Faith, hope, and chicanery; want to do some good? Ask your favorite charity where it spends its money.

• Author: Marx, Gary

FAITH, HOPE, AND CHICANERY

The souvenir program for the BahiaShrine Temple circus held in Orlando, Florida, in 1983 tugged forcefully at local heartstrings. It was packed with testimonials and photographs of patients treated in the Shrine's 19 orthopedic and three burn centers for children. There was a photo of a bandaged, smiling two-year-old recovering from severe burns and another showing a clown cheering up a wheelchair-bound child. Local businessmen who were told the circus would benefit such children filled the program's pages with paid ads and purchased blocks of tickets.

The circus was a tremendous success. It madean $81,000 profit, more than any circus in the Orlando chapter's 22-year history. Unfortunately, not a penny went to provide medical care to disabled and burned children. Instead, the Orlando Shriners placed the money in the bank and drew on it for temple-related travel and entertainment, the upkeep of the fraternity's private bar and restaurant, and the payment of utilities and other expenses.

The Shrine fraternity, which operates the nation'slargest charity, had been misleading the public for years. And not just in Orlando. Fewer than ten of the 175 Shrine circuses held each year donate any money to the hospitals. In 1984, the circuses reaped an estimated profit of $17.5 million. The charity's own records show the hospitals received only 1 percent of that, a total of $182,000. When you add the revenue from the fraternity's other fund-raising activities--football games and the sale of Shrine newspapers, for example--less than one-third of all receipts actually went to pay for the treatment of Shrine hospital patients.

The Shriners are not unique. Behind many aworthy cause--whether furthering cancer research or locating missing children--may be a charity scam. "Whenever the current news is focusing the public's attention on a crisis or a need it becomes a focus of fund-raising, both by existing charities and newly created opportunists,' says Larry Campbell, California's registrar of charitable trusts. "For us it's hard to remember there are legitimate charities out there operating.' It is also difficult to determine which are legitimate. Though the nation's 483,000 charities and public service organizations reported income of $225 billion in 1984, accurate financial information on individual organizations is hard to come by. As a result of the regulatory freedom charities enjoy you can learn more about the Shrine by visiting one of their three-ring circuses than you can from their glossy annual report or IRS file. Because charities have successfully fought disclosure initiatives, what can be learned about their finances boils down to what they decide to tell you.

Super Bowl shuffle

In September, about 30 state regulators andassistant attorneys general met in San Antonio to review the year's crop of dishonest charities and professional fund raisers.

John Vasquez, an assistant attorney generalfrom Texas, briefed his colleagues on the Rainbow Foundation, an organization that had been raising funds in Texas and California to buy dying children their last wish. The state forced the organization into receivership last year following complaints that contributions were not being spent as advertised.

When Vasquez obtained a warrant and visitedthe foundation's offices, he found records so incomplete "we'll never know how much money they had.' The records, however, did show that money was spent to rent a home in Houston for Rainbow's administrator, Jamie Norris. They also indicated that Norris used donations to pay for personal trips to Switzerland and the Cayman Islands where investigators suspect he squirreled away a significant portion of the charity's funds.

Vasquez also told of a charity dedicated tomultiple sclerosis research that was supported through rock concerts organized by friends of Ronnie Lane, a former bass player for the rock group Small Faces. Called Action for Research for Multiple Sclerosis (ARMS), the organization was shut down in March when investigators found $1 million had been spent on administration and only $67,000 on medical research. A state-appointed receiver has filed a lawsuit charging that most of the money spent on ARMS went to exorbitant salaries and administrative expenses paid to the charity's administrator, her lover, and friends. Some $4,000 alone was spent on eating and drinking at a posh Houston dining club.

Terry Knowles, New Hampshire's registrar ofcharitable trusts, then told of an organization that sold commemorative coins nationwide for the Christa McAuliffe scholarship set up at the New Hampshire high school where the space shuttle crew member had taught. The company's salesmen told people buying the coins for $19.95 each that all proceeds went to provide college scholarships. But the legitimate fund never received any of the money.

Illinois Assistant Attorney General Tina Rossosaid her office is still trying to untangle a mess caused by last year's sale of the Chicago Bears's "Super Bowl Shuffle' record and video. The producers of the shuffle told the Bears that "a substantial portion of the proceeds . . . will be donated to help feed Chicago's neediest families.' That message also appeared prominently on the record cover. But so far none of the reported $365,000 in profits has gone to help needy families in Chicago or anywhere else. The producers have admitted to investigators they had no specific charity in mind when they started.

Waverly Crenshaw, Rosso's counterpart in Tennessee,offered details about a bogus charity called Missing Children USA, Inc. Investigators forced it to close this year after they discovered it misled contributors into believing it was a non-profit organization that published a monthly magazine with pictures of missing children. The company turned out to be a for-profit business that had published only one issue.

Of course there are scores of other charityfrauds that the regulators didn't discuss at their San Antonio meeting. The Rev. Guido John Carich, fund-raising director of the Pallotine Fathers in Baltimore, was charged by the state of Maryland in 1978 with...