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The Honolulu Advertiser
Posted on: Sunday, September 23, 2007

AFTER DEADLINE
Charity series presents all sides

By Mark Platte
Advertiser Editor

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Read the Hawai'i charities series and search our database at www.honoluluadvertiser.com/charities

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Rob Perez's four-part series last week titled "Unguarded giving: Who's regulating Hawai'i's charities?" was a solid piece of journalism, not only because of what it exposed but because the reporting and writing were scrupulously balanced and fair about a tricky topic.

When we discussed Perez's series, I was concerned about the potential negative impact it might have on giving. So many charities draw from an ever-decreasing pool of funds, and I didn't want potential donors to use the series as an excuse not to give to worthy causes.

According to a 2002 Hawai'i Community Foundation study, Hawai'i residents gave some $430 million in goods and money to charities here and on the Mainland the year before. The percentage of all households giving, according to the study, was 92 percent, and the average annual donation among giving households was $1,123.

Perez's special report laid out all sides of the issue. He revealed that state government has virtually no oversight over our charities, assigning not even one full-time investigator to watch over giving.

He also found that Hawai'i is one of only 11 states that do not require charities to register, meaning that there is often no way to track how much money some groups are collecting or whether organizations are legitimate and their donations tax-deductible. He uncovered some extreme examples of exorbitant salaries, improper loans and other questionable dealing, but he also found charities that are models of efficiency, like Make-A-Wish Foundation.

The third day of the series showed just how little some of the money raised goes to some charities, with much eaten up by telemarketers' costs. Perez highlighted the case of an O'ahu-based for-profit telemarketer that raised $15,000 from Hawai'i residents for Children's Cancer Assistance Network, based in Washington state, in 2005 and found that only $168 went to the kids.

Perez also showed how little interest there is at the state Legislature in trying to regulate and register charities despite efforts by the state attorney general's office to do so. Even the simple request to get nonprofits to file a copy of their federal tax returns each year was rejected before it got out of committee.

The series was accompanied by a database that allows readers to search through the records of 650 nonprofits and find a tally of revenues, assets, expenses and executive salaries. The database has drawn nearly 20,000 page views in the week or so it's been up.

One of those quoted in the series, John Flanagan, president of the Hawaii Alliance of Nonprofit Organizations, thought the stories were valuable and error-free and "a positive way to get the conversation going" about the points raised. However, he believes that most of our readers probably came away with the impression that charities were ripping people off.

"The title of the series alone, 'Unguarded giving: Who's regulating Hawai'i's charities,' adds to the stereotype that there's a problem and nobody is minding the store while there's money going out the backdoor," said Flanagan, a former editor and publisher for the Honolulu Star-Bulletin. "That's not true."

He believes the stories were largely built on the false assumptions that telemarketers shouldn't be raising money for charities, that those with the lowest administrative costs are the most well-run nonprofits and that registration and reporting to the state are essential to making sure charities stay honest. In fact, he said, nonprofits with income of $25,000 or more are highly regulated by the IRS.

Flanagan did like the database that included all the facts and figures about hundreds of nonprofits and wishes it could be expanded. But overall, he had concerns about the series.

"The stories were told from the attorney general's point of view and not the nonprofit sector's point of view," he said. "There are some bad cases involving nonprofits and some serious cases, but those are isolated, and what the nonprofit community does for Hawai'i has not been told."