Fund-Raiser Got Most of Charity’s Money : Donations: While less than 1 cent of every dollar went to grant the wishes of dying children, the rest evaporated in a professional operation, records show. The state has moved to disband the group.

SACRAMENTO —  Touched by the plight of dying children, thousands of Americans last year donated money to the Children’s Wish Fund of Carson, unaware that less than 1 cent of every dollar was used for its intended purpose--to fulfill the wishes of gravely ill youngsters.

But what happened to the other 99 cents?

Most of it evaporated in an elaborate and expensive professional fund-raising operation run by National Marketing Services, also of Carson, records show.

A review of the charity and its for-profit fund-raising company shows that the two are so tightly intertwined that it is difficult to tell where one leaves off and the other begins.

Last month, the state attorney general accused the Children’s Wish Fund of defrauding the public, and filed suit to disband the charity. The suit contends that so little of the money went to grant wishes--just $10,431 out of total $1.3 million raised last year--that the charity’s fund-raising appeal amounts to a knowing deception.

Other charities say the allegations against the Carson group are hurting them.

“The difficulty is that the names are so similar,” said Karla Blomberg, president of Make-A-Wish Foundation of America, which says it is the world’s largest such charity. “People don’t hear the name. They hear wish and they hear children and terminally ill and life-threatening and they put it all in one lump.”

The suit against Children’s Wish Fund makes much of the ties between the charity and its professional fund-raisers, labeling them “co-conspirators” in making misrepresentations.

Officials of Children’s Wish Fund and National Marketing deny doing anything improper.

However, all of the directors of Children’s Wish Fund have close business or personal relationships with National Marketing’s owner, Marlowe Johnson, according to interviews with those individuals.

The charity’s executive director, Maurice Benkoil, once was a paid fund-raiser for National Marketing and continues to be paid as much as $300 a month to write telephone sales scripts for the firm’s other customers, he said. “He has worked for my company,” Johnson said of Benkoil. “He works for my company now. We have a symbiotic relationship.”

All three members listed on the Children’s Wish Fund’s board of directors also have ties to National Marketing or its owner. One member, Thomas Johnson of Lakewood, is Marlowe Johnson’s nephew and was once National Marketing’s bookkeeper. Board member Marybeth Powell is an employee of National Marketing.

The chairman of the board, Thomas Richardson Jr., is a longtime friend of Marlowe Johnson, who says that he plans to hire Richardson at National Marketing.

According to Benkoil, National Marketing provides office space, phones and support services, and acts as “controller” for the charity by depositing donations and disbursing payments.

Both Johnson and Benkoil said they see no reason to question the links between the charity and National Marketing.

Benkoil acknowledged that the charity’s board did little more than decide on which wishes to grant and has not reviewed the performance of its fund-raisers.

Records show that National Marketing collected $1.1 million last year on behalf of the Children’s Wish Fund and turned over only 6% of that amount to the charity--and most of that was devoured by administrative expenses. In all, only five children benefited from the fund in 1990.

In the suit, Atty. Gen. Dan Lungren named Benkoil and the charity’s board members as well as National Marketing and other fund-raisers as parties to the alleged fraud.

“Look at this whole operation as a money machine,” said Deputy Atty. Gen. Peter K. Shack. “The money is going into the top and most is going out to fund-raisers, leaving only a little trickle for the beneficiaries.”

Benkoil and National Marketing’s Johnson argue that the charity’s operations are legal and that the lawsuit has delayed new fund-raising agreements that would assure that more money would reach the children than it does now.

“Nobody drives limousines here,” said Benkoil, who makes $36,400 a year as the charity’s executive director. “I get the feeling over and over I am being called a crook and a cheat and a liar and I will get my day in court and I can’t wait.”

Johnson, owner of National Marketing, which handles all of the fund raising for Children’s Wish Fund, is equally insistent that both are above reproach.

“No one is taking money and putting it in their pockets,” Johnson said. “Not a single penny has been misappropriated. . . . Where is the fraud?”

Benkoil contends that when he took over the reins of the charity in June, 1990, the fund was destitute. He said he has been trying to revitalize it under a new board of directors. Since December, he said, the fund has granted eight wishes and has plans to grant another four soon. The $24,000 spent on wishes to date this year “is three times what my predecessor gave in any one year,” he said.

But the numbers pale beside better-known wish-granting charities--several of which report spending well over 50% of the money they raise directly on sick youngsters and their families.

Asked why anyone should contribute to his fund when such a small amount actually reaches children, Benkoil replied, “Because we are helping children that other people are not helping.”

The fund, incorporated as the California Rainbow Children’s Wish Foundation in 1986, has grown enormously since it was founded by Dennis M. Cunningham.

But from the start, very little of the money has actually reached children, according to the charity’s filings with the Internal Revenue Service and the state attorney general. Of the $3.1 million raised in five years, 88% has gone to professional fund-raisers.

In 1990, Cunningham left the presidency, becoming a $37,500-a-year consultant, paid by National Marketing from the money it collects for the charity, according to Marlowe Johnson.

Benkoil said he terminated the contract in June. “I didn’t feel we were getting any benefits from it,” he said. “It was impossible to get hold of him (Cunningham).”

Cunningham is cited in the civil suit for accepting payments for consulting services that “were either not performed or were of such a negligible or insignificant nature that they were without value” to the charity.

Benkoil said that under his own leadership the charity has expanded into four other states. However, he refused to name them.

In Arizona, the charity’s telemarketing contractor, Zzones International Marketing, has already run into problems with the Phoenix-area Better Business Bureau and the Scottsdale Police Department.

In an alert to members, the bureau warned that the charity does not meet the agency’s standard that at least 50% of the money collected should go toward the intended purpose.

“When you’re talking about terminally ill children, you’re really pulling at heartstrings,” said the Better Business Bureau’s Karon Krause. Although the phone solicitors are paid by Zzones, “they were representing themselves as volunteers,” she said.

In fact, Zzones was operating under a contract with National Marketing that paid the Scottsdale company 78.5% of whatever it raised in Arizona.

“Our contention is that this is a typical boiler-room operation,” said Scottsdale Police Detective Sam Bailey. “One of the complaints is that somebody would arrive at the door a couple of hours later or the next day--a runner to pick up donations.”

Carlo Ardizzone, who co-founded Zzones, said he is losing money on his contract with National Marketing. He blamed the Better Business Bureau, local television reports and government agencies.

Like other professionals raising money for the Children’s Wish Fund, he said his only aim is a modest profit. “We don’t want to be millionaires,” he said.

National Marketing’s Marlowe Johnson said that because of the cost of phone solicitation, Ardizzone and other telemarketing fund-raisers could not expect more than a 7% or 8% profit.

The Zzones contract leaves 21.5% for the charity, Johnson said. Of that, National Marketing retains 9.5% for expenses and a profit of 3% to 4%.

In theory that should leave 12% for the charity. However, Children’s Wish Fund’s records show that it received only half that in 1990.

Benkoil becomes emotional describing what the charity has meant to the few children whose wishes have been granted. “Until you see a look in a child’s eye, who obviously believes nobody loves him any more, that even God doesn’t love him because he’s going to die, then somebody hugs him,” he said.

Not all of the families of the children are happy with the charity’s performance.

Wanda Cortez’s 5-year-old granddaughter, Nicole Nino-Cortez, was born with a rare muscular disease that will eventually confine her to bed where she will lie, “totally still like a piece of paper,” Cortez said.

Never able to walk, and growing weaker, the bright little girl’s wish was for a computer to allow her to write and--when she becomes too weak to talk--enable her to continue communicating.

Cortez said it took more than a year for the charity to fulfill Nicole’s wish. It was only when Cortez complained to a local TV station that the charity made good, even though National Marketing’s Stockton-area subcontractor, Tel-Mar Productions, had begun collecting money in Nicole’s name even before her wish application was completed.

Benkoil “kept making excuses after excuses after excuses,” Cortez said.

Benkoil said checks from both Children’s Wish Fund and National Marketing were lost in the mail. ‘ “The check is in the mail’ is one of the biggest jokes in America, but the fact is the check was in the mail,” he said.

Other wish groups say that they use different strategies for raising money.

At Make-A-Wish, for example, there “is no door-to-door solicitation, no telephone solicitation and no professional fund-raisers,” Blomberg said. “If you do get solicited by phone or someone at the door, you know it’s not Make-A-Wish.”

Still, there is concern that public confusion could hurt the other organizations.

“The public is generally not good at telling one wish-granting charity from another,” said Peter G.W. Samuelson, president of Starlight Foundation International.

Starlight officials argue that the Children’s Wish Fund logo--depicting a child reaching for a star--is a copy of Starlight’s trademarked symbol. “You don’t have to be a rocket scientist to see that someone sat down and said, how can we be deceptively similar,” Samuelson charged.

An attorney for Children’s Wish Fund has denied any trademark infringement.

Both Starlight and Make-A-Wish rely heavily on volunteers to raise money, most often through corporate sponsors, service clubs and annual fund-raisers.

Officials of both charities applaud the attorney general’s attempt to shut down the Children’s Wish Fund and to send a message to charities that do not deliver on their promises.

But Deputy Atty. Gen. Shack is concerned that the public not turn its back on legitimate charities.

“We sure hope that (the action against Children’s Wish Fund) doesn’t hurt the 99% of charities that are good,” Shack said.

Comparing Children’s Organizations

State Atty. Gen. Dan Lungren has charged the Children’s Wish Fund of Carson with fraudulent misrepresentation and wants to shut the charity down. The suit contends that Children’s Wish Fund spends so much on fund raising and administration that it has little left to grant the wishes of dying children.

The following is a comparison of Children’s Wish Fund with other organizations that grant the wishes of dying or seriously ill youngsters. Percentages indicate the portion of the total raised by each organization in the fiscal year 1990 that was spent on children or on fund raising:

Children’s Wish Fund (Based in Carson)

AMOUNT RAISED AMOUNT TO CHILDREN FUND-RAISING EXPENSES $1,255,728 $11,682(O.9%) $1,155,029(92%)

Background: A Solano County Superior Court judge has barred the charity’s professional fund-raisers from stating that the money collected will “in any substantial degree” be used to help dying children or “for any charitable purpose at all.” The amount used for the charity’s programs includes $10,431 to grant five wishes and $1,251 for balloons distributed at hospitals. The group has relied heavily on phone solicitiation to raise money.

Los Angeles Make-A-Wish Foundation (Based in Los Angeles)

AMOUNT RAISED AMOUNT TO CHILDREN FUND-RAISING EXPENSES $307,556 $242,626(79%) $83,826(27%)

Background: One of 74 local affiliates of the Make-A-Wish Foundation of America, the world’s largest wish-granting charity. Raising money through service organizations and fund-raising events, the group does no phone or door-to-door solicitations. Figures are for a five-month period in 1990, when expenditures exceeded the amount raised. Last year the group reported granting 209 wishes.

Starlight Foundation of Southern California (Based in Los Angeles)

AMOUNT RAISED AMOUNT TO CHILDREN FUND-RAISING EXPENSES $343,319 $765,102(223%) $65,424(19%)

Background: One of 11 chapters of Starlight Foundation International, the group also provides rooms with video games and other amusements to hospitals serving low-income youngsters. The group raises money through special events including an annual gala. In its 1990 fiscal year, the group spent more than it raised, dipping into its bank account. Starlight has not hired telemarketers to raise money but is considering it.

Children’s Wish Foundation International (Based in Atlanta)

AMOUNT RAISED AMOUNT TO CHILDREN FUND-RAISING EXPENSES $693,193 $302,547(44%) $294,993(43%)

Background: Because of the similarity of names, the Children’s Wish Foundation believes it has been hurt most by the allegations about the Children’s Wish Fund. The two groups are not connected. The foundation has begun to rely heavily on professional telemarketers in some states. Founded by individuals who left Make-A-Wish, the foundation has had some problems with Georgia authorities. In 1989, its officers agreed to pay $5,000 in fines because of an advertising campaign purporting to raise money for specifically named children who did not, in fact, exist. The organization is no longer on probation and complies with state law.

SOURCE: Internal Revenue Service forms filed with state attorney general