News and analysis
December 10, 2012

A Consultant’s Revenue-Generating Tactics Draw Scrutiny

Thos Robinson/Getty Images for Alaska House

Clifford Feldman (left), who has worked with many relief charities in his career to help them attract medicine, food,and other products, attends a 2009 benefit with Todd Palin (second to the left), husband of former Alaska Gov. Sarah Palin, and two officials of a group that sends Alaska seafood to people in poor countries.

For nearly two decades, Clifford Feldman has hopped around the developing world helping U.S. charities deliver relief supplies to impoverished communities.

The 60-year-old consultant has overseen shipments of food and medicines to Haiti, Guatemala, and Uganda for groups based in Florida, South Carolina, and Virginia.

Along the way, Mr. Feldman’s employers have touted his prowess for helping them secure, ship, and value such noncash donations, according to one group’s display of his accolades from, among others, an Army general, the Ford Foundation, and the government and people of the West African nation of Benin.

“I’m on the road 200 days a year to make sure the donations go where they’re supposed to go, that they’re used properly, that where we put them they stay,” he said in an interview. “I’ve been doing this a long time.”

Mr. Feldman has joked about being a Jewish New Yorker helping mostly small Christian charities spread the gospel by providing supplies to poor children like the smiling Ugandan orphans crowding around him in a Facebook photo.

But no one is laughing now about his most recent work for World Help, a Christian charity based in Forest, Va. The group’s president, Vernon Brewer, had recently been crediting Mr. Feldman for the group’s astronomical growth in revenue since 2008. Today, Mr. Brewer is blaming his former consultant for the fact that World Help has had to lower its revenues for the past three years by $250-million in reported donations of medicines, food, and hospital supplies.

Big Swings in Revenue

World Help’s precipitous drop in revenue, driven by doubts about its gifts, casts a troubling spotlight on the values of noncash donations, also known as “gifts in kind.”

Regulators have been increasingly scrutinizing such donations because they are easily overvalued, intentionally or not, when counted as revenue. Those higher values can mislead donors by concealing high fundraising and administrative costs and salaries.

In an interview with The Chronicle before World Help made its accusations, Mr. Feldman said unclear accounting guidelines and industry standards permit charities to account for and value goods in various ways. He said World Help recorded transactions as gifts when it participated in shipping goods overseas and that the group may value medicines and other items differently than the organizations that made the gifts.

After Mr. Brewer ended his contract over the dispute, Mr. Feldman did not return calls or e-mails seeking comment. “Everyone is scrambling to do it the right way, but there’s really no right way to do it,” Mr. Feldman told The Chronicle in October. “No one wants to end up looking like they’re doing it wrong.”

That’s precisely how things have ended up for World Help.

In late November, Mr. Brewer lowered the last three years of his charity’s revenues by $250-million after The Chronicle alerted him that three organizations—Catholic Medical Mission Board, Cross International, and Direct Relief International—denied making nearly $350-million in gifts reported on World Help tax forms from 2009 to 2011.

Jim Cavnar, Cross International’s president, said he had “no idea” why World Help would be reporting $61-million in donated products from the organization. His group never made such donations, he said.

Barbara Wright, a Catholic Medical Mission Board spokeswoman, said World Help assisted with shipping its goods but did not receive the nearly $189-million in donated medicines and other products that Mr. Brewer’s organization had claimed. The goods were donated to recipient organization that the Catholic mission board had designated, such as the Sovereign Order of Malta, in Guatemala.

Mr. Brewer disputed Catholic Medical Mission Board’s assertion and provided two letters from the New York charity that he says confirm receipt of donations.

The Catholic group’s procurement officer, Ralph Barberio, said he believed the donations had transpired and that Mr. Feldman and Mr. Brewer’s son, Josh, had been to the mission board’s Long Island, N.Y., warehouse this year.

Thomas Tighe, president of Direct Relief, said his group gave $3.3-million in medicines last year and that he was disturbed to learn that World Help had recorded the gift as a $100-million donation.

“Accounting principles may be applied differently by different groups to similar facts, but at some point this matter of how in-kind contributions are valued becomes much more significant than mere reasonable differences of interpretation among nonprofit accountants,” Mr. Tighe said in an e-mail. “It goes to the matter of public trust.”

Initial Praise

During Mr. Feldman’s time at World Help, the group’s revenue grew by 940 percent, thanks in large part to the value of noncash donations he procured. When World Help hired him in 2008, its revenue was $23-million; by last year, it had risen to $239-million.

In the year before World Help hired Mr. Feldman, its noncash donations made up 57 percent of revenue. In 2011, the medicines, hospital supplies, and other items accounted for 95 percent.

Three months ago, Mr. Brewer was praising Mr. Feldman for his efforts when The Chronicle began to analyze the revenue growth that landed the relief organization at No. 77 on the Philanthropy 400 list this year. The organization first appeared on the list at No. 162 in 2011, two decades after it was founded by Mr. Brewer, who is well known in Christian charities both for his work with his group as well as for being one of the first graduates in 1973 of the late-Rev. Jerry Falwell’s Liberty University.

The Chronicle began to examine World Help’s revenues in part because other charities claimed donations from World Help that World Help did not itself record in its tax forms, as it is required to do.

For example, the Breast Cancer Society, another fast-growing nonprofit that relies mostly on in-kind gifts for its revenue, recorded a $22.8-million gift from World Help in 2011, as well as other large gifts in previous years from that charity and a second organization, the Stars Foundation, which also employed Mr. Feldman.

Mr. Brewer initially directed The Chronicle to Mr. Feldman, who said the discrepancies stemmed from accounting differences with those donors.

When two or more charities work together to deliver donated supplies, each group can book the gift’s value as revenue, Mr. Feldman said.

World Help’s claim to the donations was legitimate, he added, because he physically oversaw their delivery to Guatemala, even though other organizations procured and delivered the goods and paid for their shipping.

World Help essentially served as a broker, signing over donations it said it received from other charities to groups that then did the delivery and distribution, a process that Mr. Feldman said is routine and within the bounds of accounting guidelines.

“Nothing was done improperly here,” Mr. Feldman said.

'Red Flags’

Accountants, regulators, and other charity leaders interviewed by The Chronicle say two or more charities may record goods as revenue, and that accounting standards allow for flexibility in how goods are valued, but that World Help’s actions seem to have gone beyond what is permissible.

Accounting guidelines issued by the Financial Accounting Standards Board say that organizations can record goods as revenue if they control where the goods are sent.

Guidelines from Accord, a membership network of Christian charities including World Help, say that more than two charities may claim revenue from the same goods only if the additional groups take “physical possession of the GIK [gift-in-kind] and add significant value by increasing the utility of the GIK, not simply add value to the GIK transaction by providing storage or transportation.”

In World Help’s case, nonprofit donors say they did not make the gifts or that they made much smaller donations that were inflated by World Help.

“It raises red flags that would need to be looked into,” says Elizabeth Korsmo, who leads efforts by the New Mexico Attorney General’s office to monitor nonprofits.

Auditor Approved Filings

Mr. Brewer says he does not blame his organization’s internal procedures or its auditor, who approved the tax filings that included the overstated revenue figures. Although noncash donations were rapidly increasing, there appears to have been no one at World Help who questioned the valuations until contacted by The Chronicle.

Mr. Brewer now squarely blames Mr. Feldman, whose contract, he says, he ended in mid-October because he said Mr. Feldman misled him about those reporting standards.

“As best we have been able to determine, the value of the medications was misrepresented to World Help by Clifford Feldman, whom World Help had retained to assist in obtaining gifts-in-kind,” the charity stated in a press release posted on its Web site in late November. “However, since learning of the overvaluation, World Help has not been able to obtain any additional information from Mr. Feldman.”

Mr. Brewer said World Help was no longer going to value goods as donations if its role was simply to pass the items along from one charity to another.

Facebook Résumé

The Chronicle has tried to contact Mr. Feldman—who has not been accused of any legal wrongdoing—at a phone number and e-mail address he has frequently used to answer a reporter’s questions, but he has not responded for over a month.

Mr. Brewer had high hopes for Mr. Feldman when he hired him in 2008 on the recommendation of a charity he would not identify. The World Help president said he had good reason to be optimistic about Mr. Feldman’s ability to expand its programs for landing in-kind gifts and government grants.

During Mr. Feldman’s tenure at World Help, government grants grew from $272,250 in 2008 to $3.7-million last year, peaking at $5.5-million in 2010, according to tax forms. “He did a lot of good things for us. It’s not that everything he did for us was bad. He got USAID grants that fed a lot of the orphans and won excess property grants to outfit the hospital in Guatemala,” said Mr. Brewer, who started World Help in 1990 and runs it with his daughter.

Given Mr. Feldman’s ability to navigate federal agencies to land such grants, Mr. Brewer said he never had any reason to question his work for World Help.

Mr. Feldman had been listed as a gifts-in-kind consultant on the Facebook page of a defunct nonprofit called Relief Corps International, in Nashville, Tenn. Shortly after The Chronicle began asking questions in October about Mr. Feldman’s biography as it appeared on the page, the charity’s Facebook presence disappeared. Tennessee corporation records show the charity existed from April 2011 to August 2012.

Reached by e-mail, Gwen Adams, executive director of Relief Corps, wrote: “For information on the goods in kind done through RCI, please contact Cliff Feldman directly. He has given his life to bringing relief to literally billions of people in need.”

Previous Work

Before his work at World Help and Relief Corps, Mr. Feldman worked at Food for the Poor, a Coconut Creek, Fla., charity, from 1999 to 2007. The résumé on the Facebook page stated that Mr. Feldman “created a goods-in-kind program and procured, shipped and distributed more than $900,000,000 in donations in 2007” for Food for the Poor.

A Food for the Poor spokeswoman said Mr. Feldman did not create the charity’s in-kind gifts program. It had existed since 1982, she said.

She did not say why Mr. Feldman left his position at Food for the Poor, stating that the organization does not discuss personnel matters.

Shortly after Mr. Feldman began his role with World Help in 2008, he also began working with the gifts-in-kind efforts of another organization, the Stars Foundation, in Lake Wylie, S.C.

In 2010, as he was generating $114-million in noncash donations as a consultant for World Help, Mr. Feldman was elevated to president of Stars.

Cheryl Clemmons, founder of Stars, asked the board to appoint Mr. Feldman president when she took a sabbatical in 2010 due to his “tremendous credentials” and “pictures of him with ambassadors, President Rene Préval of Haiti, and other prestigious individuals,” according to an e-mail Ms. Clemmons wrote to CNN, which shared it with The Chronicle following an investigation the cable network had done on a different charity.

Not long after, Ms. Clemmons said she asked the board to ask Mr. Feldman to resign.

“The reason I requested the board to ask Mr. Feldman to resign, was this: He was traveling constantly out of the country working with many other nonprofit organizations, and he did not have time for TSF,” she said in an e-mail.

Civilian Plumber

Mr. Feldman’s work in shipping humanitarian aid began as a voluntary effort when he was a civilian plumber and boiler operator on a New York military base in Syracuse 20 years ago from September 1984 until March 17, 1999, according to New York State records.

The online biography on the Relief Corps Facebook page stated that Mr. Feldman held the “civilian position” of “special-projects coordinator for the New York Air National Guard Humanitarian Program, a program that he created.”

“With the full cooperation of the 174th Fighter Wing in Syracuse, New York, Mr. Feldman created a full-service transportation hub for nongovernmental and volunteer organizations in 20 countries,” the biography stated.

The Relief Corps Facebook page included a 1997 letter of appreciation to Mr. Feldman from Lt. Col. Robert Knauff, then the commander of the New York Air National Guard. “Directly because of your efforts, children in unprivileged nations have food, clothing, and the opportunity for education and a better life,” the letter stated. Through a spokesman, the now-retired Major General Knauff said Mr. Feldman was the official volunteer coordinator of the airlift program, an effort to transport food and supplies to impoverished nations. The program, however, was created by the Guard. Not that his work didn’t impress some big names. A letter from then-U.S. Sen. Mike DeWine of Ohio, now the state’s attorney general, thanked Colonel Knauff for the assistance the program provided in Haiti, specially commending Mr. Feldman’s efforts.

“He was the first civilian to be inspected by the 9th Air Force inspection team and recognized as the 'Best Seen To Date’ humanitarian program on a U.S. military base,” the biography states.

An Air Force spokeswoman who reviewed records of the New York base in the years Mr. Feldman was employed there said she was unable to find any record that such a recognition was provided to the program or to Mr. Feldman.

The biography also states that Mr. Feldman came in second behind the New York City Police Department for a Ford Foundation “creativity in government” award. The foundation provides no such award. But it does administer, with Harvard University, what’s called the Innovations in American Government Awards. The New York Police Department won in 1997, but finalists for that year do not include Mr. Feldman, according to online records and a Harvard official.

Shipping Donations

One accomplishment that Mr. Feldman’s online résumé does not list is his work in helping to propel the growth of the Breast Cancer Society, a Mesa, Ariz., charity. (See this Chronicle article on the Breast Cancer Society, whose fundraising and administrative costs appear much smaller to donors than they would otherwise thanks to gifts of products from groups affiliated with Mr. Feldman.)

During Mr. Feldman’s time with the Stars Foundation and World Help, the Breast Cancer Society reported in its tax forms that it received more than $73-million in medicines and other noncash items from those two charities, accounting for nearly half of the organization’s revenue from 2009 to 2011.

But at least in some cases, it’s unclear whether Mr. Feldman had the authority to donate those goods or whether the breast-cancer group could record them as gifts.

Last year, the Breast Cancer Society recorded a $22.8-million gift from World Help, for example.

Mr. Feldman told The Chronicle that the goods came from the Catholic Medical Mission Board. But the Catholic group’s spokeswoman said the goods had not been donated to World Help, and that World Help simply assisted in shipping the goods to an organization overseas designated by her group, though she declined to specify what type of assistance World Help provided.

She said that her organization had “no dealings with” the Breast Cancer Society.

The letters Mr. Brewer provided to The Chronicle state that shipments were consigned to World Help to be distributed to Sovereign Order of Malta, in Guatemala. They do not mention the Breast Cancer Society.

Mr. Feldman told The Chronicle that World Help recorded the goods as revenue because he helped deliver the items to Guatemala. Both Mr. Feldman and the Breast Cancer Society’s president, James Reynolds, said they played a role in delivering supplies but that the distribution was primarily handled by Order of Malta.

Mr. Reynolds said his group could record the $22.8-million donation because Mr. Feldman had provided a letter to his group giving it complete control over where the goods would be sent in exchange for Breast Cancer Society’s payment of shipping costs, in accordance with accounting guidelines. Mr. Reynolds also said he had visited Guatemala on numerous occasions.

Mr. Feldman arranged similar deals when he was president of Stars Foundation. From February 10 to July 14, 2010, Mr. Feldman signed five letters sent to SPCA International that gave the animal charity “official title” of roughly $5-million worth of medical shipments, values that Mr. Feldman provided, according to copies of the letters. The language of the SPCA letters is nearly identical to the two provided to Breast Cancer Society.

SPCA’s revenue grew to about $14.1-million that year; two years earlier, the group recorded $3.3-million in revenue.

When he was still employed by World Help and before he stopped returning phone calls and e-mails, Mr. Feldman told The Chronicle that he took measures to ensure that organizations employing him followed proper accounting practices and did nothing improper.

He said had never seen so much scrutiny of noncash donations but that he understood why questions were being raised.

“I understand them because there are charities out there doing goofy stuff,” he said.

Suzanne Perry contributed to this article.

Send an e-mail to Doug Donovan or Caroline Preston.