Sued by Another CEO, Under Another Investigation: Feed the Children’s Public Spectacle Goes On

By Cropsci (Own work) [CC BY-SA 3.0 or GFDL], via Wikimedia Commons

April 11, 2017, The Oklahoman

While it is difficult to figure out the true scope of the decline of Feed the Children (FTC), it’s clear that the organization is still in the long, slow, torturous process of falling from grace in a particularly public way.

Founded by Larry Jones in Oklahoma in 1979, the nonprofit organization’s initiatives include U.S. and international programs encompassing disaster relief, child sponsorships, and medical and food assistance programs. But the organization, famed for its vicious internecine battles and outrageous practices, has been in the news for years, as we described in 2010.

The American Institute of Philanthropy [now CharityWatch] named FTC as the “Most Outrageous Charity” of the year in 2009. […] Contributions, according to the group’s 990 report, totaled $1.192 billion, which constituted a $14 million dollar increase over the year previous. Cash donations, however, totaled a bit over $123 million, of which $63 million was spent on fundraising.

According to AIP, which had some scathing things to say on its website about their fellow watchdog organizations with regards to this charity, “Based on FTC’s most recently available financial statements for fiscal 2008, only 21 to 23 percent of its cash budget was spent on program services and $63 to $65 was spent to raise each $100 cash contribution. In 2008, about 54 percent of FC’s cash budget of $125 million was spent on ‘television and radio,’ ‘direct mail,’ and “direct mail postage” according to its audit of the same year.”

It will be interesting to see what happens with their fundraising this year in the wake of the November firing of the 68-year-old Larry Jones (after he had, according to his board, bugged three of the organization’s offices among other things). Will the proportion of its budget spent on its very lucrative fundraising change, for instance? Subsequent to Jones’ separation (after three decades of service), FTC has continued to be in the news with legal suits by former board members, charges leveled by Jones against the organization, and an investigative report by CBS news that claimed FTC had overstated its aid to earthquake-damaged Haiti.

In 2012, FTC paid $800,000 to settle a wrongful termination lawsuit filed by Jones. A series of leadership disputes have ensued ever since. (NPQ related part of the tale in 2015, in “Never a Dull or Unsullied Moment at Feed the Children.”) Travis Arnold has served as interim CEO each time there’s been a CEO vacancy.

Then, in January 2016, the FTC board appointed former congressman J.C. Watts, Jr. as the organization’s president and CEO on January 21, 2016, with a three-year contract. By November 15, 2016, the FTC board announced in a brief statement that Watts left FTC to “devote his time and talent to other interests and pursuits.” That same statement stated that Travis Arnold is serving again as FTC’s interim CEO.

To us, it seemed clear that the real truth would come out in time. Last week, we finally, formally learned that Watts did not leave voluntarily. The board fired him, allegedly in retaliation for Watts taking his concerns to Oklahoma’s attorney general’s Public Protection Unit after the FTC board refused to hear them. Watts’ seven-page lawsuit filed last Monday in Oklahoma County District Court seeks compensation for financial damages and emotional distress, and also seeks punitive damages. The Public Protection Unit began an official inquiry assisted by a special prosecutor, Oklahoma County District Attorney David Prater. The Oklahoman reports that FTC “called the ‘alleged issues’ raised by Watts baseless and without merit.”

Watts also claimed in the lawsuit that he was lied to when he was recruited to be the CEO and president. He alleged the defendants falsely represented the charity “was on a solid financial and organizational foundation and had resolved the well-publicized past problems.” He alleged the defendants made the false representations to entice him to accept their job offer “and secure desperately needed funding.”

He claimed he quickly found out the defendants were only interested in his fundraising abilities “and did not want any interference with the long-running practices of the organization.”

The lawsuit names as defendants FTC’s six directors, led by board chair Rick England, owner of a Ford dealership in Hinton, Oklahoma.

There are certain phrases that should be disturbing for any board member to hear. Attorney general is one of them; it’s almost biologically encoded to be unnerving. But to fire the person who speaks these words is probably exactly the wrong decision to make as a board. That someone of Watts’ experience and unquestioned integrity is the one speaking these words, especially after so many years of contending with similar complaints from former FTC CEOs, would make most boards stop, listen, and attempt to knuckle down to address the problem. The problem for FTC’s board this time is that it’s not just about fighting or settling a lawsuit. FTC must endure the withering investigation of a special prosecutor.—James Schaffer