News and analysis
May 09, 2013

Cancer Charity Shrinks Its Revenue

Less than two weeks after the Christian relief charity World Help reported that it had overstated its 2011 revenues by 1,400 percent, in large part because it said it had overvalued medicine it provided to other charities, one of its beneficiaries is taking similar, though smaller, action.

The Children’s Cancer Recovery Foundation, in Harrisburg, Pa., said it would lower its 2011 revenues by removing the value associated with the Gardasil HPV vaccine it received from World Help and then donated to a charity in Ghana.

Greg Anderson, the group’s founder, did not specify exactly how much the revenue would change, but the vaccine was valued at $4.1-million, which accounted for 34 percent of the group’s revenue.

“It is my belief that World Help’s lack of management oversight, internal controls, and transparency brought about this mess,” Mr. Anderson wrote. “Children’s Cancer Recovery Foundation is a victim, not a perpetrator.”

Dramatic Cut

World Help, which last fall ranked No. 77 on The Chronicle’s list of 400 charities that raise the most from private sources, lowered its 2011 revenue last month from the $239-million it reported to the Internal Revenue Service to just $17-million. Nearly all of its revenue came from the value it estimated for the medications, food, and other supplies that it received from other charities to deliver overseas.

But an examination by The Chronicle last year revealed that those other charities—Catholic Medical Mission Board, Cross International, and Direct Relief International—said they had not provided the roughly $350-million worth of medicines over three years to World Help, as listed in the Forest, Va., charity’s tax filings.

World Help blamed a consultant, Clifford Feldman, whom it hired in 2008 to land such donated items, saying in a statement that he “falsified and engineered paperwork regarding gifts-in-kind,” the term for donated medicines, clothes, food and other items.

World Help’s 940-percent revenue growth since 2007 had been driven almost entirely by the value of those donated goods.

Overhead vs. Program Costs

To explain what happened, Mr. Anderson issued a news release that said:

“In 2011, Children’s Cancer Recovery Foundation partnered with World Help, a relief charity, to donate a large quantity of the drug Gardasil to the medically underserved in Ghana, World Help subsequently removed this and other transactions from their books and restated their 2011 revenues. Immediately upon receipt and confirmation of this information, CCRF took actions to review its own 2011 activities.”

The statement went on to say that the foundation intends to restate its 2011 financial statements and amend its IRS Form 990 by June 30.

He did not say how it would handle another sum that has come under scrutiny. In February, The Chronicle published an article that said that $3-million more of its $11.9-million budget in 2011 came from a shipment of medicine whose value has also come under scrutiny. That shipment was for penicillin and other antibacterial drugs the Children’s Cancer Recovery Foundation says it received from another nonprofit, Global Assistance, in Lake Oswego, Ore.

The restatement of revenue could change how much the charity says it spends on charitable programs versus overhead. With the $4.1-million change for 2011, that could mean that the amount the charity can say it spends on programs is closer to 45 percent of its budget rather than the 81 percent it says on its Web site were spent on programs in 2011.

World Help’s chief executive, Vernon Brewer, could not be reached for comment.

One of the other charities that received donated medications from World Help in 2011, the Breast Cancer Society, in Mesa, Ariz., is reviewing the $28.8-million in goods it received from World Help.

Send an e-mail to Doug Donovan.