News and analysis
April 26, 2013

Big Relief Charity Says It Overstated Its Revenue by 1,400%

World Help, a Christian relief charity that last fall ranked No. 77 on The Chronicle’s list of the country’s largest nonprofits, now says its revenues were only 7 percent of what it previously reported to the Internal Revenue Service.

The revised numbers, which appear in the group’s audited financial statements for 2012, could have implications for other nonprofits that say they received goods from the charity.

World Help grew rapidly in recent years thanks to donated medicines. The organization said its revenues totaled $239-million in the informational tax return it filed for 2011.

But in its latest audited financial statement, World Help says the accurate figure is much smaller—just $17-million. In 2012, the group says, it raised $25-million.

The Chronicle first began to examine World Help last October, in part because of its skyrocketing revenue. The nonprofit said it grew 940 percent over five years.

In an interview last year with The Chronicle, World Help’s president, Vernon Brewer, credited a consultant, Clifford Feldman, for that growth. He said Mr. Feldman, whom World Help hired in 2008, was responsible for procuring donations of medicines, food, and other goods.

But The Chronicle found that World Help’s big donors said they never gave the medicines it claimed.

Three charities—Catholic Medical Mission Board, Cross International, and Direct Relief International—told The Chronicle that they did not donate roughly $350-million worth of medicines over three years to World Help, as listed in the Virginia charity’s tax filings.

After The Chronicle contacted Mr. Brewer about the discrepancy, he blamed Mr. Feldman, whose contract he ended in mid-October. Mr. Feldman could not be reached for comment.

Mr. Brewer told The Chronicle that Mr. Feldman worked with other nonprofits that also recorded the goods as revenue.

Breast Cancer Society, in Mesa, Ariz., recorded $22.8-million in donated goods from World Help in 2011. Children’s Cancer Recovery Foundation, in Harrisburg, Pa., says it received $4.1-million in medicines from World Help that year.

World Help’s revised audited financials for 2011 now say it received a total of just $5-million in goods that year.

In an e-mail on Friday to The Chronicle, James Reynolds Jr., of the breast-cancer group, said his charity had accurately recorded goods received from World Help. “This matter has been reviewed extensively by ourselves, third parties, and by independent auditors, and verified to be correctly reported by our organization,” he said.

Greg Anderson, of the children’s cancer group, did not immediately return e-mails seeking comment. In previous e-mails to The Chronicle, he said his group’s donations from World Help were recorded accurately.

Recalculated Revenue

World Help initially restated its 2011 revenue by $135-million. Mr. Brewer told The Chronicle at the time that he had documents verifying the gifts from Catholic Medical Mission Board.

But in its most recent financial statement, World Help lowered its 2011 revenue even more sharply, by $222-million.

In an e-mail To The Chronicle on Monday, World Help stressed Mr. Feldman's responsibility for the misstated revenue, saying he "falsified and engineered paperwork regarding gifts-in-kind," the term for donated medicines, clothes, food, and other items. 

Even without the revenue from its donated goods for 2011, World Help "still sends 87 percent of all of its donations to the field to directly assist our partners, a percentage much higher than the national average for nonprofits," the group said.

[Editor’s note: The previous two paragraphs have been updated since this article was originally posted.]

Donated medicines have been a source of controversy. Charities sometimes record the goods as revenue when they play only a small role in their procurement or delivery, like helping to pay some of the costs of shipping them abroad.

It can also be difficult to determine the value of the donated medicines, making it easy for nonprofits to say the items are worth more than they are.

In a Chronicle interview in October, before he stopped responding to The Chronicle’s phone calls, Mr. Feldman told the newspaper that World Help assisted Catholic Medical Mission Board in shipping its goods to overseas nonprofits. He said World Help was trying to record its goods correctly in the absence of clear accounting rules.

“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.”

Doug Donovan contributed to this article.

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