News and analysis
December 17, 2014

Quadriga, Accused of Misleading Donors, Reorganizes Under New Name

Quadriga Art, the direct-marketing company that has come under fire for alleged fundraising abuses, lives no more — ­at least under that name.

Quadriga, along with eight affiliates, has been folded into a new company called Innovairre Communications, which is billing itself as a sophisticated, more-efficient fundraising powerhouse.

"Innovairre will service more than 500 nonprofit agencies, nonprofit, and commercial clients, with nearly 4,000 employees working across five continents," a company news release says. "Until now, these resources have been spread across many different companies and brands."

The release does not mention Quadriga, which along with several affiliates agreed to a $25-million settlement with the New York Attorney General in July over direct-mail campaigns for a veterans charity. Nor does Innovairre’s website or Facebook page mention the predecessor company.

Don McKenzie, Innovairre’s president, said he was hired by Mark Schulhof, Quadriga’s former chief executive, about 16 months ago to devise a strategy for consolidating the nine companies in the United States and Hong Kong that are affiliated with RBS International Direct Marketing, Quadriga’s parent company.

"The idea of this is to build the largest leading-edge technology-driven company supporting the nonprofit industry," Mr. McKenzie, former chief executive of the direct-marketing group SourceLink, said in an interview.

The new company offers direct mail, marketing, data analysis, customer-relationship software, and premiums, the gifts that accompany fundraising appeals.

The change does not involve new owners or investors, Mr. McKenzie said. Mr. Schulhof, whose family established Quadriga about 70 years ago, is not part of the management team that runs Innovairre day to day but remains chief executive of RBS, while Thomas Schulhof, his uncle, remains a shareholder, an Innovairre spokeswoman said.

Controversial Past

Quadriga has been hammered, including in several CNN exposes, for offering direct-mail services that left several charities deeply in debt and unable to spend more than a fraction of the money they raised for their missions. An investigation by New York’s attorney general, Eric Schneiderman, focused on Quadriga’s relationship with the Disabled Veterans National Foundation, finding that Quadriga entities, including Brick Mill Studio, were heavily involved in setting up the group and assuming up-front costs of printing, packaging, and mailing fundraising appeals.

But almost 90 percent of the donations from 2007 through 2013, or about $104-million, went to the outside vendors. Mr. Schneiderman also found cases of misleading fundraising materials and conflicts of interest.

While not admitting fault, the companies agreed to pay almost $10-million in damages, which will go to programs to help disabled veterans and forgive $13.8-million owed by the charity.

Mr. McKenzie said Innovairre continues to work with the disabled-veterans group but is winding down the relationship, as agreed in the New York settlement. He said the company no longer covers up-front costs for charities, although several organizations that previously signed on to that approach remain clients, including SPCA International, an animal-welfare group that was also highlighted by CNN.

Mr. McKenzie said Innovairre was putting into practice the changes required by the New York settlement. They include ensuring that start-up charities and Quadriga entities have separate legal counsel, disclosing potential conflicts of interest, performing due diligence to be sure that fundraising appeals are accurate, and providing charities with more information about projected costs and revenue of fundraising campaigns.

Among the companies that united to form Innovairre are Brick Mill, PEP Direct and PEP Response Systems, Mail America Communications, Alaniz MetroGroup, and Diamondback Direct.

"Now we can walk into a client and have a conversation around optimizing fundraising and bring all of our skills together and have one leadership team, one message to market, one message internally," Mr. McKenzie said.

He said he met with many clients while setting up the new company and was "completely transparent" about Quadriga’s involvement. But, he said, "this is a forward-thinking strategy, not a backward strategy."

Send an e-mail to Suzanne Perry.