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Organized charities are among the most revered and least questioned institutions we have. Since World War I, philanthropy has developed into one of the ten largest industries in the nation, representing nearly $50 billion in capital investment. The public has proved its eagerness to give generously to charitable organizations which enjoy its trust. To date the question whether this trust is justified has not been raised. However, several sources, including two Rockefeller reports published in 1945 and 1960, and two recent articles by John Lear in the Saturday Review, and Dr. Robert Hamlin, an Associate Professor at the Harvard School of Public Health, present disturbing evidence of inefficiency and mismanagement among voluntary charitable health agencies.
The first Rockefeller Foundation Report noted a variety of evils among voluntary health agencies, such as lack of coordination between agencies which resulted in a confusing duplication of appeals and failure of agencies to inform contributors how their money was spent. The findings of the second report, written by Dr. Hamlin for the Rockefeller Foundation ad hoc committee on voluntary health and welfare agencies are even more disturbing. He reported that "no strong, central agency" had been created, too much money was going into overhead (as much as 36.2 cents being spent in raising each dollar), the public continued to be in the dark about how the money was spent and the agencies were continually fighting among themselves rather than attempting to align their efforts with those of the federal government.
Mr. Lear's specific analysis of the operations of several voluntary health agencies is hardly more comforting. According to his article, James V. Lavin, president of the Massachusetts Branch of the American Cancer Society, divided his time between the Society and his own fund-raising agency which competed with it, receiving considerable income from both organizations. Several of Lavin's chief subordinates in the Society suffered from similar division of interests. Only through sustained pressure from a member of the board of directors did the Massachusetts Cancer Society make an even nominal change in this situation.
The results of such mismanagement were most unfortunate: of the $1,150,000 collected in the 1960 Massachusetts drive, $548,241 was spent for overhead. Further damaging evidence occurs in Lear's second article which reproduces the internal revenue form filled out by the Massachusetts Branch. This document, which even baffled a certified public accountant, contains the following figures: cost of operations--$1,368 (when the president's salary alone was $17,500), miscellaneous expenses--$599,752.33, cash on hand--$1,207,269.05 (in an organization which annually begs people for donations).
These figures clearly indicate something amiss.
Lear's article describes the activities of several other agencies as well and discloses exaggerated campaign claims and a niggardly payment policy on the part of the March of Dimes in addition to outright fraud on the part of the Kenny Foundation.
These isolated cases suggest a more general malady which ought to be closely investigated. The pattern of corporation giving since 1945 reflects distrust of health agencies in general. In 1947-48 corporations and foundations gave three times as much money for health and welfare as for education. In 1960 on the other hand the ratio was one to one; and the move away from health and welfare donations continues to accelerate. Private donors are likewise becoming disillusioned with the menagerie of voluntary health agencies. If their vital public service is to continue, a general overhaul is necessary.
Dr. Hamlin has proposed a plan to effectively revamp the present, confused situation. The first step would be the formation of a national committee of voluntary health agencies to establish a code of accounting procedures for all the various agencies.
The national committee would keep a careful eye on the records of the agencies to assure adherence to the code. The second key element in Dr. Hamlin's plan would be the participation of individual donors in committees at the local level to prevent the public from giving to unworthy charities. Acceptance of proper accounting standards, the examination of records by an impartial body and information telling the public how their money is spent would much improve the position of all the agencies concerned.
However such a plan depends on the willingness of the charities to police themselves. If the American Cancer Society and the National Foundation are any example, the agencies strongly oppose such regulation. Yet unless progress is made soon, the government may have to step in and use its powers to force the agencies to come to terms, or at least impose its own standards and auditors. The former course might be disastrous; the latter might be the only feasible solution. In any case, the services of voluntary health organizations can not be dispensed with in the fight against misery and disease. It would be most unfortunate if their own factionalism and mismanagement crippled them.
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