Lincoln Continental automobiles, fourteen hundred dollars spent for Christmas parties and an Easter dinner, three thousand dollar staff charges at the tavern located in the same building as the Industries' offices, hundred dollar meals at swank New York restaurants, etc.). NAC took no disciplinary action against the NAC accredited agencies involved.
9. M. C. Van de Workeen, Executive Director of the National Information Bureau, serves on NAC's 12-member Commission on Accreditation&emdash;a fact which is not disclosed in NIB's report on NAC and which he himself does not disclose in correspondence dealing with complaints about the objectivity of the report (See attached letter to the National Information Bureau dated September 16, 1983 and response dated October 20, 1983).
10. The Comission on Accreditation of Rehabilitation Facilities (CARF) a reputable and recognized standard-setting body accredits agencies in the field of work with the blind and has declined to accede to NAC's pleas that it, in effect, keep its hands off NAC's territory. CARF apparently feels that dissatisfaction with NAC accreditation within the field is so great that it has the responsibility to offer a viable accrediting mechanism to agencies serving the blind.
With this background in mind, let us turn to the NIB reports. It is unfortunate and perhaps not entirely coincidental that no current NIB report on the American Foundation for the Blind is available. In 1980 NIB listed the AFB as not meeting its standards. We have attempted to obtain a copy of that report. We are told that we may not have one because the report "is being updated." We note that in May of 1981 the report was being updated, the same for May of 1982, and May 1983, and we must presume the same will be true for May of 1984. Telephone contact with NIB officials elicits the response that there is no scheduled time when the report will be made available, that it has not been "too long a period" since a report did exist, and that "no, it is not possible for us to send you the last report we had because it is our policy never to release information that is outdated." We find it interesting to note that at the same time we were denied a copy of NIB's 1980 report on the American Foundation for the Blind we were provided a 1976 report on the Sierra Club and a number of 1980 reports on other organizations.
We have obtained financial data on the American Foundation for the Blind from the New York Department of State Charities Registration Section&emdash;the same source NIB uses for many of its reports&emdash; and from the Foundation's own published annual report. Having done so, it is easy to see why NIB's report has been so long in coming. A mere five minutes with a calculator reveals that the Foundation cannot meet NIB's published standards regarding fundraising costs as a percentage of related contributions, a program consistent with the organization's stated purpose and its personnel and financial resources, and ethical publicity and promotions excluding exaggerated or misleading claims. In 1982 the American Foundation for the Blind's fundraising costs as a percent of direct mail contributions were 69.1 percent. In 1983, these fundraising costs were 47.5 percent. In 1982 the American Foundation for the Blind had current unrestricted funds available for use in the amount of $25,267,223 and in 1983, it had $28,140,487. The amounts expended in those years were $10,310,607 and $10,732,841 respectively. In 1983 an additional $292,922 was utilized for property and equipment acquisition from unrestricted funds. This amounts to a consistent practice of accumulation of excess funds well beyond the published standard allowed by NIB. NIB's three year delay in issuing a report on the AFB should be contrasted with its published comments regarding accumulation of funds in the reports of two organizations of which it disapproves: "Because of Father Flanagan's Boys' Home's (FFBH) available assets and total support/revenue from sources other than contributors, FFBH's continued solicitation of 'contributors' support for current programs raises a question with regard to NIB standard #5." And, "Question is raised with regard to NIB standard #3 as to Dakota Indian Foundation's apparent accumulation of assets and as to whether this method of accumulation in past years fulfilled the purpose for which contributions were solicited and received." The latter comment is made in connection with the accumulation by the organization involved of less than a half million dollars. But, of course, it is easier to take on a small Indian organization in a Western state than it is a 28 million dollar next door neighbor&emdash;especially when that 28 million dollar neighbor provides more than 50 percent of the funding to a favored "pet" organization in which M.C. Van de Workeen holds a prestigious sounding official position.
Let us look now at precisely how NIB deals with that "pet" organization, the National Accreditation Council for Agencies Serving the Blind and Physically Handicapped (NAC). First of all, as we have already seen, since it cannot approve the fundraising and asset accumulation practices of the source of more than 50 percent of NAC's budget, it protects that source by keeping it interminably in "report being updated" status. It suppresses previously existing (1980) reports on the grounds that they are "outdated" &emdash; strangely somehow more outdated than NIB's 1976 report on the Sierra Club, which it continues to circulate.
NIB's NAC report begins with the incredible statement that, "The National Accreditation Council for Agencies Serving the Blind and Visually Handicapped (NAC) is 'the' standard-setting and accrediting body in work with the blind." This statement goes beyond the bounds of misleading innuendo. It is a direct falsehood. It is widely known that the highly regarded Commission on Accreditation of Rehabilitation Facilities (CARF) accredits agencies for the blind. It is equally widely known that NAC is most unhappy with the fact that CARF has been unwilling to accede to NAC's demands that CARF refuse to accredit agencies for the blind. Certainly this fact is known by M. C. Van de Workeen, who is no mere outside observer in this rivalry but a member of NAC's Commission on Accreditation. In view of these facts, it is difficult to accept NIB's explanation that it, in effect, accidentally close the quotation in the wrong place.
Next NIB describes in glowing declaratory statements NAC's highly controversial view of itself&emdash;that "It strengthens and improves the services and management of organizations for the blind, and it gives blind people and contributors a way to identify those agencies and schools that are achieving maximum effectiveness." NIB uses no quotation marks, no qualifying "NAC states that it ... "&emdash;simply the bold, unsupported assertion of this astounding value judgment as fact. Naturally, the assertion is unaccompanied by any disclosure of NIB Executive Director Van de Workeen's position with NAC.
We have earlier mentioned that NIB disapproves the Blinded Veterans of America&emdash;stating in effect, (among other things) that it questions BVA's estimate of the number of blinded veterans&emdash;the implication being, of course, that BVA inflates its estimate of the number of blinded veterans in order to build a more compelling case for the need for its services.
As one would expect, however, NIB fails to comment on NAC's manipulation of statistics to suit its own ends. The generally accepted number of agencies and schools serving the blind in the United States is approximately 500. As a matter of fact, NAC itself used this figure for many hears. However, years passed (NAC has now been in existence for almost twenty years) and eighty percent of the organizations in the field had never thought enough of NAC accreditation even to bother applying for it. The statistics became an embarrassment. Unable to attract more applications for accreditation, NAC did the only thing it could to create more favorable statistics. It suddenly began claiming that there are only 400 agencies and schools eligible to receive accreditation and presto it can report (in June 1981) that it has accredited 21 percent of those eligible, rather than the actual 17 percent it would report if it used the generally accepted statistics. Even now in 1984, the figures are 23 percent (using NAC's deflated universe) and 19 percent (using generally accepted figures).
We believe that NIB is not unaware of these figures, nor of the intent behind their manipulation. We believe it simply chooses to look the other way when NAC is involved and to zero in on the discrepancy when the Blinded Veterans Association is involved. Why? Favoritism and Whim?
NIB states that "NAC is recognized by the U.S. Department of Education as the reliable authority as to the quality of training offered by special schools for the blind." It fails to disclose the termination of NAC's federal funding and the reason for that termination. [If it did disclose that NAC's federal funds were cut off, it would undoubtedly parrot NAC's usual whitewashed version of the reason for the cut&emdash;that the grant period had simply ended&emdash;However, we have the Appropriations Committee report and the underlying correspondence on the matter, if anyone cares to see the documentation.]
In further distortion by omission NIB reports that "as of June, 1981, NAC officially was sponsored by thirty six national and state professional and consumer organizations of this type in the blindness field. Characteristically NIB leaves out the important fact that in 1975 the National Council of State Agencies for the Blind voted to withdraw its sponsorship of NAC and that repeated attempts to gain reinstatement of that organization's sponsorship have failed. Nor does it mention what even NAC concedes to be a major factor in its existence&emdash;the fact that NAC has failed to gain the support of the largest consumer organization in the country, the National Federation of the Blind. To speak of consumer support and not to mention this fact is game playing of the worst sort.
NIB reports that "the 35 member board of directors [of NAC] met once in fiscal 1981 with attendance of 27. The 8 member executive committee met three times with average attendance of about 7." NIB does not disclose the long-standing controversy concerning NAC's practice of holding closed board meetings, the Congressional intervention which led to consumer observers being permitted to attend board meetings, and NAC's subsequent and immediate transfer of all real governing control to the executive committee, which continues to hold closed meetings with no public minutes. Neither the fact nor the propriety of the practice is discussed by NIB.
If one retained any lingering doubts concerning the objectivity of NIB's report on NAC, those doubts would vanish after reviewing NIB's financial analysis on NAC. NIB reports that NAC received total contributions in 1981 of $307,769 including $205,000 from the American Foundation for the Blind and that NAC's fundraising expenses as a percentage of contributions are 10.5 percent. It makes no other comment.
It does not mention that readers should consider whether a so-called "independent" accrediting organization which consistently receives more than 50 percent of its public support from another foundation (in this case 67 percent of its unrestricted contributions as reported by NIB) can adequately maintain its independence. It does not mention that NAC fails to disclose its financial dependence upon the American Foundation for the Blind in its published annual reports, providing only one lump figure labeled "contributions."
The reader might also be interested in knowing something about the fundraising practices of the American Foundation for the Blind since NAC receives such a large proportion of its contributions as a kind of pass-through from the Foundation. Perhaps NIB might say that "In 1982 NAC received 67 percent of its total public support from the American Foundation for the Blind, which had a fundraising cost of 69 percent of direct mail contributions. The AFB's fundraising expense as a percentage of direct mail contributions does not meet NIB standard #4. In addition, the American Foundation for the Blind does not meet NIB's standard regarding excessive accumulation of assets, having available for current unrestricted use in 1982 in excess of 25 million dollars, representing substantially more than twice its annual operating budget." The reader might indeed, like to have such information, but he/she will not get it from NIB. As mentioned earlier, NIB categorically refuses to provide any information whatsoever on the Foundation.
At this point, one might say that perhaps it is unreasonable to expect NIB to cross reference financial information about two organizations in one report even if the information is relevant. As we shall see, NIB has no compunction about doing this if it believes it serves its purpose. It is only that in this case, NIB's needs are not met by such disclosure, so it does not make the disclosure.
Similarly, it does not produce the desired result for NIB to apply its "standard financial analysis" to ANC's 1981 financial report. Therefore, it simply does not do it. As indicated earlier, it reports (without comment) a fundraising cost of 10.5 percent of "contributions."
It is instructive to look at the way NIB says it evaluates fundraising costs: "...the cost of fundraising should not be more than 30 percent of the funds raised. In many cases, reasonable fundraising costs should amount to much less than 30 percent of the total raised ... under some circumstances an overall percentage of 30 percent may be too high. This might be true in the case of an organization that receives most of its contribution income in large grants from a few donors. Three million dollars would clearly be too much to spend to obtain ten million dollars from a thousand donors. The average gift would be $10,000 and the average cost of obtaining each gift would be $3,000!" [From NIB Standards in Philanthropy]
What happens to NAC's 1981 fundraising costs when the methods of analysis are applied which NIB frequently uses (particularly, when it suits NIB's desire to show an organization in an unfavorable light)?
If only the data presented in the NIB report is used, one would subtract the $205,000 grant given by the American Foundation for the Blind from NAC's "contributions" of $307,769. It is reasonable to assume that virtually no fundraising costs are attributable to obtaining this grant since the Foundation has a long-standing commitment to prevent the financial collapse of NAC. Moreover, AFB staff and board members have consistently sat on NAC's board.
Therefore, if one uses what NIB claims to be its usual method, NAC's fundraising costs are found by determining what percent $32,415 is of $102,769. The answer is 31.5 percent&emdash;which is, of course, slightly in excess of NIB's published standard of 30 percent.
However, when data supplied by NAC to the New York State Department of Charities Registration Section (again a method frequently employed by NIB when it wishes to discredit an organization) is used, the picture becomes radically different. There we learn something that we cannot learn from NIB's report&emdash;that NAC had not only the large grant from the AFB but $117,979 in additional foundation and trust grants and only $22,819 in "contributions," and $1,000 in bequests.
Calculating NAC's fundraising costs as a percent of "contributions" yields a fundraising cost of 142 percent! When we calculate the fundraising costs for contributions and bequests combined we get a figure of 136 percent. It becomes painfully obvious why NIB did not employ its usual analysis, and why NIB reported "contributions" were "general contributions" rather than disclosing the total amount of foundation and trust grants.
One wonders what one must offer to get such loyalty from M. C. Van de Workeen and his National Information Bureau. We also wonder whether NIB will now revise its NAC report or will choose to protect NAC with the AFB indefinitely in "report being updated" status.
We doubt that NIB will be any more objective in presenting NAC's 1982 and 1983 figures than it has been in the past. The figures are as follows:
One begins by wondering why FIB finds it necessary to employ its childishly petty "NFB has stated that it is, etc." language in its standard brief opening description of the organization. Surely if it thinks it has enough data to issue the report at all, it has enough to be reasonably capable of making a short declaratory statement about the essential nature of the organization without resorting to its cutsie quotation mark innuendo technique with its maybe you are, maybe you aren't implication.
In view of NIB's sanctimonious refusal to release 1980 data about the American Foundation for the Blind on the grounds that "NIB never circulates outdated information," we find NIB's statement that "This report is based on information previously provided by NFB..." to be somewhat amusing in that NFB has certainly not provided any data to NIB as recently as 1980. It is clear that NIB circulates what information suits its purposes.
Next comes NIB's ludicrous assertion that a penny (used by the NFB in its mailing to draw attention to a particular theme) is "unordered merchandise!" Ostensibly, NIB has two objections to the use of "unordered merchandise." First, its alleged high fundraising cost, and second, its "undue pressure." The penny costs less than seals (which NIB does not consider to be unordered merchandise). Further, it costs less than virtually any other part of the mailing it is part of--the printing, envelopes, postage, labeling, sealing, stuffing, etc. It would seem just as sensible to frown on other attention-getting techniques of equal expense--the use of multi-color printing perhaps, or high quality paper, or personalized addressing (all techniques which, incidentally, NIB itself employs in its own fundraising mailing).. But NIB has decreed for some unfathomable reason that of all of these possibilities, only the lowly penny is to be prohibited. And undue pressure? Surely the widespread technique of affixing live 20 cent stamps to return envelopes applies more pressure than the inclusion of a penny. While we are on the subject of undue pressure, it is difficult to imagine any fundraising practice which applies more pressure than the techniques employed in United Way fundraising campaigns, where it is not unusual for an employee to be required to "donate" a given amount, subject to dismissal from his or her job. NIB's definition of "pressure" appears to be as unique as its notions of objectivity. The same arguments, of course, apply to the miniature pencil also used by NFB.
NIB petulantly preaches about its expectations that responsible organizations will supply it this or that information. Until it learns something more about responsible behavior itself, it is quite likely that increasing numbers of responsible organizations will refuse to supply it any information at all.
Items 4, 5 and 6 in NIB's comment section of its report of the National Federation of the Blind contain such astoundingly gross distortions, and violate so completely the basic ethical standards required by the American Institute of Certified Public Accountants and universally adhered to by responsible professionals in the fields of accounting and financial analysis, that we quote them here in their entirety. The material is a case study in the tactics of smear and innuendo. Here is what NIB says:
"4. In 1981, NFB made a grant of $270,000 (or 17.0 percent of total program expenses) to the Jacobus tenBroek Memorial Fund. This grant was made from NFB's program category "Specialized programs and services." NIB's review of the Jacobus tenBroek Memorial Fund's 1981 report to the Internal Revenue Service noted that the Fund received $544,353 in support/revenue and had expenses of $185,789. There was an excess of support/revenue over expenses of $385,564. Of the Fund's total expenses, $147,465 or about 27.1 percent of total support/revenue was spent on program. Because of these low program expenses, question arises as to what portion of the NFB program grant of $270,000 was actually used for program services and/or to increase the Jacobus tenBroek Memorial Fund's fund balance, which totaled $1,539,659 (includes $1,252,425 in land, property and equipment, net) as of December 31, 1981.
"5. NFB's President and unpaid staff head is a member of the Board of NFB and executive director (paid staff head) of the American Brotherhood for the Blind. He is the President and a member of Jacobus tenBroek Memorial Fund's 6-member Board of Directors. Two other officers of the National Federation of the Blind are also officers of the Jacobus tenBroek Memorial Fund.
"6. By the nature of NFB's structure, the control of its activities as been vested primarily in the office of the President. Question arises with regard to NIB standard #1 as to whether there is too much control vested in a single individual by this organization."
First it should be noted that we do not find other instances where NIB reviews the finances of either grantee or grantor organizations in its reports. As we noted earlier, for example, despite the fact that the National Accreditation Council for Agencies Serving the Blind and Visually Handicapped regularly receives more than 60 percent of its total public support from the American Foundation for the Blind, NIB does not point this fact out in its report on NAC; nor does it caution the contributor that the bulk of NAC's funds come from an organization whose fundraising costs as a percent of direct mail contributions are sometimes as high as 69 percent, and which has accumulated millions of dollars in excess funds--or, to be precise, in 1983 $28,140,487 (nearly 18 million dollars more than its 1983 expenditures). NIB does not note in its report on the United Way of America that the United Way made a PROGRAM grant to the American Association of Fundraising Counsel (an organization of professional fundraisers). It does not speculate on the propriety of categorizing such an expenditure as a program grant; and of course, it is silent about the fact that the President of the American Association of Fundraising Counsel, one John J. Schwartz, is the Corporate Secretary of the National Information Bureau. [Our concerns about the relationship between NIB and the United Way are discussed more fully elsewhere in this report].
NIB has apparently discontinued using the heading, "Selected Facts" in its report. Perhaps it felt that the heading too aptly describes the technique it employs to smear and distort.
Why, for instance, does NIB discuss NFB's grant to the Jacobus tenBroek Memorial Fund without indicating that the tenBroek Fund is a non-profit organization which operates the National Center for the Blind? Why does it conveniently omit the fact that Kenneth Jernigan's position as President of the tenBroek Fund is a volunteer, UNPAID position? We have seen enough of NIB's unethical behavior to know that these omissions are deliberate rather than inadvertent.
But these omission, innuendo packed as they are, do not begin to compare to the incredible irresponsibility of NIB's discussion of the financial affairs of the Jacobus tenBroek Memorial Fund. How different the "selected facts" NIB chooses to report in item 4 of its report on the National Federation of the Blind appear when the complete financial report of the Jacobus tenBroek Memorial Fund is reviewed. NIB complains that the tenBroek Fund had "low program expenses" and an "excess of support /revenue over expenses of $358,564" and expenses of $185,789. NIB conveniently fails to point out the fact that in addition to its regular expenses of $185,789, the tenBroek Fund also spent $339,679 on renovation and expansion of the National Center for the Blind. If NIB had given this data, then it would also be clear to its readers that the tenBroek Fund received only $18,885 more during the year than it spent. Further, NIB did not report that the tenBroek Fund had outstanding contractual obligations in the amount of $212,950 to complete the renovation and expansion project at the National Center for the Blind. Having withheld these essential facts from the reader (apparently deliberately to create the false impression that the National Federation of the Blind has made grants to the tenBroek Fund in order that the Fund could improperly accumulate large excesses) NIB sanctimoniously concludes that "...question arises as to what portion of the NFB program grant of $270,000 was actually used for program services and/or to increase the Jacobus tenBroek Fund's fund balance..." Note that immediately following this statement NIB discusses the fact that the NFB President and two other NFB officers are officers of the Jacobus tenBroek Memorial Fund, without stating that all officers of the tenBroek Fund serve on an entirely volunteer basis. The innuendo that somebody is getting a "rakeoff," doing something under the table, or engaging in hanky panky is clear, unethical, and irresponsible.
NIB's own standards state that "it is not unreasonable to accumulate available assets to approximately 100% of an agency's most recent annual expenses or its next years budget." In the case of the tenBroek Fund, this would mean $698,243. The Fund had (when the $212,950 in outstanding contract obligations is taken into account) $75,439 in available assets.
The real facts bear scant resemblance either to the so-called "facts" contained in or the impression created by NIB's report on the National Federation of the Blind. Indeed, one would have to search diligently to locate a more archetypical "hatchet job." The evidence is irrefutable that NIB's reports are designed to perpetuate the personal value judgments of its Executive Director, M.C. Van de Workeen, and that it uses whatever techniques come to hand to get the job done.
The ethical standards of the American Institute of Certified Public Accountants prohibit the publication of selected portions of financial statements, and for very good reason -- it is easy (as we have seen with NIB's treatment of the tenBroek Fund, the National Federation of the Blind, the American Foundation for the Blind, and the National Accreditation Council for Agencies Serving the Blind and Visually Handicapped) to create any desired impression simply by including or excluding particular data. No reputable accounting firm engages in such practices, which appear to be routing operating procedure at NIB.
NIB makes much of the fact that the National Federation of the Blind, the American Brotherhood for the Blind, and the Jacobus tenBroek Memorial Fund have the same mailing address and urges that the readers of the NFB report ask for NIB's report on the American Brotherhood for the Blind -- a report equally distorted and filled with innuendo. In view of the fact that the common address happens to be that of the National Center for the Blind and that the Center occupies a full square city block, one wonders what NIB finds so noteworthy about the matter -- more noteworthy, for instance, than that Helen Keller International, Inc. (which does not meet NIB standards) is located at the same address and in the same building as NAC's benefactor, the American Foundation for the Blind, and that the Chairman, President, and Secretary of Helen Keller International, Inc. also serve as Chairman, President, and Secretary of the American Foundation for the Blind. Also, the common address of the organizations headquartering at the National Center for Charitable Statistics is located at the same address and in the same building and in the same office as the United Way of America, and that an individual paid by the United Way of America serves as executive director of the National Center for Charitable Statistics, and that M.C. Van de Workeen (head of NIB) was reported by NIB to be President of the National Center for Charitable Statistics in 1983. Add to this that United Way contributes to NIB and that NIB contributes to the National Center for Charitable Statistics, and that the National Center for Charitable Statistics receives contributions from United Way and that this link leads to that link until it all gets considerably involved. And does Van de Workeen get paid by the National Center for Charitable Statistics? We don't know. Does he get paid from other philanthropists that he accredits? We don't know. But the National Information Bureau meets its own standards. It tells us so. (See the attachments.)
None of these items is noted in NIB's reports on Helen Keller International, Inc., or on United Way of America, and we cannot help but wonder how NIB decides when common addresses and officers are noteworthy. NIB issues favorable reports on United Way of America.
While we are on the subject of what is noteworthy, WE find NIB's treatment of the United Way to be particularly so. Let us be absolutely clear. We are not talking about the United Way organizations at the state and local level throughout the country. We are talking about the United Way of America national service center only. In fact, the state and local United Way groups throughout the country do much of their work through dedicated volunteers--civic and business leaders of the community. We believe these community leaders, as well as the tens of thousands of average citizens who give to United Way and who do volunteer work for it at the state and local level do not know what is happening at the United Way of America national service center. We believe they will be as disappointed and outraged as we are at what is happening. The facts which we are about to set forth are in no way a criticism of these local United Way organizations. Quite the contrary. The individual local United Way volunteer or contributor will, we think, not be please upon learning what is happening to his or her hard earned donations. Furthermore, we suspect that many local United Way groups will want to reconsider the question of making use of NIB services and data.
The reader will remember that we earlier pointed out that NIB annually receives sizable gifts from United Way of America -- sometimes as much as 8 percent of its entire budget. We are concerned that NIB does not disclose this obvious conflict of interest in its report of the United Way of America. Such disclosure might prompt the reader to search out more objective sources of data on the United Way -- United Way's complete filing with the New York Department of State Charities Registration Section, for example (which, of course, as we know is readily available to M.C. Van de Workeen and the National Information Bureau). We obtained the New York report and, as usual, we find it most interesting to compare the complete financial reports with NIB's "pick and choose" versions.
Using its "pick and choose" method of financial disclosure, NIB reports that Kenneth Jernigan during 1981 had a salary of $50,805 as Executive Director of the American Brotherhood for the Blind, and $10,000 in contributions to employee benefit plans. NIB does not report that no other employee of the American Brotherhood for the Blind received in excess of $30,000; nor does it report (although the information is readily available to it from the New York Department of State Charities Registration Section) the salaries of such people as William Gallagher, head of the American Foundation for the Blind--$64,735 plus $9,710 for the year ended June 30, 1983 -- or for the NAC board members or executives or for the heads of other large New York agencies in the blindness field. In July of 1983, NIB makes the following statements in its report on United Way of America: "United Way of America reported in February 1982 that the salary range of its executive staff was from $40,000 to $125,000." What NIB does not tell its readers is that during 1981 William Aramony, President of the United Way of America, received a salary of $123,908 and an additional $35,159 in contributions to employee benefit plans, bringing his total compensation to $159,067, or that the following year Mr. Aramony received a whopping $36,432 raise to 160,340 and an additional $58,621 in employee benefit plan contributions, bringing his total compensation for 1982 to $218,961. Incidentally, one can readily obtain more recent as well as more complete and undistorted data from governmental agencies than from the National Information Bureau -- and one is not compelled to make "contributions" to get it. NIB's July 1983 report on the NFB reports only 1981 figures, although 1982 figures were available from the State of New York and elsewhere. Nor did NIB disclose that in 1981 United Way had four additional employees whose total compensation packages paid them in excess of $90,000 each, and 59 others who were paid in excess of $30,000. For 1982 the comparable figures were (in addition to Aramony at $218,961) one employee at $131,513, one at $110,017, one at $105,231, one at $102,512, and an additional 66 paid in excess of $30,000.
We can easily see why NIB finds the "pick and choose" method so convenient to use. Needless to say, United Way would not look kindly upon disclosure of the compensation of its executives. On the other hand, we think this is exactly the kind of information potential contributors would like to have. NIB's so-called "unbiased report" withholds useful data freely available from governmental agencies -- data, we might add, which has already been paid for at considerable cost to the taxpayer.
By touting itself as the place which dispenses "wise giving" advice, NIB steers unwitting contributors away from public sources of full, complete, and unbiased disclosure and financial reports to its own distorted versions -- designed to help its friends and hurt those who will not pay money or homage to it. What other explanation can there be for NIB's insistence on disclosing the salary of the Executive Director of the American Brotherhood for the Blind, while declining to disclose the salaries and benefits of United Way employees receiving two, three and (in one instance) almost four times as much? NFB believes that non-profit charitable organizations should pay salaries adequate to attract qualified and competent personnel. However, we believe United Way's compensation of its executive staff -- $218,961 for its president and well over $100,000 per year for several others -- to be excessive, and we believe that NIB's failure to specifically disclose these salaries and benefits -- particularly, when viewed along side of its insistence on reporting the precise salary of the Executive Director of the American Brotherhood for the Blind -- to be a deliberate attempt to protect United Way's questionable compensation practices from public scrutiny. We think that many contributors would feel most uncomfortable in knowing that their donations go to pay such lavish salaries to United Way's executive staff. And it is clear, that NIB and United Way officials fear the same thing.
Examination of United Way of America's complete financial reports fro 1981 reveals that the New York Department of State Charities Registration Section disallowed more than four million dollars worth of expenditures which United Way attempted to claim as "program service expenditures" under a program service category called "Campaign Support." As most American know, United Way calls its annual fundraising drive a "campaign." United Way includes in its program category "Campaign Support" such items as compilation of fundraising costs! In 1981 United Way of America received 94 percent of its total public support and more than 75 percent of its total public support and revenue from fundraising campaigns conducted by its local affiliates.
NIB not only accepts United Way of America's categorization of these fundraising costs as "program service expenditures," but it fails even to inform its readers that the New York Charities Registration Section insists that United Way of America delete these fundraising costs from its report of "program service expenditures." By these tactics NIB is able to report data which shows that United Way of America's "program service expenses" were 99.7 percent of its total contributions and membership support and that "fundraising expense as a percentage of contributions and membership support were one half of one percent" -- figures which, of course, meet NIB's published standards. How different the situation becomes when the $4,155,554 in "campaign support" expenditures is counted as fundraising costs -- that is, when United Way of America follows the same rules other organizations are expected to follow. Then, "Program service expenditures" become only 65.9 percent, and fundraising costs become 34.1 percent of contributions and membership support -- figures which fail to meet NIB's published standards. In the fact of such shocking and flagrant favoritism one finds it difficult to believe that NIB can maintain even the pretense of objectivity. Contrast costs as fundraising expense with its arbitrary reclassification of program service expenditures made by the American Brotherhood for the Blind and the National Federation of the Blind. Earlier in this document we exposed NIB's distorted presentation of selected figures from the financial statements of the Jacobus tenBroek Memorial Fund so that it could criticize grants made by the National Federation of the Blind to the National Center for the Blind. In its report on the American Brotherhood fro the Blind, NIB repeats its shoddy analysis of the tenBroek Fund's assets and expenditures, arbitrarily excludes from program services a large grant made by the Brotherhood to assist the tenBroek Fund with it manipulated figures to conclude that the American Brotherhood fro the Blind had low "program service expenditures."
Similarly, in its report on the National Federations of the Blind, NIB arbitrarily shifts $234,794 in program service expenditures to fundraising expense, and by so doing changes NFB's fundraising expense as a percentage of public support from 26.4 percent as reported in NFB's audited financial statements prepared by an independent certified public accountant to 41.2 percent after NIB's reclassification. These percentages do not take into account income NFB received in the form of donated service, even though the American Institute of Certified Public Accountants Audit Guide for voluntary Health and Welfare organizations (which guide NIB purports to follow) requires that such income be considered. NFB's fundraising percentages calculated in accordance with these provisions of the Audit Guide are 17.8 percent (and 27.7 percent, even when NIB's arbitrarily reclassified figures are used). Presumably NIB bases its reclassification on provisions of the Audit Guide regarding multipurpose mailings. However, the reader will note that NIB here again employs its convenient "pick and choose" technique to produce the figures it wishes to report relying on the Audit Guide only when it suits its purpose to do so.
At this point we refer the reader to our letter (copy attached) to NIB requesting disclosure of data regarding its own practices in connection with allocation of costs between fundraising, management and general, and program services. As we state, in that letter, our analysis of NIB's financial statement indicates the almost certain likelihood that NIB does not itself follow the provision of the Audit Guide with respect to the charging of multipurpose mailings, the categorization of management and general expense, and the reporting of the value of donated services. Further, we believe that NIB does not answer truthfully questions regarding allocation of fundraising costs in its report to the New York Department of State Charities Registration Section -- or, perhaps worse yet, answers technically truthfully, but in such a way as to create deliberately an impression exactly opposite to the true facts.
In other words, it would appear that NIB may be answering truthfully when it says that it does not allocate part of its costs for multipurpose fundraising mailings to fundraising and part to "program services." It would appear that it may simply charge the entire cost of the multipurpose mailing to "program services" and deny that there is any fundraising at all. Such behavior would be so shocking that only the most shady and irresponsible organizations would engage in it.
We have also requested further information about the National Center for Charitable Statistics. As we noted earlier, M.C. Van de Workeen was said by NIB to be the President of the NCCS in 1983, an organization which shares office space and possibly staff and funding with the United Way of America, and perhaps NIB. We do not have precise details about the financial relationships among NIB, United Way of America, and National Center for Charitable Statistics, because although the National Center for Charitable Statistics has apparently raised considerable funds in the state of New York, it has not registered with the New York Department of State Charitable Registration Section to solicit funds as is required by state law. We do not know is M.C. Van de Workeen is compensated for his services as President of the National Center for Charitable Statistics, and if so, by whom.
We will share any information we obtain on these and related subject with those who are receiving this report and who care to have such information. In view of the incredibly biased nature of NIB's report on United Way of America we are concerned to find further financial and program linkages between the two organizations, and possibly others. The distinct possibility exists that the National Information Bureau-United Way of America-National Center for Charitable Statistics structure and relationship is aimed at enlarging the fundraising base available to United Way affiliates, thereby increasing the control exercised by United Way of America over charitable activities and organizations throughout the country -- for such is necessarily the result when NIB succeeds in damaging the credibility and, therefore, the fundraising capacities of charitable organization which raise funds independently rather than as part of the United Way joint campaign system. And, or course, the NIB and Mr. Van de Workeen have a financial stake in the outcome. Preliminary indications are that organizations which rely on relatively small donations from large numbers of people and which raise funds primarily through the mail or other mass appeals find it more difficult to gain NIB approval than do organizations which rely primarily on corporate and foundation giving, large gifts from wealthy individuals, and sophisticated deferred giving organizational development programs. It is interesting to note that the former method is usually handled by the organization itself and is independent from the United Way system and from the New York based professional philanthropy establishment. Further research is required to flesh out the overall pattern and motives for NIB's extensive bias.
The question legitimately arises as to whether NIB performs any service of value to the public at all. Organizations soliciting funds from the public are required to file detailed reports with the Federal Government and with charitable regulatory agencies in most states. These reports are available in their entirety (not just in NIB's "pick and choose method") to any member of the public. It is difficult to see how any interest is served (except, of course, NIB's own) by NIB's selective publication of bits and pieces of these publicly available reports. The governmental regulatory agencies operate within a framework of laws and regulations and are required by law to treat all organizations uniformly and fairly. Administrative hearings, appeals procedures, and eventually court action to protect constitutionally guaranteed rights exist within the governmental regulatory system. At the same time, needs of the general public to have full and accurate financial and program data on charitable organizations, and to be protected from fraudulent solicitation are met. No such protection (either fro the public or the charitable organization) exists in connection with the activities of the National Information Bureau. NIB is responsible to no constituency except M.C. Van de Workeen, its own self-perpetuating board of directors, and (of course) the financial interests of its own contributors such as the United Way. NIB is free to distort and to use its reporting system to advance the interests of its own group of favored charities and to harm those who refuse to kow tow and pay homage. NIB's very existence violates its own published standard involving duplication of work. NIB would do well to reflect upon some of its own pronouncements. It says: "NIB believes health and welfare organizations have an obligation to assess what others are doing in their areas of interest... If these groups have greater resources and are competent to deal with the specific need, the organization should be prepared to shift its emphasis or go out of business."