Waist Deep In The Autism Fundraising Hole · 2009-09-30 13:30

An Update on the “Autism Spectrum Disorder Foundation” & Its Telemarketing Campaign

The Autism Spectrum Disorder Disorder Foundation (ASDF) — the subject of the report “Dialing for Autism Dollars,” published on this weblog in March 2009 — has filed its 2008 audit, tax return, revised telemarketing contracts, and fundraising campaign report with the North Carolina Secretary of State Charitable Solicitation Licensing Section. These documents reveal that the purportedly charitable organization, whose principals claim to provide educational services and financial aid to benefit autistic children and their families, is almost exclusively devoted to the begging business, and that ASDF is thousands of dollars in debt to the professional fundraising firms whose staff have been blanketing the United States with telephone solicitations since mid-2008.

As described in detail in “Dialing for Autism Dollars,” ASDF was incorporated in 2007, granted tax exemption shortly thereafter, and promptly commenced a nationwide telephone and direct mail fundraising campaign. Its founder and President — Schererville, Indiana resident Michael Slutsky — has acknowledged having no personal or professional experience or expertise in autism or disability services or advocacy; until early 2008, he was a wholesale distributor of candles and other fundraising supplies to churches, school groups and nonprofit organizations.

In 2008 — its first full year of operations — Mr. Slutsky’s newly-hatched “charity” received $370,082 in donations, incurred $370,858 in liabilities for telemarketing services, and incurred an additional $126,930 in liabilities for printing and mailing fundraising appeals. At the end of the year, the organization faced a $165,854 deficit, with $159,225 owed to fundraising consultants, and $14,678 to Mr. Slutsky himself.

ASDF’s expenditures on grants, donations and scholarships to directly benefit autistic children and families totaled $1,391 — $160 to subsidize one parent’s attendance at a workshop, $850 for a camp scholarship for one child, an $86 donation to the Autism Society of Oregon, and another $295 in unspecified grants and donations. These outlays represent less than 0.3% of the $370,082 in contributions received by the organization from the general public during 2008. In its audit, however, ASDF asserts that its telephone calls and direct mail packages help fulfill its charitable mission, and therefore allocates half of its fundraising costs — over $250,000 — to the “program services” category.

ASDF’s Direct Mail Package

The paper goods at the heart of ASDF’s “volunteer solicitation” campaign (reproduced in the images below and in a 4MB .pdf file) come packaged in a glossy envelope illustrated with photographs of a girl playing with a butterfly, and embellished with the words “Wings of Hope” and “Thank you for volunteering… Start your kit today and give hope to children with autism.” The envelope flap declares that “Every 20 minutes a child is diagnosed with autism,” and urges the recipient to open the package immediately.



The package contains two “assignment cards” with a computer-generated list of names, addresses and telephone numbers of fifteen of the recipient’s neighbors, and a list of “Early Signs and Red Flags for Infants and Toddlers at Risk for an Autism Spectrum Disorder.”


The package also contains fifteen blank white envelopes, fifteen blank green envelopes, and fifteen campaign letters.



The campaign letters inform the reader that one in 150 children are diagnosed with autism, and invite potential donors to

bring a candle of hope into that dark world by helping the Autism Spectrum Disorder Foundation today. By giving to the Wings of Hope Campaign, you can help us provide financial assistance to families in need, free Early Detection Kits, and scholarships to send children with autism to camp.


The recipient is instructed to hand-address each white envelope to the neighbors listed on their “assignment card,” and to self-address each green envelope; to personalize each campaign letter with a signature and a handwritten message; to stuff each white envelope with a campaign letter and a green return envelope; and to mail all fifteen envelopes with stamps purchased and donated by the recipient. The recipient is next instructed to record donations on the assignment card as they are received from neighbors; to follow up with a phone call to those who do not respond; to convert cash donations into a personal check made payable to the Autism Spectrum Disorder Foundation; and to mail off the donations and the completed assignment sheet in a large envelope provided in the package.

The large envelope is addressed to the “Autism Foundation Processing Center, P.O. Box 96730, Washington, D.C. 20090-6730” — a rented mailbox at the main post office in the nation’s capital, where neither the Autism Spectrum Disorder Foundation nor any “Autism Foundation” has an office, or is legally authorized to solicit funds. ASDF’s actual legal address in Everett, Washington, the name of the telemarketing firm hired to conduct ASDF’s fundraising campaign — InfoCision Management Corporation of Akron, Ohio — and a list of ASDF’s official filings with state regulatory agencies appear in small print on the back of the campaign letter. The small print also indicates that donations to ASDF may be used for far less specific purposes than those described in the campaign letter:

Funds donated to ASDF will be used to address any and all kinds of issues in assisting children with Autism and their families.


Completing the presentation, a slip of yellow paper reiterates the assertion that “Every 20 minutes a child is diagnosed with autism,” and urges the recipient to visit the organization’s website at www.myasdf.org/wingsofhope.

The only information about autism provided in the direct mail package is the list of “Early Signs and Red Flags” on the assignment sheet, and the recitation of the “one in 150” statistic in the campaign letter. Such sparse factual content notwithstanding, the note on “Accounting for Costs of Activities That Include Fundraising” accompanying ASDF’s audit asserts that:

[ASDF’s] direct mail campaigns share a dual purpose of fundraising and program services that call for the recipients to help fulfill the ASDF’s mission. Given the dual nature of the mail campaigns, the ASDF has adopted a policy to split the costs of the direct mail campaign 50% to fundraising and 50% to program services.

ASDF’s “Early Detection Kit”

The “Early Detection Kit” described in the fundraising appeal consists of a cover letter addressed to “individual[s] who work in the care industry,” a DVD and a growth chart listing “various developmental capabilities children should have throughout the first five years of life.” The list of milestones on the growth chart is appropriated word-for-word from the Child Development Informational Card published by the U.S. Centers for Disease Control, a resource widely distributed to physicians, educators, clinics, and social service providers. Whereas ASDF fails to cite the source of the list, the CDC gives proper attribution to Drs. Steven Shelov and Robert E. Hannerman, authors of the American Academy of Pediatrics guide, Caring for Your Baby and Young Child: Birth to Age 5, published by Bantam Books.

ASDF’s 2008 Audit

The following financial statements are reproduced from ASDF’s audit, prepared on July 14, 2009 by the St. Louis firm Swink Fiehler & Company P.C.

STATEMENT OF NET ASSETS AS OF DECEMBER 31, 2008

Assets  
Cash and cash equivalents $6,780
Funds held in escrow $1,349
Total assets $8,129
   
Liabilities and Net Assets  
Liabilities  
Accounts payable $157,518
Loans payable to Executive Director $14,678
Payroll liabilities $80
Wells Fargo checking overdraft $1,707
Total Liabilities $173,983
Net Assets  
Unrestricted net assets ($165,854)
Total Net Assets ($165,854)
Total Liabilities & Net Assets $8,129
 

(The notes to the financial statements describe the $14,678 in loans payable to Michael Slutsky as “non-interest bearing advances” that the foundation intends to repay, and indicate that ASDF “makes periodic payments as cash flow permits” — implying that such advances and repayments occur on a regular basis.)

STATEMENT OF ACTIVITIES AS OF DECEMBER 31, 2008

Revenue  
Contributions $370,082
Total revenue $370,082
   
Expenses  
Program services $250,285
Management and general $25,384
Fundraising $255,913
Total expenses $531,583
   
Decrease in net assets ($161,501)
   
Unrestricted Net Assets, Beginning of Year ($4,353)
   
Unrestricted Net Assets, End of year ($165,854)
 

(As itemized in the “Statement of Functional Expenses” that follows, and explained in the note on “Accounting for Costs of Activities That Include Fundraising” cited above, $248,894 of the $250,285 categorized under “Program Services” represents half of the cost of the telemarketing and direct mail campaign.)

STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDING DECEMBER 31, 2008

  Program Services Management and General Fundraising Expense Total Expenses
         
Grants $341     $341
Compensation of officers   $585   $585
Payroll taxes   $69   $69
Professional fees – legal and accounting   $16,666   $16,666
Advertising and promotion   $1,689 $1,689 $3,378
Office expenses   $795   $795
Travel   $898 $898 $1,796
Bank and merchant service fee   $2,221 $2,221 $4,442
Donations $200     $200
Printed materials and fulfillment $38,515   $38,515 $77,030
Professional fees – telemarketing services $185,429   $185,429 $370,858
Postage and delivery $24,950 $250 $24,950 $50,150
Registration fees   $801 $800 $1,601
Scholarships $850     $850
Telecommunications ________ $1,411 $1411 $2,822
         
TOTAL $250,825 $25,385 $255,913 $531,583

(Grants, donations and scholarships are not itemized in ASDF’s financial statements, but are partially described in its tax return.)

ASDF’s 2008 Tax Return

The Form 990 informational return filed by the Autism Spectrum Disorder Foundation with the Internal Revenue Service reports $370,082 in contributions and $271,348 in program expenses in 2008; $270,252 of the latter amount represents half of the cost of ASDF’s telemarketing and direct mail campaign. The remaining $1,096 is comprised of three grants made during the first two months of 2008: an $850 payment to Mount Hood Autism Camp, a $160 payment to Think Social Publishing, and an $86 donation to the Autism Society of Oregon Walkathon.

The 990 claims that ASDF President and Executive Director Michael Slutsky devoted 45 hours per week to the Foundation’s activities, but received no compensation whatsoever; and that Chief Financial Officer Janet Coyer toiled a noteworthy 75 hours per week on ASDF business for only $585 in annual salary. $387,533 in “professional fees” to consultants is reported, $279,506 of which consists of payments to InfoCision. The 990 provides no further detail regarding the remaining $108,027 in “professional fees,” and does not indicate whether any of these “professional fees” were paid either directly or indirectly to Mr. Slutsky or Ms. Coyer in lieu of salary.

In addition to identifying Mr. Slutsky and Ms. Coyer as Directors, the Board roster provided with the 990 names Everett, Washington school psychologist James Roan, and indicates that he received no compensation and devoted no time whatsoever to the organization. (In a March 2009 phone conversation, Mr. Roan claimed to have had no significant involvement with ASDF since early 2008, when he helped to develop its website.) Also named as a Director is Mrs. Helen Ignas, who has shared a residence with Mr. Slutsky and like Mr. Roan, devoted no time to the organization’s activities.

ASDF’s Telemarketing Contract With InfoCision

In March 2009, Mr. Slutsky and Ms. Coyer entered into a revised contract with InfoCision for ASDF’s telemarketing and direct mail fundraising campaign. Charges for phone calls, printed matter, postage, and other services remain roughly the same as in the original September 2008 contract; however, whereas the original contract included a “Breakeven Guarantee For Prospecting” ensuring that ASDF’s liability would not exceed the cost of the fundraising campaign, the revised contract paints a far less generous scenario:

3.1 Pay From Proceeds The parties agree that InfoCision [IMC] shall advance [ASDF] $3,000 per month. This amount shall first be paid from the proceeds fulfilled from donations accrued for all programs during the contract term. In the event the proceeds from all programs do not total $3,000, IMC will advance the amount of the shortage from its own funds. The $3,000 advancement will be added to the accumulating deficit on [ASDF]‘s account.

The remainder of proceeds from all programs will go to IMC to pay all fundraising costs irrespective of the program… Parties also agree that this schedule of payment will be adhered to on each individual campaign, until both parties are satisfied but in no event later than the time in which [ASDF]‘s deficit is eliminated.

In the event that there are not enough funds to pay all of the donor acquisition debt, IMC may at its sole discretion forgive the remainder of the donor acquisition debt…” (emphasis added)

The note on “Mail and Communication Campaigns” in the ASDF audit indicates that of the $157,870 in accounts payable to fundraising consultants at the close of 2008, only $24,164 stood to be forgiven if the campaigns fail to generate enough donations to cover costs.

InfoCision’s Fundraising Campaign Report

In June 2009, InfoCision filed a final accounting for the ASDF telemarketing campaign in North Carolina. According to this report, out of $14,943.25 in donations received from North Carolina citizens between October 15, 2008 and March 21, 2009, $14,898.95 was paid to InfoCision for calls, letters, postage, training, computer services, and shipping. $44.30 — 0.3% of the total amount raised in North Carolina — was ultimately received by the Autism Spectrum Disorder Foundation.

Associated Community Services Contract & Withdrawal

As previously discussed in “Dialing For Autism Dollars,” the Autism Spectrum Disorder Foundation has also retained Associated Community Services (ACS), a Southfield, Michigan for-profit firm that conducts telemarketing campaigns on behalf of nonprofit organizations. ACS’s fundraising campaign for the Knoxville-based Youth Development Fund has been the subject of investigation by the Tennessee Attorney General’s office; in August 2008, ACS was fined $100,000 by the Missouri Attorney General for harassing Missouri residents with rude, high-pressure telephone solicitations.

The contract between the Autism Spectrum Disorder Foundation and Associated Community Services names ACS as ASDF’s “exclusive sales agent and exclusive representative,” responsible for “locat[ing] telemarketing firms qualified to conduct campaigns” throughout the United States and Canada. The contract further reveals that ASDF has agreed to pay ACS 52% of gross proceeds resulting from the firm’s efforts, and that ASDF has also commissioned “an outside firm to collect the proceeds of solicitation, deposit same, and… account for all funds received through ACS’s efforts.” The identity of this “fundraising campaign finance manager” is not disclosed.

In June 2009, Associated Community Services formally withdrew its applications to raise funds in North Carolina for ASDF and for the unrelated Law Enforcement Education Program, and submitted an affidavit confirming that ACS had not solicited and would not solicit funds for either organization in that state. Although ACS President R. William Burland did not specify his reasons for the withdrawals, they occurred shortly after the Federal Trade Commission’s announcement of “Operation False Charity,” a crackdown on fraudulent charity telemarketers. At the same time, the Connecticut Attorney General announced the filing of a lawsuit against Associated Community Services alleging failure to comply with state regulations requiring disclosure of its status as a paid solicitor, and the South Carolina Attorney General publicized an ongoing investigation against the firm.

The North Carolina withdrawal notwithstanding, ASDF’s contract with ACS remains in effect through July 2010. Absent similar withdrawals in other states, it can be assumed that ACS will continue to raise funds on behalf of the Autism Spectrum Disorder Foundation everywhere it is legally permitted to do so.

Free Speech, Secrecy & Sunshine

In its 1988 decision in Riley v. American Federation of the Blind (108 S.Ct. 2667), the United States Supreme Court struck down North Carolina’s Charitable Solicitations Act, which defined the “reasonable fee” that a professional fundraiser could charge a nonprofit organization, and required fundraisers to disclose to potential donors, before appealing for funds, the percentage of contributions collected during the previous twelve months that were actually turned over to the charity. The court held that such requirements represented unconstitutional infringements on freedom of speech, were “unduly burdensome,” were likely to hamper legitimate efforts to raise money for charitable purposes, and would inevitably discriminate against small or unpopular organizations. The American Federation of the Blind’s case was argued by Errol Copilevitz, whose firm represents the Autism Spectrum Disorder Foundation and a host of other nonprofit organizations engaged in telemarketing and direct mail fundraising.

While overruling a law that it described as “prophylactic, imprecise, and unduly burdensome,” the court acknowledged the need to prevent fraud on charities and potential donors by requiring tax-exempt organizations and their for-profit consultants to disclose the details of their financial relationships. The court suggested that, in order prevent fraud,

the State may itself publish the detailed financial disclosure forms it requires professional fundraisers to file. This procedure would communicate the desired information to the public…

The North Carolina Attorney General’s office took this advice to heart; the state now leads the way in making charitable solicitation filings readily available to the public on the Internet. In so doing, it subverts intentions such as those expressed in the contract between InfoCision and the Autism Spectrum Disorder Foundation:

10.2 Non-Disclosure of Relationship

[E]ach party agrees that it will not disclose either expressly or by implication the existence of this Agreement or the relationship created hereunder to any third party without the express written consent of the other party. Further… both parties agree to maintain complete confidence and secrecy with respect to the pricing, terms and conditions of this Agreement.

Evidently, Mr. Slutsky, Ms. Coyer and their fundraising consultants would prefer that the public remain unaware of the extent to which contributions to the Autism Spectrum Disorder Foundation enrich those who hold out the begging bowl to the caring, generous and unsuspecting public. The organization’s financial statements, contracts and regulatory filings, however, reveal the dollars-and-cents reality behind ASDF’s altruistic-sounding pleas for donations for the supposed benefit of “children and the families of children suffering autism spectrum disorder.” These documents paint a picture of a money-churning operation masquerading as a philanthropy, an “Autism Foundation” established and enabled by individuals with no experience or expertise in the field of developmental disabilities, who solicit donations at great expense with materials that provide minimal, already widely available information about autism — and who would like potential donors to believe that they are engaging in a primarily educational endeavor, rather than digging an ever-widening financial hole in the ground.

The following non-profit organizations provide education, recreation, respite and advocacy for autistic children, adults, their families, educators and care providers. Each and every one is worthy of support; none engages in telemarketing solicitation.

Asperger’s Association of New England (AANE)
ARC of King County, Washington
Autism National Committee
Autism Network International
Autism Society of America Foundation
Autism Society of Indiana
Autism Society of New Hampshire
Autism Society of North Carolina
Autism Society of Oregon
Autistic Self-Advocacy Network
Autistics.org
Provincial Autism Center

Many thanks to the reader who provided me with ASDF’s fundraising kit.

Comments


  1. Awesome. As always.

    — Ken    2009-09-30 22:04    #

  2. As if autism research and services didn’t have enough challenges, they have to be saddled with this Slutsky trying to siphon off the dollars of people who are inclined to donate to support them? He should be ashamed…but I doubt he has the conscience to realize it.

    — isles    2009-10-02 11:20    #

  3. Awesome work – as always

    So many donors are deceived – it is a crime. I pray this evidence is used to stop them.

    — Jennifer    2009-10-03 09:36    #

  4. Thanks for this great post on alerting many would-be donators not to fall prey to these phony outfits.

    — Can Diet Help Autism ?    2010-03-03 23:53    #

  5. My Dad responds to their contests and usually sends a couple of dollars. He has dementia and it makes him happy. But now I just found an ASDF letter that talks about a “Personal Credit Number.” It is 9 digits plus a zero on the front. Looks like they will issue a check, but it will be on this new credit (aka social security) number. Nice. Any reason I should NOT freak out?

    — coo    2010-03-04 17:49    #

  6. I’d be freaking.

    — Kathleen Seidel    2010-03-04 19:05    #

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