CharityWatch has been rating Childhood Leukemia Foundation (CLF) for over 20 years. Over these two decades of analyzing the charity’s IRS Tax Form 990s and audited financial statements we issued it a failing grade, or “F” grade, each and every time we updated its rating.
Our most recent rating of the charity is based on our analysis of its fiscal year ended December 31, 2023 financial reporting. CharityWatch determined that Childhood Leukemia Foundation spent only 14% of its total expenses on programs that year, with the remainder spent on overhead that primarily included for-profit professional fundraiser fees. We also determined that in 2023 it cost the charity just over $80 to raise each $100 in cash support from its donors. This means that for every $5 you donated to the charity, it cost it $4 to raise those dollars from you.
Childhood Leukemia Foundation relies heavily on for-profit professional fundraising companies to bring in the vast majority of its donations. For example, in 2023 it paid $1,351,420 to Universal Events of Pleasanton, California and $1,151,211 to Innovative Teleservices of Port Huron, Michigan to raise $1,603,052 and $1,282,562 in donations, respectively, according to the charity’s 2023 IRS tax Form 990. In total, the charity reports that professional fundraisers raised $3,245,644 on the charity’s behalf in 2023, only $422,613 of which made it to the charity. Amounts retained by the fundraising companies totaled to $2,823,031, according to the charity’s 2023 tax filing.
Federal Trade Commission (FTC) Investigation
In 2022 and 2023 the Federal Trade Commission (FTC) issued Civil Investigative Demands (CIDs) to the charity with the goal of determining if it truly functions for charitable purposes. According to the Order Denying Petition to Quash Civil Investigative Demand (the Order) in the matter of August 11, 2022 Civil Investigative Demand Issued to Childhood Leukemia Foundation, Inc., the FTC states that its investigation centers on “whether CLF’s program spending is so de minimis that it is deceptive to tell consumers that their money will be spent on the purported charities described to them.” Specifically, the FTC seeks to determine if CLF is “engaged in ‘unfair or deceptive acts or practices’ in violation of Section 5 of the FTC Act, 15, U.S.C. [45].” According to the Order, “The information sought in the CID is needed to enable the Commission to determine whether CLF is operated as a nonprofit.”
Audit Notes
An important aspect of CharityWatch’s evaluations is analyzing a nonprofit’s audited financial statements. Audits often disclose information about a charity that is more comprehensive, and often more reliable, than its tax filings. Below we outline some of the Analysts’ Notes from our review of the Childhood Leukemia Foundation’s 2023 audit.
Agreements With Fundraising Companies
According to the Childhood Leukemia Foundation audit of December 31, 2023 (Note 8, Commitments and Contingencies, Professional Fundraising):
“The Foundation entered into various agreements with professional fundraisers to solicit donations to fund and further the Foundation’s programs and mission, expiring between 2023 and 2025. Terms of the agreements provide for the Foundation to receive between 13% to 25% of the contributions raised through these agreements. For the years ended December 31, 2023 and 2022, contributions under these agreements approximated $3,246,000 and $2,400,000 and is included in individual and corporate contributions. For the years ended December 31, 2023 and 2022, payments to the fundraisers under these agreements approximated $2,825,000 and $2,066,000 and is included in professional fundraising services.”
According to the Childhood Leukemia Foundation audit of December 31, 2023 (Note 2, Summary of Significant Accounting Policies, Financial Instruments and Concentrations of Credit Risk):
“…At December 31, 2023 and 2022, three professional fundraisers accounted for approximately 99% and 100% of receivables and for the years ended December 31, 2023 and 2022, three professional fundraisers accounted for approximately 99% and 90% of contributions.”
Employment Agreement
According to the Childhood Leukemia Foundation audit of December 31, 2023 (Note 8, Commitments and Contingencies, Employment Agreement:
“The Foundation entered into an employment agreement with an officer of the organization, expiring in 2031. Terms of the agreement provided for annual base compensation, plus bonus.”
The only paid officer listed in the charity’s 2023 IRS tax Form 990 is Executive Director, Barbara Reid-Haramis. According to the Childhood Leukemia Foundation (CLF) tax filing for the fiscal year ended December 31, 2023, CLF reports re: Compensation, Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees (IRS Form 990, Schedule J, Part II):
CLF reports providing “bonus & incentive compensation” during 2023 to Barbara Reid-Haramis, Executive Director, who received $10,000 of bonus and incentive compensation, with a total reported compensation of $193,134.
Government Funding
According to the Childhood Leukemia Foundation audit of December 31, 2023 (Note 7, Employee Retention Credit):
“As part of the Coronavirus Aid, Relief, and Economic Security (‘CARES’) Act, the Foundation received $79,681 in refundable payroll tax credits in 2023 for employee retention during the COVID pandemic period from 2020 to 2021. This amount has been included in investment and other income.”
