Donation vexation: FTC and 10 States challenge cancer “charity” as a sham

Think about the two women across from you in the office. Now consider the sobering statistic that of those two women, one will battle cancer in her lifetime. The bad news gets worse when you realize there are sham charities out there that claim to offer financial assistance for people undergoing cancer treatment, but then spend donations for other purposes. The FTC and 10 states just sued Cancer Recovery Foundation International (also known as Women’s Cancer Fund) and Gregory B. Anderson, alleging the defendants collected $18 million from generous Americans between 2017 and 2022 while providing only $194,809 in financial support for cancer patients – literally about a penny of every donated dollar. According to the lawsuit, Anderson pocketed $775,139, nearly four times more than what the “charity” gave collectively to women battling cancer. But hold on to your hat – and your wallet – when you learn where the FTC and the States say the rest of the money went.

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The defendants solicited charitable donation chiefly through telemarketing. As one telemarketing script claimed, “Your donations mean the world to a woman fighting for her life, helping pay basic household bills like rent, water, and heat.” Another pitch promised donors that their gift would “go to directly help cancer patients and their families who are in need” with essential living expenses. A pledge letter showed a woman with a head covering typically worn by patients undergoing chemotherapy and asked people to increase their donations, citing “the double jeopardy of cancer patients in the time of Coronavirus.”

That’s where the defendants said the donated money was going. But according to the FTC, California, Florida, Maryland, Massachusetts, North Carolina, Oklahoma, Oregon, Texas, Virginia, and Wisconsin, in addition to the $775,139 that went to Anderson, the for-profit fundraisers that Anderson hired grabbed $15.55 million – 85% of the total. Compare that to the 1% of contributions the FTC and the States say went to help patients.

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What’s more, two of the for-profit fundraisers the defendants used – Associated Community Services, Inc. and Directele, Inc. – were sued by the FTC and multiple states in 2021 for making deceptive charitable solicitations, including for Women’s Cancer Fund. According to the complaint, that lawsuit didn’t deter the defendants or end their scheme. When Directele and Associated Community Services were banned from any fundraising as part of a federal court settlement, the defendants turned to another for-profit fundraiser, Front Line Support LLC, which made similar allegedly deceptive claims on behalf of Women’s Cancer Fund.

The complaint sums it up this way: “[A]lthough Women’s Cancer Fund was organized as a non-profit, it did not operate as a legitimate charity whose primary purpose was to further its charitable mission. Instead, it was operated by Anderson primarily to benefit his own financial interest and the financial interests of the for-profit fundraisers he hired. Any charitable spending was incidental to supporting these core private interests.” The lawsuit is pending in federal court in Texas and alleges violations of the FTC Act, the Telemarketing Sales Rule, and numerous state consumer protection laws.

Even at this preliminary stage, the case sends some important messages to businesses and business leaders.

The FTC and the States are united in the fight against bogus charities. As the complaint alleges, “At Anderson’s direction, Women’s Cancer Fund lied to tens of thousands of generous donors about the good their charitable contributions would accomplish, effectively preventing millions of dollars from going to legitimate charities that would help women with cancer.” It goes without saying – but it bears repeating – that using the plight of cancer patients to deceptively squeeze cash out of kind-hearted Americans is a particularly pernicious tactic likely to attract law enforcement attention.

Charities thinking about hiring professional fundraisers should do their homework. Legitimate charities have two primary assets: their good reputation and their record of good work. Hiring questionable for-profit fundraisers and handing them a big chunk of donations is an easy way to lose the goodwill of the community you serve. Investigate before signing a contract and remember that a for-profit fundraiser – like any other business – is known by the company it keeps. If a deep dive into its past dealings reveals anything iffy, find another fundraiser.

For the people in charge, incorporation isn’t a defense to deceptive practices. The lawsuit names both the corporate entity and Women’s Cancer Fund honcho Gregory Anderson. Of course, the question of individual liability depends on the facts of each case. The complaint here cites Anderson’s management of “every aspect of Women’s Cancer Fund and its operation” and alleges that he – among other things – “had authority over all the finances and oversaw all aspects of Women’s Cancer Fund’s fundraising. He recruited telemarketers, provided and approved deceptive telemarketing scripts and other solicitation materials, and managed Women’s Cancer Fund’s relationship with its for-profit fundraisers.”

Business executives should bring their business savvy to their role as board members of charities. As a business leader in your community, you may be asked to serve on the board of a charity. Do your due diligence to make sure it’s a genuine nonprofit. Take a careful look at the books, fundraising expenditures, the background and experience of the people running the charity, arrangements with for-profit fundraisers, and anything else that an experienced business person would scrutinize before lending their name to what could be a legitimate charity or a sound-alike scam. And if you decide to serve, don’t just rubber-stamp problematic policies. Raise your independent voice to pose the tough questions that need to be asked.

Read Before Giving to a Charity for resources to help you determine if your personal and business donations are going to genuine charities.