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September 14, 2011

The Big Business of Breast Cancer

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Photo Credit: Stephen Lewis

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It's good practice, say experts, for charities to make their financial records accessible to the public on their websites. But most, including the Breast Cancer Society, do not. "Nobody wants you poking around their financial drawers, asking why this much is spent on salaries versus this much on research. Who wants to deal with that?" explains charity consultant Gary Snyder, author of Silence: The Impending Threat to the Charitable Sector. Tax returns for all IRS-recognized nonprofits, dubbed "990s," are free for perusal on guidestar.org, but these are usually two or three years old, and realistically, how many of us would even know how to read them? So donors rely on groups like Charity Navigator, which uses tax returns to rate organizations on transparency and how much they spend on actual services versus overhead and salaries. The problem is, these ratings are notoriously unreliable, since tax returns are prepared by the organizations themselves. It would be as if your Equifax credit score were based on credit card statements you devised for them. (Last year, Charity Navigator announced that it would revamp its evaluation process.)

For the past six years, Charity Navigator has conferred its highest four-star rating on the National Breast Cancer Foundation, based in Frisco, Texas, a suburb of Dallas. The NBCF is something of an institution in the area, each year doling out 50 or so grants of upwards of $40,000 apiece to clinics and hospitals across the country to subsidize mammograms for the uninsured. (All told, the NBCF claims to have paid for 130,000 mammograms.) The group was founded two decades ago by breast cancer survivor Janelle Hail, a charismatic Paula Deen look-alike. Despite its size — it garnered $10 million in donations last year — and blue-chip partnerships with the likes of Dannon and Fujifilm, the NBCF could be called a family business. Buried in the footnotes of its latest tax return: A significant wing of the Hail family is employed by the NBCF. In 2009, Janelle Hail took home a $172,000 salary, plus another $57,000 in "other compensation." Her son Kevin Hail, NBCF's chief operations officer, makes $130,000, plus another $55,000 in other compensation. (Both have enjoyed raises of upwards of $10,000 per year since 2005.) NBCF also employs Hail's husband, Neal, as "senior consultant" and son Brent, who is the vice president of operations. But because the IRS requires that charities only disclose the salaries of its board members, key employees, and anyone else earning more than $100,000, Neal and Brent don't qualify, and Hail won't say how much she pays them, despite Marie Claire's repeated requests.

Family-run charities are standard fare in breast cancer circles, and, not surprisingly, family ties raise some discomforting conflicts of interest. Phyllis Wolf and her son Joseph cofounded the Baltimore-based American Breast Cancer Foundation in 1998. Its mission: Provide financial assistance to uninsured breast cancer patients. For most of its history, the American Breast Cancer Foundation relied on telemarketers to solicit donations. But by 2002, Joseph had struck out on his own, opening a marketing firm called Non Profit Promotions, which, despite four other vendors providing similar services, quickly scored the ABCF's biggest telemarketing contracts. "He always [tried] to give us the better deal, having had a relationship with the foundation," says Sherri Walters, development associate at the ABCF. Non Profit Promotions generally pocketed about 40 cents for every dollar it collected, and over the course of nine years, Joseph billed his mother $18 million for his services. ABCF terminated its relationship with Non Profit Promotions in 2008, about a year before Phyllis Wolf took early retirement.

The net result of all this profiteering? Pink has lost its punch. "All these groups that have sprouted up around the country have diffused the attention to breast cancer," contends Fran Visco, president of the National Breast Cancer Coalition and former chair of the Integration Panel of the Department of Defense Peer-Review Breast Cancer Research Program. "They take up dollars and put them into little pots all across the country. They take away from the efforts that can — and do — make a difference. They should all be focused on putting themselves out of business." But who closes up shop when business is booming?

For anyone worried about where their donations are going, here's a useful tip: Skip the pink-ribbon merchandise. Because no one really owns the rights to what has become the universal symbol of breast cancer (though Susan G. Komen for the Cure trademarked its own version), peddling the logo has become a massive racket, overrun by slick profiteers exploiting the public's naive assumption that all pink purchases help the cause. Often they don't. Tchotchke vendor Oriental Trading sells an extensive line of pink-ribbon party favors, including "Find the cure" car magnets and "I wear pink in honor of" buttons. Save for proceeds from its pink rubber duckies, part of a sponsorship deal with Komen, not a penny of Oriental Trading's breast cancer novelties goes to breast cancer. Three years ago, veteran nurse Christina McCall, the daughter of a breast cancer survivor, launched Pink Ribbon Marketplace, an online store based in Germantown, Tennessee, with a vast array of pink-hued goodies. "As a woman and the mother of three daughters, it quickly became apparent that creating a business that gives back to breast cancer victims and their families was important to me," she writes on her store's website. "I personally chose our local American Cancer Society and Reach to Recovery Program to be the receipient [sic] of funds we donate." But when asked about those donations, McCall fesses up that, in fact, no monies have ever gone to the American Cancer Society or its breast-cancer-targeted Reach to Recovery program. "I'm a little leery of [donating money]," McCall told Marie Claire. Instead, she says she gives away free products to charity events and donates to individuals — "depending on my profits." (Shortly after MC contacted her, McCall removed any reference to the American Cancer Society from her website.)

Last year, the Better Business Bureau issued a warning to consumers about misleading or vague claims made on the packaging of pink-ribbon-festooned products. "Simply because a company puts a pink ribbon on its package doesn't always mean a good breast cancer charity is benefiting from your purchase," noted Michelle L. Corey, a BBB exec.

Google "pink ribbon," and the first listing to pop up is pinkribbon.com, the glossy website of Pink Ribbon International, an Amsterdam-based outfit owned by Dutch businessman Walter Scheffrahn. The site serves up an eclectic mix of breast cancer information and merchandise, including a yard sign ($14.99) and barbecue apron ($16.99) embossed with the site's logo. Over the past seven years, Scheffrahn has shelled out 200,000 euro ($288,000) to buy the rights to the enviable pinkribbon.com domain name in roughly 40 countries. "There's not a real global awareness of the pink ribbon," says Scheffrahn. "We want to take it to the next stage." But despite its official-looking packaging, his site is riddled with misleading information, including a statement that Scheffrahn's company donates "10 percent of its company capacity and funds" to charity. Exactly how much is that? Scheffrahn says it refers to manpower, not actual dollars. Scheffrahn also claims that 90 percent of donations made to breast cancer through his websites go to charity. (Ten percent is reserved for overhead, he says.) But this, as it turns out, is also a bit fuzzy. Scheffrahn says his entire Web network generated "something like $20,000" by the end of last year. (That's hard to confirm given that, at press time, pinkribbon.com's tax returns were not yet available to the public.) So where did the $20,000 go? Scheffrahn confesses that not only hasn't he donated the money yet, he's unsure which organization to give it to. "It will go to a fund we think is appropriate," is all he can come up with, as though it were the first time he'd ever been asked the question.


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