Attorney general accuses Minnesota car donation charity of fraud
ST. PAUL (Forum News Service) -- Minnesota's attorney general accused the nation's largest vehicle-donation charity on Wednesday of using most of its money for its own operations instead of giving most of the funds to local Make-A-Wish Foundation...
ST. PAUL (Forum News Service) - Minnesota’s attorney general accused the nation’s largest vehicle-donation charity on Wednesday of using most of its money for its own operations instead of giving most of the funds to local Make-A-Wish Foundation chapters.
Attorney General Lori Swanson said about 20 percent of the Car Donation Foundation’s $108 million in gross revenue over a four-year period went toward charitable grants, while the rest was used for fundraising and administrative costs and through payments to a pair of companies owned by the executives who founded and manage the charity. Swanson said the compliance report she issued questions the payments and solicitation tactics of the charity.
The St. Paul-based foundation has been soliciting vehicle donations under a “Wheels for Wishes” program through newspaper and Internet ads that said profits would go to local Make-A-Wish chapters to help children fighting cancer. Nearly 50,000 vehicles were donated to the foundation in 2014, amounting to $37 million in revenue. The foundation solicits donations of used vehicles, which donors may deduct on itemized tax returns as charitable contributions
The report found that the foundation’s solicitations were misleading because they did not disclose the foundation rather than Make-A-Wish was the recipient of the donated vehicles, Swanson said.
“Donors need transparency to make informed decisions, including who they are donating to and how their donation will be spent. They haven’t been given that here,” Swanson said.
The foundation, founded by William Bigley and Randy Heiligman, uses National Fundraising Management Inc., a for-profit Minnesota company which is exclusively owned by Bigley and Heiligman, as its national fundraising company, according to Swanson
In Minnesota, it uses Metro Metals Corporation, another for-profit Minnesota company which is exclusively owned by Bigley and Heiligman, as its scrapyard and auction house. The foundation paid these two for-profit corporations almost $36 million between 2011 and 2014, she said.
The foundation works nationwide in about 40 states and has come under prior IRS scrutiny for its ties to private firms.
Swanson, who has authority over Minnesota charities by state law, said the compliance report could lead to litigation or other enforcement actions if steps aren’t taken to correct the situation. She also informed the IRS of her findings.