Metro

Leading hunger relief charity challenged on its claim of low costs

The Food for the Poor website pictures children in need.
The Food for the Poor website pictures children in need.

Desperate children living in ramshackle huts. Malnourished mothers cradling gaunt infants in reed-thin arms. Distressing scenes of hopeless poverty in Haiti, across the Caribbean, and in Latin America.

Such heartbreaking images have helped spur a windfall of money for Food for the Poor, one of the nation’s largest charities, which reported disbursing nearly $1 billion in aid in 2017. All of it delivered to “the poorest of the poor” with extraordinarily little overhead, the international relief group says in its appeals.

“Over the last 10 years, fund-raising and other administrative costs averaged less than 5 percent of our expenses,” Food for the Poor wrote on its website in January. “More than 95 percent of all donations went directly to programs that help the poor.”

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That’s what church congregations in New England and elsewhere have been told from the pulpit by advocates for the ecumenical Christian group. That’s what hundreds of thousands of donors who contributed cash in 2017 believed, and what the charity continues to maintain.

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But it’s a far cry from the truth, a growing number of critics say.

Food for the Poor, they say, greatly inflates its total donations by putting huge and questionable valuations on noncash gifts, like medicines. That has the effect of making its overhead seem deceptively small by comparison.

The group’s cash gifts tell a very different story. Food for the Poor apparently spent 64 percent of its cash donations in 2017 on wide-ranging direct assistance that included housing, school supplies, and sanitation, according to its most recent financial statement. The remaining 36 percent went to salaries, fund-raising, and other overhead costs.

And belying its name, the Florida-based group spent just 7 percent of its cash donations on direct purchases of food in 2016, according to e-mails exchanged between a charity official and one of the organization’s critics, who shared the e-mails with the Globe.

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These practices by the charity have sparked investigations and regulatory questions in at least four states and a cease-and-desist order from California’s attorney general, which Food for the Poor has appealed. But the scrutiny has gone largely unnoticed in the Boston area, home to the nation’s third-largest Haitian community, whose native country is the biggest recipient of the organization’s aid.

The charity has solicited for many years in New England, often in churches where visiting clergy use their sermons to urge parishioners to donate. Food for the Poor also has advertised three to six times a year in The Pilot, the newspaper of the Archdiocese of Boston, most recently in March.

The organization would not disclose how much it collects in donations in New England, and the Massachusetts attorney general’s office, which regulates charities in the state, said it does not have that data.

Whatever its reach in New England — and it appears to be significant — Food for the Poor is competing for a limited number of charitable donations on what critics say is an uneven playing field.

“They are gaming the industry, because those of us who are not gaming cannot beat those ratios,” said Patrick Moynihan, president of The Haitian Project, a Providence-based nonprofit organization that built and supports a private, tuition-free school in Haiti. “Food for the Poor is very likely taking donations from compassionate, well-intentioned individuals of modest means in order to help corporations dispose of their trash.”

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Food for the Poor adamantly denied any financial sleight of hand. And Angel Aloma, the charity’s executive director, said in an interview that the investigations are diverting attention from the good works it does.

“It’s not that I worry so much about what this might do financially, because our partners and donors have responded with a lot of loyalty and support,” Aloma said. “We’re not motivated by the things they say we’re motivated by. We’re motivated by the fact that we're saving lives.”

At issue is the charity’s practice of combining $800 million of in-kind gifts with its much smaller cash donations, obscuring the reality that cash gifts account for only about 15 percent of its revenue.

Many of those in-kind gifts are medicinal drugs — some allegedly nearing their expiration date and barred from US distribution — that have been wrongly overvalued at US market prices instead of the far lower prices they bring outside the country, according to the California attorney general.

For example, the charity used US prices when it placed a $924,671 value on a 2012 shipment of the cholesterol drug simvastatin to Nicaragua, according to the cease-and-desist order issued in March by California Attorney General Xavier Becerra.

Its appropriate international price was less than $5,000, the order said, a reflection of the premium that US consumers pay for drugs. Pharmaceutical corporations say US prices are partly a product of research and development costs; critics say the companies charge sky-high prices simply because they can.

In another case, Food for the Poor shipped the antibiotic ciprofloxacin and painkiller tramadol to Guatemala in 2013 at a stated value of $534,000. On the international market, the cost was less than $46,000, Becerra said.

The California order, which accuses Food for the Poor of filing “false and misleading” financial statements and federal tax forms with his office, bars the charity from reporting that 95 percent of donations go directly to relief. Becerra is also seeking $1.09 million in penalties.

Food for the Poor’s use of the 95 percent figure, Becerra said, is “deceptive because it included both cash and noncash donations. But noncash donations, including Food for the Poor’s overvalued pharmaceuticals, did not pay for any overhead or fund-raising; only the cash donations did.”

Combining the two types of donations creates “a likelihood of confusion or misunderstanding in the minds of potential donors,” he said.

Becerra also wants to revoke Food for the Poor’s charity status in California. The group, which can continue soliciting in California pending resolution of its appeal, collected $38.6 million in cash donations there from 2012 to 2015.

The charity defended its marketing and bookkeeping methods.

In a statement, Food for the Poor said its “solicitation materials did not contain any misrepresentations. The program expense ratio highlighted in . . . solicitations is true and accurate when . . . expenses are viewed as a whole.”

Aloma also denied that Food for the Poor ships drugs near their expiration dates, saying that most are shipped with more than a year remaining.

Since its founding in 1982, the charity said, it has fed hundreds of thousands of people each day, built 124,800 housing units, and provided $14.3 billion in aid. The organization also said its accounting methods have been certified by independent auditors.

In January, however, Food for the Poor changed the language on its website to say that “more than 95 percent of all donations, including donated goods, have gone to programs that help the poor.”

That case has raised concerns in the Massachusetts attorney general’s office, which is watching the proceedings closely, said Chloe Gotsis, spokeswoman for Attorney General Maura Healey. And Charity Navigator, which evaluates US nonprofit organizations, recently cautioned donors of its “moderate concern” about Food for the Poor.

Financial transparency is at the core of many questions about Food for the Poor, but one critic also criticized the kind and quality of some goods it distributes.

Patrick Moynihan’s wife, Christina, a teacher at the Louverture Cleary School near Port-au-Prince, said she has seen crates at the charity’s Haitian warehouse that contain winter hats, gloves, and scarves; Rachael Ray diet cookbooks; and 100-pound bags of beans that the school’s cooks found riddled with stones.

“That was so infuriating,” Christina Moynihan said. “What I saw in that warehouse was that there are businesses in the United States that are able to give donations and write their taxes off without any concern about an impact on the country that is receiving it.”

Aloma, who said shipments are tightly controlled, seemed startled by Moynihan’s report of mismatched goods and unacceptable food.

“That’s a shocker,” he said. “I‘ve never seen anything like that in the warehouse.”

News of the California cease-and-desist order came as a surprise to every clergy member and parish official in Massachusetts contacted by the Globe, all of whom praised the group.

“We’re very supportive of their work,” said Sue Grundy, parish administrator at St. Peter’s Episcopal Church in Cambridge, where a visiting priest has preached in support of Food for the Poor for nearly a dozen years. “As far as we know, they’re supporting the communities that they are involved in.”

The Rev. David Mullen of St. Brendan’s Church in Bellingham said he was unaware of any criticism of Food for the Poor, which has dispatched a priest to the Roman Catholic church once a year for the past several years to solicit donations.

“It’s very convenient. They send a priest, and he can be here on the weekends when I’m away,” Mullen said. “I have always assumed the best of people unless proven otherwise.”

The Roman Catholic Archdiocese of Boston declined to comment about the California order.

“There is no coordinated relationship with this group at the archdiocesan level,” said Terrence Donilon, spokesman for the archdiocese. “Certainly, the focus of the work on addressing poverty, malnutrition, and related health issues is vitally important and something we should all be dedicated to helping to solve,” he added.

Ruth McCambridge, editor of the Nonprofit Quarterly, based in Boston, said that inflating the value of donations has “long roots” in the charitable world.

“If they overvalue those goods, they make their budget look bigger than it is,” said McCambridge.

She said she was not speaking specifically about Food for the Poor, though she did add: “I think the [California] attorney general has done the right thing here. Would I advise our attorney general to be just as active? I absolutely would.”

Brian MacQuarrie can be reached at brian.macquarrie@globe.com.