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America's worst charities look nothing like Habitat for Humanity, Boys and Girls Clubs or thousands of other charities, large and small, that are dedicated to helping the sick and needy.

Well-run charities rely on their own staff to raise money from a variety of sources. They spend most of their donations on easy-to-verify activities, whether it's running soup kitchens, supporting cancer research, raising awareness about drunken driving or building homes for veterans.

The Times/CIR list of worst charities, meanwhile, is littered with organizations that exhibit red flags for fraud, waste and mismanagement.

Thirty-nine have been disciplined by state regulators, some as many as seven times.

Eight of the charities have been banned in one state.

One was shut down by regulators but reopened under a new name.

A third of the charities' founders and executives have put relatives on the payroll or the board of directors.

For eight years, American Breast Cancer Foundation paid Joseph Wolf's telemarketing company to generate donations.

His mother, Phyllis Wolf, had founded the Baltimore-based charity and was its president until she was forced to resign in 2010.

While she ran the charity, her son's company, Non Profit Promotions, collected $18 million in telemarketing fees.

Phyllis Wolf left the charity after the payments to her son attracted media attention in 2010. The charity has since stopped using telemarketers, including Joseph Wolf's.

Phyllis and Joseph Wolf did not respond to several calls seeking comment.

The nation's worst charities are large and small. Some are one-person outfits operating from run-down apartments. Others claim hundreds of employees and a half-dozen locations around the country. One lists a UPS mail box as its headquarters address.

Several play off the names of well-known organizations, confusing donors.

Among those on the Times/CIR list are Kids Wish Network, Children's Wish Foundation International and Wishing Well Foundation. All of the names sound like the original, Make-A-Wish Foundation, which does not hire professional telemarketers.

Make-a-Wish officials say they've spent years fielding complaints from people who were solicited by sound-alike charities.

"While some of the donations go elsewhere, all the bad public relations that comes with telemarketing seems to come to us," said Make-A-Wish spokesman Paul Allvin.

Donors who answer calls from the 50 worst charities hear professionally honed messages, designed to leverage popular causes and hide one crucial fact: Almost nothing goes to charity.

When telemarketers for Kids Wish call potential donors, they open with a name you think you've heard before.

Then they ask potential donors to "imagine the heartbreak of losing a child to a terminal illness," according to scripts filed with North Carolina regulators in 2010.

Kids Wish, the callers say, wants to fulfill their wishes "while they are still healthy enough to enjoy them."

They leave out the fact that most of the charity's good deeds involve handing out gift cards to hospitalized children and donated coloring books and board games to healthy kids around the country. And they don't mention the millions of dollars spent on salaries and fundraising every year.

The biggest difference between good charities and the nation's worst is the bottom line.

Every charity has salary, overhead and fundraising costs.

But several watchdog organizations say charities should spend no more than 35 percent of the money they raise on fundraising expenses.

The Make-A-Wish Foundation of Central and North Florida is one of dozens of Make-A-Wish chapters across the country.

Last year, it reported raising $3.1 million cash and spent about 60 percent of that, $1.8 million, granting wishes.

The same year, Kids Wish raised $18.6 million, its tax filing shows. It spent just $240,000 granting wishes — 1 percent of the cash raised.

The formula

The path chosen by Jacqueline Gray shows exactly how a worthy cause can be turned into one of the nation's worst charities.

In 2007, Gray and her husband, Kevin, started Woman to Woman Breast Cancer Foundation in Lauderdale Lakes.

For a year the couple struggled to raise money by hosting golf tournaments and by making phone calls to potential donors themselves.

Then they met Mark Gelvan, a New Jersey consultant who has spent two decades transforming fledgling charities into money-making machines.

"He said he had the best dialers on the market," Jacqueline Gray recalled.

Gelvan introduced the Grays to what sounded like a winning formula.

He would help the charity expand if it signed a contract with telemarketer Community Support Inc.

The staff at Community Support would handle everything. They would create the marketing materials and run the call centers.

The telemarketer even gave the Grays $30,000 in seed money to cover bills related to the expansion. All the Grays had to do was agree to let Community Support keep the majority of every dollar raised, then sit back and wait.

The transformation was immediate.

From donations of less than $15,000 in fiscal 2008, contributions to Woman to Woman through its professional solicitor increased to $1.5 million in 2009, then leaped to $6.3 million in 2010 and $6.7 million in its most recent filing.

What the charity got to keep was far more modest. It netted about $50,000 its first year with Community Support and $544,000 in 2011.

That was still enough for Gray, her husband and her daughter to start taking salaries. In the latest year, the trio received $84,000 in total compensation. Each member of the family also has a vehicle provided by the charity.

The Grays' decision to sign on with professional fundraisers transformed Woman to Woman into one of the nation's worst. It falls at No. 22 on the Times/CIR list.

Woman to Woman raised $14.5 million in donations from 2009 to 2011, tax filings show.

It paid nearly 95 percent of that to its for-profit fundraiser and spent about $700,000 on overhead and salaries.

That left an average of less than $20,000 a year to provide mammograms and other diagnostic services for women with breast cancer.

Jacqueline Gray, herself a breast cancer survivor, said she is as shocked as anyone by how much money has been raised in her charity's name and how little of it has reached patients. She said she is angry that phone solicitors take more than 90 percent of the revenue.

But she vehemently denies that she's to blame.

"Why would I be to blame for a system that's dysfunctional?" Gray asked. "We are doing what we're supposed to be doing."

She showed a reporter several emails she has sent Gelvan in the past year, trying to renegotiate Woman to Woman's contracts for better returns.

His response, according to Gray: If they didn't like 10 percent, Gelvan would replace Woman to Woman with another charity.

"In the tele-funding business sector, it is common for nonprofit organizations to renew PFR (professional fundraising) contracts under the same terms and provisions of the previous contract," Gelvan wrote in an email that Gray shared with Times/CIR reporters. "This is part of the 'if it's not broken, don't fix it' principle."

Instead of giving the charity a better return, Gelvan introduced the Grays to the next piece of the formula — gifts-in-kind.

Gifts-in-kind are donated items like generic drugs and medical supplies. Getting them to the sick and poor in developing countries can be an important role for a charity.

But for charities that spend most of their money on for-profit solicitors, gifts-in-kind can function as an accounting gimmick.

The value of these shipments is often highly inflated, with pills that sell for pennies priced at $10 each on paper.

Several charities also can pitch in to pay the overseas transportation costs of the same shipment of medical supplies.

Under accounting rules, each charity is then allowed to take credit for the entire value of the shipment as if it alone provided the supplies to those in need.

The result: A charity's revenues and good deeds are boosted and fundraising costs look smaller.

That makes donated items especially useful for charities that fear being criticized for having excessive fundraising costs on their public IRS filings.

Kevin Gray, the charity's chief financial officer, said Gelvan made no pretenses when he suggested the charity start shipping goods overseas.

"Mark said it was a way to make our 990 (IRS filing) look better," Kevin Gray said.

Gelvan told them to hire a company that rounds up donated goods and ships them overseas for charities, according to the Grays.

He handed them a binder laying out options like a Sears catalog.

They could send blood pressure monitors to Ghana. Or maternity ward equipment to the Philippines. Or surgical supplies to Guatemala.

The Grays rejected the idea.

"I can't figure out why I'd pay to ship medicines out of the country while people need the stuff right here," Kevin Gray said. "Why would I want to spend money that way?"

But the Grays say their charity would have no money if not for professional fundraisers, so they have continued paying them.

Reaping the benefits

The fundraising formula that raised millions of dollars for the Grays' charity has been adopted by hundreds of charities.

They use it to deceive donors and turn their causes into profit centers.

Few have been more successful than Mark Breiner, the founder and one-time president of Kids Wish Network.

Breiner relied on professional fundraisers and donated items to build his charity into a nearly $20 million annual operation.

He is among the beneficiaries. The charity he founded has paid him or his companies nearly $4.8 million in the past 10 years — $1.5 million more than what the charity spent on direct cash to children, according to tax filings.

While Breiner was still president of Kids Wish, earning $130,000 a year, he joined a former employee as a partner in a fundraising company called Dream Giveaway.

In 2008 and 2009, Kids Wish paid Dream Giveaway nearly $1.7 million in consulting fees to run automobile give-aways that raised money for the charity. The charity's IRS filings do not specify how much it netted on these early sweepstakes.

Breiner continued making money after he retired from Kids Wish in mid-2010 and left his mother-in-law on the seven-member charity board. In 2010 and 2011, the charity paid two of Breiner's companies $2.1 million for licensing, consulting and brokerage fees.

Kids Wish violated IRS rules by waiting four years to disclose the money it paid Breiner's companies.

The charity first reported the payments in amended tax filings last year after an employee took her concerns about insider dealings to the charity's board.

Meanda Dubay, who had been a wish coordinator for six months, told Kids Wish's directors she was seeking protection under the charity's whistle-blower policy.

She was fired immediately after she raised her concerns.

Kids Wish officials accused Dubay of stealing proprietary information from the company's database and said they had been preparing to dismiss her prior to her appearance before the board.

The charity asked the FBI to investigate Dubay. The FBI found no wrongdoing.

Kids Wish then sued Dubay for breach of contract and defamation. Dubay, who declined to talk to reporters, has denied all allegations in the civil case, which is pending.

Kids Wish officials said in an email that the omissions in the IRS filings resulted from "inadvertent errors made by the former accounting firm."

Officials at the Tampa accounting firm, Guida & Jimenez, did not return calls seeking comment.

Breiner declined to answer questions about his fundraising and consulting businesses, which received an additional $1.26 million from Kids Wish for a car giveaway in 2012.

But he said in an email that the charity recently completed an IRS audit that included a review of its contracts with his companies.

"They found no indication of private inurement or conflict of interest with founders or board members," Breiner said.

An IRS spokesman said federal law prohibits the agency from commenting on a specific individual or organization's tax issues.

Breiner has cashed in on other close relationships in the charity industry as well.

His consulting business was paid nearly $1 million over two years by a charity founded by a former Kids Wish board member. And when Kids Wish's longtime telemarketer started a charity so his son could have a job, he turned to Breiner for fundraising help.

"Mark's a genius," said Robert Preston, who paid Breiner's companies more than $375,000 in 2011 to run a Porsche giveaway for the charity, WorldCause Foundation.

Breiner's consulting arrangements may be perfectly legal, but such relationships are bright red flags to charity experts. They create the appearance of a conflict of interest and make it easy to turn charitable donations into personal profit, experts say.

Putnam Barber at the University of Washington, who has been writing and teaching about nonprofits for more than 20 years, said, "That kind of arrangement makes me fume."

Kendall Taggart is a reporter for The Center for Investigative Reporting. Times researcher Caryn Baird, computer-assisted reporting specialist Connie Humburg, and web developer Bill Higgins contributed to this report, along with CNN senior producer David Fitzpatrick. Times staff writer Kris Hundley can be reached at khundley@tampabay.com.

http://finance.townhall.com/columnists/morganbrittany/2013/06/17/the-50-ripoff-charities-give-at-your-own-risk-n1621292/page/full