How to describe the CharityWorks Dream Ball?
Extravagant. Theatrical. A spectacle of philanthropy, pomp and power that wound through the National Building Museum every fall.
One year the gala was inspired by the Roaring Twenties; another’s “Midnight at the Oasis” featured a Middle Eastern dance troupe and fire dancing. There was the “Shangri-La” ball with a contortionist and personalized fortune cookies, and the “Absinthe Dream,” which bathed the soaring space and aerialists in green. The cost? About $600,000 each year.
CharityWorks threw another annual dinner, the 100 Point Vintage Wine Tasting, with celebrity chefs and the world’s finest wines. “I know a little bit about good food and wine,” Fox News’s Chris Wallace raved in the annual CharityWorks newsletter. “To sit there comparing the Château Latour and the Mouton-Rothschild is almost surreal.” The wines alone were valued at more than $300,000.
The parties were over the top, but it was all to raise money for charity and attracted some of the most generous and sought-after philanthropists in town — Ted and Lynn Leonsis, Raul and Jean-Marie Fernandez, Russ and Norma Ramsey, David and Katherine Bradley, to name a few. “Power philanthropy at its finest,” boasted a banner on the CharityWorks website.
But the 2016 Dream Ball, previously scheduled to take place this month, has been canceled. The wine dinner is no more. In April, the website offered this message: “Due to unforeseen circumstances, CharityWorks is restructuring.” Three months later, it posted an open letter announcing that it would no longer host fundraising events, citing the founder’s recurring health problems.
CharityWorks bills itself as “a major philanthropic organization in the metropolitan area.” But it’s not a charity or a nonprofit as defined by IRS rules. Neither is it a for-profit business, like an event-planning firm.
Basically, it seems to be an entity that existed to hold two fundraisers a year on behalf of other charitable organizations.
“There are 8,000 charities in Washington,” said Chairman Fernando Murias. “Most of them are very good causes. We came up with a creative way to distinguish ourselves and our events from the hundreds that go on each year. I think it’s a creative business model.”
Now, however, that model appears to have broken down, leaving some area charities waiting for hundreds of thousands of dollars that they say they fear may never materialize.
Americans donated a record $373 billion to charity in 2015, a testament to both the vast needs in this country and the willingness of even those with modest means to lend a hand.
CharityWorks, founded in 1999, was just a tiny drop in that sea, raising, it says, a total of $13 million over 17 years for nonprofit organizations in the Washington area.
The fundraising model was simple: CharityWorks selected one or two charities each year as “partners” (causes such as education for poor children and assistance to the military and their families), pledged to fund a program or a special project, and then hosted the wine tasting in the spring and the signature Dream Ball in the fall to drum up the money.
Founder Leah Gansler said that her prior charitable work “gave me the idea to create a mechanism for smaller charities to reach donors they normally would not have access to.”
“We force small charities to think big,” echoed Murias.
In the early boom years of the 2000s, CharityWorks gave away more than a million dollars a year. In interviews with The Post, three charities confirmed that they had received substantial donations: $1.2 million to the Higher Achievement Program in 2006; $1.3 million to the Center City Consortium in 2007; and $2 million in 2008 for the construction of the District’s Fisher House, a residence where injured soldiers and their families could stay during recovery.
“By any measure, they exceeded our expectations,” said Fisher House President David Coker.
Impressed by the success, small nonprofits clamored to become CharityWorks partners, going through a rigorous application process for up to $250,000 in grants. If selected, the charities were featured prominently in all the promotional materials and expected to participate actively in the fundraisers: directing donors to buy tables and write checks to CharityWorks and providing luxury items for the silent auctions held at both events.
In return, CharityWorks promised to publicize the partnerships, raise money on the charities’ behalf and introduce staff members to high-level supporters.
Then the economy took a turn for the worse. CharityWorks appeared to float above the fray; the parties were, if anything, even more elaborate.
But unknown to almost everyone involved with the organization, the charities were receiving less and less money.
In more than three dozen interviews with board members, donors, volunteers and charities, most spoke on the condition of anonymity because they were not authorized to speak for CharityWorks or the nonprofit partners. Several people said they were reluctant to discuss the organization for fear of alienating current or future donors, or because they still hoped that CharityWorks would eventually honor the commitments it had made.
In calls to every charity partner from the past five years, only two — Fisher House and Capital Partners for Education — confirmed that they had received the entire amount they’d been promised, although they would not state how much that was.
Several charities declined to comment on how much they expected to receive and whether they had, in fact, received all or part of that amount.
According to an audit of 2011, partner Thanks USA, the charity was told that it would receive a total of $276,826 and received a check for $155,688 in early 2012. Also according to the audit, later that year CharityWorks informed Thanks USA, which awards scholarships to military families, that it would receive $50,000 less than expected (with no explanation why) and sent a second check for $70,000.
“The initial communication did not consider our office expense allocation,” said Gansler. Murias said the commitment was only $225,688.
Live It, Learn It, a small educational nonprofit, was the other 2011 partner. “Literally every single person I have spoken with has raved about Saturday’s Dream Ball,” wrote founder Matthew Wheelock in a letter to Gansler. “Over the course of the evening, many Live It, Learn It allies and guests echoed the thought that dominated my consciousness: Wow — could this really be for us?”
Wheelock declined to comment for this article.
The USO, a 2012 partner that CharityWorks said received $225,000, did not return repeated calls for comment. Teach for America, which was a partner in 2014 and lists CharityWorks as donor of $100,000-$999,999, would not comment.
The last two charity partners, in 2015, Best Buddies and the Yellow Ribbon Fund, received $80,000 and $87,000 this summer. That was far less, based on receipts from previous fundraising campaigns, than they would have netted through their own local fundraising efforts, which were largely suspended last year.
CharityWorks says it has given $1,685,376 over the past five years, and another $235,000 in “directed” donations — checks written directly to the charities by individual donors at the request of CharityWorks.
All the money raised for the annual charity partners is collected during the calendar year of the partnership, said Murias, and the pledges are distributed over the next two years. Some of the money, he said, has been withheld when the charity “can’t absorb” the total amount effectively or is not using it as intended.
He conceded that several of the charities may not have had a “complete understanding” of the timing of payouts, the exact amount they would receive or that part of the pledges included directed donations.
“I think there’s been poor communication with these charities,” he said. “All the partners we have will be taken care of.”
Ask any question about CharityWorks and all roads lead back to Leah Gansler.
Gansler, explained a close friend carefully, is a complicated woman. On the one hand, she’s unbelievably generous, the first to show up in a crisis or at a celebration. On the other, she’s stubborn and can be controlling.
Her idea for CharityWorks was both simple and ingenious. She created two networks: a group of volunteers to put on the events — who paid dues to become members — and local business leaders to raise money and select the charity beneficiaries. And she did not take no for an answer.
“She’s the most determined person I ever met,” said one executive who worked with her closely.
Most of her friends were wives of successful businessmen, defense contractors and corporate leaders. Gansler’s husband, Jacques, served as undersecretary of defense during the Clinton administration and went on to a successful teaching and consulting career. Her stepson, Doug Gansler, was the state’s attorney for Montgomery County and later attorney general of Maryland.
“Leah could talk the talk,” explained one longtime volunteer. “She knew how to rally the wealthy people in Washington.”
And she insisted on the best. Susan Gage, one of the city’s top caterers, did all her events. Hargrove, the company that builds presidential inauguration sets, designed the lighting and decor for the Dream Ball. The wine tasting featured 10 of the most famous wines in the world accompanied by dinner prepared by celebrity chefs at the private homes of multimillionaire supporters.
In 2007, Gansler was named “Washingtonian of the Year” for working 15 hours a day despite some serious health issues: “I don’t get tired when I know I’m doing something to help someone,” she told the magazine.
In 2009, Rep. James P. Moran (D-Va.) entered a lengthy tribute into the Congressional Record: “I rise to recognize and salute Ms. Leah Gansler, a very special person in the Washington metropolitan region. . . . We are graced by her commitments and accomplishments which have helped so many.”
Gansler, now 67, has said that she never took a salary from CharityWorks because helping the less fortunate was a labor of love. According to several people who worked with her over the years, she also loved the parties and the social status that came from rubbing elbows with the biggest names in Washington.
She acknowledges that she made all the major decisions for CharityWorks and controlled all the finances. There’s no record of how much the organization raised or gave away because of its complicated and private — and perfectly legal — financial structure.
“I authorized expenditures related to our events and I led the fundraising efforts for our events as well,” said Gansler, who declined to be interviewed for this story but answered a few questions via email. All the money raised went into a tax-exempt fund; Gansler said she was the only person with direct access to how much was spent and how much was disbursed to charity.
In short, she controlled everything.
“It gave Leah the latitude to do anything she wanted to do,” said one former volunteer.
Nonprofits agonize over every penny, every day. If CharityWorks had been a traditional nonprofit — commonly known as a 501(c)3 — it would have filed an annual 990 report with the IRS, which spells out how much a charity spends and gives. The annual report, something every donor should read, allows supporters to crunch the numbers and decide which charities are using their money most effectively.
According to philanthropic accountability organizations, a charity should use at least 65 percent of any money raised for the charity’s stated mission. Most reputable event planners, said one veteran Washington fundraiser, will not work with any charity that spends more than 50 percent of donations on salaries and other expenses.
CharityWorks was unusual in that it operated like a charity — soliciting donations, distributing money — but was actually a fund under the umbrella of the Community Foundation for the National Capital Region (CFNCR), one of hundreds of institutions around the country that manage and distribute money to deserving local causes.
The CFNCR encompasses almost 700 funds valued at more than $300 million, all swept into one giant pile of money and distributed around the Washington region. Most of these funds come from individuals or families who want a foundation to handle paperwork and investing but lets them choose which charities to support and when the money is distributed.
That’s how CharityWorks operated, but anyone curious about its finances was out of luck: The fund’s activities are considered private, as if it were a bank account, which means no public documentation of expenses or distributions. Virtually every fundraising figure about CharityWorks comes from CharityWorks and cannot be independently verified. That’s fine with Gansler, who said “I do not have any concerns” about the lack of transparency.
People have many reasons for keeping information private, CFNCR President Bruce McNamer said, and community foundations provide donors that option.
Because CharityWorks is not a legal entity, it was actually the community foundation that gave donors tax deductions for gifts and paid all the bills related to CharityWorks’ events. A close examination of the foundation’s annual 990s reveals that the direct expenses for the five most recent Dream Balls averaged $600,000 per year; the wine tasting cost about $300,00 per year.
“Fundraising is a legitimate deductible expense for charitable purposes,” said McNamer, who said he was comfortable with the high costs for the ball because they were valid expenses. (Murias said the $600,000 includes $125,000 paid to two unidentified CharityWorks staffers for “work done year round.”)
Not everyone shares that view. “That’s an absurd amount to spend unless you’re raising $5 million or more,” scoffed one veteran event planner.
According to the tax documents, the Dream Ball raised $1.2 million in 2010, $1 million in 2011, $879,000 in 2012, $760,000 in 2013, and $538,000 in 2014, the most recent tax filing. The 2014 ball operated at a loss; attendance in 2015 was down further.
One board member said that he had tried for the past three years to persuade Gansler, unsuccessfully, to cut back on the events, which cost close to $1 million to put on each year. She continued to insist that there be no changes to the wines, the venue, the catering or anything else that made the Dream Ball special.
This summer, the advisory board pulled the plug.
In November 2015, Leah and Jacques Gansler filed for Chapter 11 bankruptcy. The documents, filed in Maryland, detail a privileged life: a $1.5 million house in McLean, a $1.7 million home in Palm Beach, plus two Florida condos worth about $4.5 million and a $30,000 Porsche.
The couple owes $1.7 million to the Internal Revenue Service, $4 million in mortgages and loans, $175,000 to American Express. The repayment plan includes an allowance of $19,000 a month, which includes renting an Annapolis home and personal expenses. Leah listed her profession as head of CharityWorks, working without compensation.
“My health issues were the main driver with our decision to no longer hold events and wind down the organization,” said Gansler. The Chapter 11 filing, she said, is “totally unrelated to CharityWorks.”
This summer, Murias asked the community foundation to send a total of $282,500 to four partner charities from the past three years. It still lists outstanding pledges of $327,500. It is unknown how much money is currently in the CharityWorks fund at the foundation.
The three charities selected as the 2016 partners — After-School All-Stars, Martha’s Table and the National Military Family Association — were informed that they would not be receiving the grants originally promised. “We are going to provide some money,” said Murias. ‘The amount is unclear.”
The open letter posted on the website ended on this note: “We are grateful for the support of the thousands of volunteers and donors, and we are proud of the impact they have made in the Washington area.” Murias said the organization is switching to a directed philanthropy model and is still accepting donations.
Whether anyone will give, of course, is another question.