February 19, 2018; Springfield News-Leader
Veterans in Defense of Liberty (VIDOL), a Missouri-based 501c4 social welfare organization, is disputing the failing grade and negative review it received from the Better Business Bureau after two consumer complaints. Its response to the press release issued by the BBB’s St. Louis office was to call the release a “malicious, materially false, reckless, libelous, and professionally incompetent hit piece.”
Using data reported on VIDOL’s IRS Form 990 returns for 2014 and 2015 (available on GuideStar), the BBB’s press release slams VIDOL for paying 94 percent of its annual budget in 2014 and 2015 to American Target Advertising, a direct fundraising company founded in 1965 and run by conservative direct marketing pioneer Richard Viguerie. Michelle L. Corey, St. Louis BBB president and CEO, said “When you donate to a cause, you want to make sure your money is going to help. With these mailers, it appears that the professional fundraisers who organize the campaigns are benefitting the most from contributions.”
VIDOL says that while the BBB does acknowledge that the organization is not a 501c3 public charity, it is inappropriately using its 501c3 charitable giving standards to grade VIDOL’s performance. VIDOL says that “ALL of its educational and informational advocacy and fundraising materials are consistent with its mission, and NONE say that VIDOL is created to disburse money to veterans.” (emphasis in original). It claims that funds counted as being retained by American Target Marketing included significant amounts paid to defray printing and postage costs (which it says account for 30 percent of the total). Elsewhere in its Form 990 returns, VIDOL claims that half or more of its costs were for “office expenses” and that less than 20 percent of its expenses were for “professional fundraising services.”
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The website version of the BBB’s February 7th press release includes a February 14th “clarification” at the bottom acknowledging that American Target Marketing paid expenses on behalf of Volunteers in Defense of Liberty from the funds it received. It is not known whether the “clarified” press release was broadcast to the BBB’s press list.
Regardless of who you believe, there is no doubt that VIDOL appears to have raised little money other than that used to support its direct mail fundraising operations. The organization has one paid employee, who receives less than $7,500 a year. Organization president Dr. William Scott Magill made an initial loan of $8,698 in “organizational startup funds,” the loan balance for which grew to $63,016 by the end of 2013 and reached $81,445 in 2015. There is no written loan agreement between Magill and VIDOL, according to the organization’s Form 990 information.
The BBB notes that VIDOL’s website offers memberships ranging between $30 and $45, and that the organization says that it is “not close to their goal of 2 million members.” Since VIDOL’s 2013, 2014, and 2015 990s detail the receipt of a total of $495 in membership fees over the three-year period, it would appear they have a long way to go.
Whether the BBB should use evaluation criteria it developed for 501c3 public charities when assessing other types of nonprofits is a valid question. However, it’s also valid to say that 501c4 organizations like VIDOL look like charities to the general public when they send direct mail solicitations, regardless of any disclaimers included in their solicitation materials. Any operating nonprofit with almost no staff, owing debt to its president, and spending almost its entire budget on direct mail fundraising deserves scrutiny, if only because the organization’s practices raise doubts in donors’ minds about how other nonprofits conduct fundraising and pursue their missions.—Michael Wyland