On the home page of its website, Folds of Honor Foundation claims that “91% of donated funds go directly to scholarships.” CharityWatch recently spoke with Jack Lemnus of USA Today’s Treasure Coast Palm Newspaper about why this claim is untrue.

“‘It would not be correct to say Folds [of Honor Foundation] spent 91% on direct grants for scholarships,’ said CharityWatch Executive Director Laurie Styron. ‘The laws governing how charities are allowed to spend their money are highly permissible. You can’t generally trust what charities tell you in their marketing.'”

CharityWatch’s Calculations

Folds of Honor Foundation does receive a top rating from CharityWatch for spending 90% of its total expenses on its programs and keeping its overhead spending on fundraising and management down to just 10% in 2023. These calculations are based on CharityWatch’s in-depth analysis of the organization’s 2023 IRS tax Form 990 and Consolidated Audited Financial Statements. However, there are many other types of expenses included in this 90% program percentage other than funding for scholarships.

In Part IX of its 2023 IRS tax Form 990 Folds of Honor Foundation does report spending an impressive $31.7 million on direct scholarship grants. However, CharityWatch computed that its total program spending in 2023 amounted to about $46 million. Meaning, the charity’s spending on scholarships accounted for only about 69% of its program spending, with the remaining 31% paying for program-related expenses like salaries, wages, and employee benefits; advertising and promotion; receptions and events; and other miscellaneous expenses. Of its total computed cash spending for 2023 of about $51.3 million, scholarship spending therefore accounted for only about 62%.

Folds of Honor Foundation reported raising a rounded $62.3 million in contributions in 2023, according to Part VIII of its IRS tax Form 990 of the same year. For our computation of the charity’s Cost to Raise $100, CharityWatch adjusted from this figure about $21.7 million of its reported change in its interest in the net assets of its chapters; fundraising event direct costs, a small government tax credit, and other changes in value of certain assets that are unrelated to what the charity spent on fundraising in 2023. Our final calculation of Folds of Honor’s Cost to Raise $100 was therefore a rounded $7 ($2.6 million fundraising expenses divided by $39.3 million cash contributions). In other words, of the adjusted $39.3 million in contributions Folds of Honor Foundation raised in 2023, it spent only $31.7 million, or about 81% on direct scholarships that year, not 91%.

CharityWatch CEO, Laurie Styron, commented further to journalist Jack Lemnus on the issue:

“‘It’s not about whether or not some good is being done,’ Styron said. ‘It’s about whether a charity is accomplishing as much as it can with the resources it has.'”

Private Jet & First-Class Travel

As part of its compensation reporting, Folds of Honor Foundation discloses that “the Organization leases an aircraft for the CEO’s use.” (See CharityWatch’s Analysts’ Notes for more information). This information is disclosed in Schedule J of the charity’s 2023 IRS tax Form 990. CharityWatch CEO, Laurie Styron, told the Treasure Coast Palm that Folds of Honor’s favorable CharityWatch rating is based on how efficiently the organization raises and spends its donations overall and should not be interpreted to mean that there is no room for improvement.

“‘If the charity is fortunate enough to receive a donation of a size large enough to cover the costs of a private jet and first-class travel, that money could likely be better spent on providing more life-changing scholarships,’ Styron said. ‘A public charity’s money doesn’t belong to the people running it, but to the public.'”

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