Toronto Star
MADD’s `exorbitant costs’ anger charity’s volunteers
Dec. 9, 2006. 08:43 AM
KEVIN DONOVAN
STAFF REPORTER
People who donate to Mothers Against Drunk Driving are told by the charity that most of the $12 million it raises annually is spent on good works — stopping drunk driving and helping families traumatized by fatal crashes.
But a Star investigation reveals most of the high-profile charity’s money is spent on fund raising and administration, leaving only about 19 cents of each donor dollar for charitable works.
MADD chief executive officer Andrew Murie defends the expenses, saying the paid telemarketers and door-knockers are actually performing good works because they educate the public as they ask for cash. That’s a defence Canada’s top charity regulator rejects.
The controversy over squandered millions has many MADD Canada volunteers — typically people whose relative or friend was killed or injured by a drunk driver — calling for the charity to clean up its act.
“These are exorbitant costs,” said Sue Storey, whose mother was killed and father injured when their car was hit by a drunk driver in 1999. Storey is the co-founder of MADD’s Dufferin chapter. “I feel like I have been let down.”
Judy Gerrard Simmons, a former MADD board member and local chapter president, said the claims from MADD’s head office are misleading. “This is the public’s money. They have a right to know where it really goes,” said Gerrard Simmons, whose 15-year-old daughter and first husband were killed by a drunk driver in 1986.
“All of these millions of dollars roll in to MADD because the public has such a heart. The money comes in because of the deaths of our daughters, sons, husbands and wives,” said Gerrard Simmons.
She and Storey are two of thousands of volunteers who counsel families victimized by drunk driving. They find it offensive that MADD raises so much money, only to have most of it stay with three paid fundraising companies. Storey said the charity’s backbone is its counselling and advocacy work, which is done by unpaid volunteers with personal knowledge of the tragedies too many drinks and a car can cause.
For years MADD has been claiming it spends donor money well — fundraising pitches say “83.6 per cent of your donation is spent directly on MADD Canada programs.” When the Star obtained MADD’s financial statements, it was clear that millions of dollars in payments to the fundraising firms made up a big chunk of its charitable programs.
Veteran volunteers who built the charity from its grassroots days are locked in a struggle with CEO Murie over what they consider deceitful fundraising practices. They are also concerned that Murie won’t reveal MADD finances — salaries and administrative expenses — to the volunteers. But they say their complaints have fallen on deaf ears.
A groundbreaking charity series by the Star in 2002 revealed that one in six charities spent more on fundraising and administration than they did on charitable work. The Star’s investigation developed a standard that many Canadian charities have adopted: Good charities devote at least 60 per cent of their annual expenditure to good works, with the best ones devoting 80 per cent or more.
Charity in Canada is regulated by the Canada Revenue Agency’s Charities Directorate, run by director-general Elizabeth Tromp.
This week, the Star told Tromp that MADD was counting the work of professional fundraisers as charity. Tromp is not allowed to comment on individual charities but she said the practice is definitely not allowed. “When a professional fundraiser has been retained, it can reasonably be inferred that the intent of the expenditure is fundraising.”
MADD’s Murie said the regulator gave him permission to count the expenses as charity.
“We view these millions of one-on-one personal contacts with the public to be vital to our mission. It ensures that individual members of the Canadian public are informed about the seriousness of impaired driving,” Murie said in a written statement to the Star. He said this is approved by the federal regulator and is practised by many other charities.
Tromp said the regulator has never condoned this approach.
Long-time MADD volunteers say fundraising is not charity. Visiting a victim at home or giving a talk to students about their personal experience is.
MADD Canada founder John Bates, who received the Order of Canada for his anti-drunk driving work, said the group created at his kitchen table many years ago has lost its way. He and other volunteers have raised this issue with Murie over the past year.
“We started off with no money at all. Now MADD has become a money machine working on fear and scare tactics,” said Bates, the one-time chairman who now has an honorary position on the board but no voting power. “There are wonderful people doing great volunteer work in MADD chapters across Canada but MADD head office has taken a national tragedy and turned it into a fundraising machine.”
Bates started the anti-drunk driving campaign in 1982 when his daughter’s friend, Casey Frayne (son of author/activist June Callwood and famed sportswriter Trent Frayne), was killed by a drunk driver. The woman was fined $500 and her driver’s licence suspended for three months after she was found guilty of careless driving. The woman was originally charged with dangerous driving, impaired driving and refusing to take a breathalyzer test.
After the accident, Bates and others in the community set up PRIDE (People to Reduce Impaired Driving Everywhere) and quickly made a big impact, forcing a change in attitude and laws.
In 1990, MADD USA expressed interest in coming to Canada. Bates and leaders of two other anti-drunk driving groups joined together, invited participation from the American group, and MADD Canada was born. By the late 1990s the organization started becoming more corporate. More staff were hired, salaries were increased, nicer offices rented and contracts signed with companies to run telemarketing campaigns, knock on doors, send out mail and issue tax receipts.
The MADD story highlights an issue that national opinion polls have shown concerns donors: charities that hire professional fundraisers to do all, or almost all, their fundraising. Fundraisers typically take 70-90 cents of each dollar. That’s what is happening at MADD, with the money turned over to the charity then being eaten up by administrative expenses and head office salaries. A portion of those salaries can be claimed as good works if the charity executives — as Murie and others do — carry out charitable activities in addition to running an office. For example, part of MADD’s mandate is to lobby for better laws.
But it’s in the area of fundraising where MADD spends a great deal of money.
Donors across Canada gave $5.4 million over the last year when the charity’s telemarketers called. MADD’s financial statements show 76 per cent ($4.1 million) was kept by the telemarketer. Part of the remaining 24 per cent ($1.3 million) was eaten up by other charity expenses such as administration, leaving little for good works.
Fundraising by volunteers, which many Canadian charities carry out, earns far more money for the chosen cause. Examples include the annual Terry Fox Run where volunteers raise money for cancer research. MADD does only a small amount of volunteer fundraising.
Murie said there is nothing wrong with using paid fundraisers because they are educating the public as well as asking for cash. He said MADD counts the words in each fundraising request and apportions expenses based on that: when the telemarketer or paid door-knocker gives prospective donors a “victim’s story” that is public awareness and part of the charity’s mission — not fundraising — even though the story is told to get a donation. The charity uses the same method of accounting for its mail fundraising drive.
A telemarketing script provided to the Star by MADD indicates that the fundraiser’s call is made to get a donation, though some information on the drunk driving problem is provided.
In the script, the paid fundraiser begins with a statistical overview of drunk driving in Canada, then describes volunteer-based services the charity provides. At this point, the fundraiser asks for a minimum donation of $50. If the prospective donor agrees, the telemarketer asks for a credit card number. If the donor says “no” then the fundraiser launches into a description of how MADD is pushing for tougher court penalties. Again, the fundraiser asks for a donation. If the prospective donor agrees, a credit card number is requested. If the answer is “no” more statistics are provided followed by one final pitch for money.
Murie said this is the charity’s public awareness and education campaign.
Ironically, the Star found, the person who does not donate gets the most “public awareness” because the fundraiser continues providing information.
In 2003, MADD was cautioned by the Charities Directorate for confusing fundraising and charitable works following an audit.
“(MADD) made incorrect allocations of expenditures between those incurred of a fundraising nature from those funds spent on charitable activities,” reads a letter to Murie from the directorate. It notes that charitable programs do not include “purely fundraising expenses such as door-to-door, direct mail and telemarketing fees.”
Murie said that after the audit, MADD worked to “enhance the accountability of our expense allocations.” He said they developed the “word count” method which he maintains was approved by the regulator.
Charity regulator Tromp said this accounting method is not approved. “We don’t go by words,” Tromp said, adding charities must carefully distinguish their good works from their fundraising campaigns. Tromp said she was speaking about charities in general and not commenting on MADD.
MADD’s financials came to light as part of a Star investigation into charity in Canada. It is unclear how many charities use contracted fundraisers because not all charities report this information to the government. Of the 800 charities that currently report using contracted fundraisers, MADD raises the most by this means and leaves the most in the fundraiser’s coffers.
MADD’s operations have led to a significant war chest, the Star found. Financial statements show the charity has $5.3 million in cash and investments. This is at odds with government strategy on charity which typically requires a group to spend most of its money on its cause.
There’s no doubt MADD Canada does good work. The Star interviewed a dozen leading volunteers (many of them current or past chapter presidents) and heard stories of how they rush to the aid of the newly bereaved, drawing on their own experiences to provide comfort and guidance. At the community chapter level, volunteers counsel the bereaved, monitor impaired driving court cases and provide pamphlets to the public. MADD also receives a government grant it uses to help train police on how to notify victims’ families; it monitors drunk driving court cases; and provides pamphlets on various issues to the public.
Another source of income for MADD is a multimedia presentation on the dangers of drinking and driving it charges high schools to view. Schools pay about $800 per showing. The financial statements show it costs MADD about $650,000 a year to mount the presentations, and it makes about $100,000 profit each year from the school fees.
Nancy Codlin of MADD’s Durham Region chapter lost her 18-year-old niece to a drunk driver six years ago and frequently helps counsel new victims.
But she is distressed at the fundraising and the lack of response from Murie and MADD’s board to their complaints. After volunteers raised the issue last spring at a highly emotional meeting, complaint letters were sent to the board. But Codlin and others interviewed say the board did not properly respond.
In a letter from MADD chair Senator Marjory LeBreton earlier this year, chapter leaders were told only that MADD’s accounting method for its fundraising expense (calling it programs and services) was approved by the board and therefore correct.
LeBreton, who is leader of the Conservative government in the Senate, lost her daughter and grandson 10 years ago in a drunk driving accident. She would not agree to an interview for this story, but sent an email encouraging the Star to speak to CEO Murie.
LeBreton wrote: “I am so proud of MADD’s success on a number of fronts — the highly successful public awareness campaigns; the extensive work with federal, provincial and territorial lawmakers to strengthen our laws; and most significantly, the heartbreaking but crucial work in support of the victims of these senseless criminal acts.”
Despite numerous requests over the past month, Murie would not agree to an interview, but accepted questions by email.
The CEO would not reveal his salary or that of other staff, saying it is personal information. Volunteers have been seeking an accounting of the $2 million-plus salary and administrative expenses at the charity’s Oakville head office.