Study Faults Charities for Veterans

The philanthropy institute gave F's to 12 of the 29 military charities reviewed and D's to eight. Five were awarded A-pluses, including the Fisher House Foundation in Rockville, which the institute says directs more than 90 percent of its income to charitable causes.

One group received an A, and one received an A-minus.

Jim Weiskopf, spokesman for Fisher House, said the charity does not use direct-mail advertising. "As soon as you do direct mail, your fundraising expenses go up astronomically," he said.

One egregious example, Borochoff said, is Help Hospitalized Veterans, which was founded in 1971 by Roger Chapin, a veteran of the Army Finance Corps and a San Diego real estate developer. The charity, which provides therapeutic arts and crafts kits to hospitalized veterans, reported income of $71.3 million last year and spent about one-third of that money on charitable work, the philanthropy institute said.

In its tax filings, Help Hospitalized Veterans reported paying more than $4 million to direct-mail fundraising consultants. The group also has run television advertisements featuring actor Sam Waterston, game show host Pat Sajak and other celebrities.

Chapin, 75, the charity's president, received $426,434 in salary and benefits in the past fiscal year, according to a filing with the Internal Revenue Service. His wife, Elizabeth, 73, received $113,623 in salary and benefits as "newsletter editor," the Post's review of the tax filing showed.

Chapin and other leaders of Help Hospitalized Veterans did not return calls for comment. But the charity e-mailed a statement stating that it is among "the finest veterans' charities this nation has to offer." The statement also said its "fundraising expenses, accounting methods, and executive salaries are comparable to other nonprofits in this field."

Bennett Weiner, chief operating officer of the Better Business Bureau, said the agency has 20 standards for reviewing charities, including that a charity's fundraising and overhead costs not exceed 35 percent of total contributions.

Weiner, who is scheduled to testify before the House committee today, said he could not comment specifically on veterans charities until after his testimony.

Advocates for veterans said they worry that scrutiny could damage military charities in general.

"In the rush to help, there's a lot of innovative work and good work happening, but there's also a lot of fraud and waste," said Paul Rieckhoff, executive director of Iraq and Afghanistan Veterans of America. "There's never been a greater need for veterans charities in a generation, and I hope issues like this don't deter people from giving."

Sen. Charles E. Grassley (R-Iowa), one of Congress's leading critics of charities, said some of the groups are abusing their tax-exempt status.

"Taxpayers are subsidizing that tax exemption," Grassley said through a spokeswoman. "Sitting on donors' money or spending too much on contracts and salaries doesn't benefit the public."

Rep. John Sarbanes (D-Md.), a member of the oversight committee, wants veterans charities to be held accountable.

"I hope there is an explanation, but it seems that most of the funds they raise never reach the veteran community," Sarbanes said through a spokeswoman. "Some of the practices being described are simply outrageous."

Rick Cohen, an expert on nonprofit groups and former executive director of the National Committee for Responsive Philanthropy, called the spending decisions of some charities "grotesque."

"I think in light of the Iraq war and the Afghanistan war, these veterans are the people who we should really be protecting and not using as excuses or avenues for ripping off charity philanthropy," Cohen said.

Staff researcher Meg Smith contributed to this report.