The Pallottine Fathers kept their fund-raising expenses below the legal ceiling in Maryland during the last six months of 1976, even though the religious order spent about 50 cents of every dollar collected on fund-raising, according to the state secretary of state.
The Pallottines were able to comply with the state law requiring charitable organizations to keep their fund-raising costs below 25 per cent of their contributions by deducting expenses for postage and mailing, an exemption allowed under the 18-month-old law.
Philip Bannon, state auditor who reviewed the Pallottines' report, said in an interview that the religious order's fund-raising expenses for all of 1976 exceeded the legal ceiling. However, the state law setting the 25 per cent ceiling became effective in July, 1976, and can be applied only to the Pallottine fund-raising costs in the last half of that year.
"We consider that they have complied with the law," said Secretary of State Fred L. Wineland, whose office is charged with administering the law. "The Pallottines and their lawyers have bent over backwards to show us everything but the kitchen sink."
The Pallottine's mail-order fund-raising drives and investments of charitable donations have been the subject of a grand jury investigation in Baltimore for the last year. The investigation was sparked by newspaper disclosures that the Baltimore-based Roman Catholic order was pouring millions into real estate ventures and lent $34,000 to Maryland's then-Gov. Marvin Mandel to help finance his divorce.
In one 18-month period, according to an audit prepared for the Pallottines, only 2.5 cents of every $1 raised in the name of the poor was actually used for the order's missionary work.
The order filed a report of its fund-raising costs with Wineland's office last month as part of an agreement with Maryland's attorney general made last year as a condition for the Pallottine's continues operation in the state.
The report shows that the Pallottines spent $1,688,000 in the last six months of 1976 on printing, postage salaries and related expenses to raise $3.3 million in charitable contributions. But more than $1.2 million of the fund-raising costs were absorbed by such deductible items as postage.
After deductions for exempted items, according to auditor Bannon, 21.3 per cent of the money raised by the order in the last half of '76 was used for fund-raising.