People gauge charities by the overhead used to get the dollars to the targeted problem. Some charities lose only a small percentage of their revenue in costs, while others soak up a majority of contributions on internal costs. Only those who commit outright fraud wind up spending none of their revenue on their stated purpose.
So what does that say about the SEIU’s low-income housing charity?
A nonprofit organization founded by California’s largest union local reported spending nothing on its charitable purpose — to develop housing for low-income workers — during at least two of the four years it has been operating, federal records show.
The charity, launched by a scandal-ridden Los Angeles chapter of the Service Employees International Union, had total expenses of about $165,000 for 2005 and 2006, and all of the money went to consulting fees, insurance costs and other overhead, according to its Internal Revenue Service filings.
Charity watchdogs say that nonprofits should never have zero program expenses in two successive years and that well-performing charities direct at least 70% of their annual spending to their charitable purpose.
“Of the 5,000-plus charities we’ve looked at, I don’t think we’ve ever seen one that didn’t spend anything on its charitable programs,” said Sandra Miniutti, vice president of Charity Navigator, an online rating service.
The SEIU didn’t want to discuss the issues surrounding the Long Term Care Housing Corporation, claiming that the charity had no connection to the SEIU. However, the LA Times notes that the LTCHC shares offices with the SEIU local and has a number of SEIU officials on its board. Two SEIU officers founded the charity, although both have since been booted from the union.
The Times has been on this case for several months. Before the election, it reported on the charity’s founder, Tyrone Freeman, and his spending habits, when he ran the United Long Term Care Workers union. Now the SEIU wants a million dollars in restitution from Freeman, and he faces federal and state investigations linked to his work at the union.
No one can quite figure out what Freeman did at the LTCHC, other than spend money. Its only revenue came from the SEIU, and until 2007 it never spent a dime on its stated mission. One has to wonder how the SEIU could have remained in the dark about its charitable arm for so long, unless it was a willful blindness and the unit had some other purpose.