Food For the Poor has agreed to a settlement over allegations of deceptive charitable solicitations with the Michigan Attorney General Office’s Charitable Trust Section that includes a payment of $300,000.
The settlement will reimburse the state $50,000 for investigative costs, with $175,000 going to the Lansing, Mich.-based Food Bank Council of Michigan and $75,000 to the Capuchin South Kitchen of Detroit, which has two soup kitchens and a food pantry serving the city’s homeless population.
While denying that its solicitations were deceptive, Food for the Poor agreed to cease allegedly deceptive language as well as pay $300,000, according to a new release from the attorney general’s office on Friday.
In a statement, Food for the Poor Executive Director Angel Aloma said: “We have served with integrity and honesty in every season of our 36-year-old ministry and we moved quickly to make sure that our mission to save lives was no jeopardized. When we learned that some people might be confused by our documents, we worked with the attorney general to make changes. We have always sought to be transparent and to put our donors first. It is our pledge to continue to work to make our disclosures as clear as possible.”
Michigan Attorney General Bill Schuette in December filed a cease and desist order against Food For the Poor, intending to bring a civil action in Ingham County Circuit Court.
The Coconut Creek, Fla.-based organization was among three charities issued cease-and-desist orders this past spring by the California Attorney General’s Office that made similar claims about how it calculated its fundraising ratios and its use of joint cost allocation. At that time, Executive Director Angel Aloma said in a statement that they believe they have done nothing wrong and were actively working to resolve the California AG’s concerns.
Food for the Poor solicits donations nationwide and is required to register in states in order to fundraise there. The Attorney General’s Charitable Trust Section received the renewal registration form in June 2016, reporting $1.157 billion in contributions and grants received; $1.158 billion in total expenses, and $1.117 billion in total program expenses. Those figures would show a 96.5 percent program-expense ratio, however, if $1.033 billion of the $1.157 billion in contributions were gifts-in-kind (GIK).
Excluding GIK in the calculation and using just the $124 million raised in cash that year, with $84 million spent toward programs, would calculate a program-expense ratio of more like 67 percent.
In court filings, the attorney general said the 95 percent statement is misleading to donors in several ways. During 2015 and 2016, Food for the Poor solicited Michigan donors with its “6 Cents Appeal,” stating that “It only takes 6 cents to provide a meal for a starving child.” Since funds raised through these mailings were not restricted to the purchase of food, the attorney general called them deceptive, misleading misrepresentative.”
The attorney general claimed that Food for the Poor misrepresented its fundraising efficiency by including gifts-in-kind. In March, the office issued an investigative order requiring production of its solicitation materials and requiring it to explain and document its programs and activities.
“I appreciate Food for the Poor’s willingness to correct its solicitations and resolve this matter,” Schuette said, “and am pleased that settlement proceeds will help hungry families in Michigan. “This action and settlement should also serve as a reminder to other charities to review regularly the accuracy of their solicitations.