Chief of Veterans Charities Grilled on Groups' Spending

By Philip Rucker
Washington Post Staff Writer
Friday, January 18, 2008

A congressional investigation yesterday uncovered new allegations of questionable spending practices at two veterans charities, including one that paid retired Army Gen. Tommy Franks $100,000 to appear in its solicitation letters using money the nonprofit raised to help soldiers returning from Iraq and Afghanistan.

At a raucous, three-hour hearing yesterday, House members questioned California entrepreneur Roger Chapin about his management of two charities. One charity, Help Hospitalized Veterans, spent hundreds of thousands of dollars in donations that were to help wounded soldiers on personal expenses for Chapin, executive director Mike Lynch and Richard A. Viguerie, to whom the charity has awarded millions of dollars in fundraising-consulting contracts, the hearing found.

The expenses included at least $340,000 in meals, hotels and entertainment; a $135,000 loan to Lynch for a divorce settlement with his former wife; a $17,000 country club membership; three airplane tickets to Hawaii; and a $1 million loan to Viguerie for a start-up initiative at his firm, several members of the committee said.

The second charity, the Coalition to Support America's Heroes, used Franks in its solicitation letters, the House Committee on Government Oversight and Reform found.

Rep. Henry A. Waxman (D-Calif.), chairman of the committee, said Help Hospitalized Veterans raised more than $168 million from 2004 to 2006. The charity spent a quarter of those donations on the veterans, with the rest going to direct-mail fundraising, salaries and other expenses, Waxman said.

Republicans and Democrats voiced outrage over what Waxman called "an intolerable fraud."

"Most of the millions they receive never reach veterans or their families," Waxman said. "Instead, the groups waste those contributions on bloated overhead costs and self-enrichment."

There are no laws that regulate how much charities spend on fundraising and overhead costs. There also are no requirements that nonprofit groups disclose such breakdowns in their solicitations. Several lawmakers signaled yesterday that they may introduce legislation aimed at helping donors better understand the finances of nonprofit groups.

Rep. Christopher Shays (R-Conn.) asked Chapin what would happen if his charities told donors how their donations were spent.

"If we disclose, which I'm more than happy to do, we'd all be out of business," Chapin said. "Nobody would donate. It would dry up."

Chapin said few people know how expensive fundraising can be.

"If I could do better, I would," Chapin said. "I've tried television, I've tried radio, I've tried foundations, I've tried corporations and the only thing that works is direct mail."

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