For several years now, Fox News, along with many other news outlets, has been providing coverage to a charity called Wreaths Across America. The nonprofit explains its mission this way:
Our mission, Remember, Honor, Teach, is carried out in part by coordinating wreath laying ceremonies on a specified Saturday in December at Arlington, as well as veterans cemeteries and other locations in all 50 states and beyond.
In short, Wreaths Across America places wreaths on the graves of veterans. According to a 2013 press release, 540,000 wreaths were placed that year. In 2014, 700,000 were placed, and according to the spokesperson I interviewed, this year the goal is 900,000.
Much of the transportation of these wreaths is donated and nearly all the wreath placement is done by unpaid volunteers. Their media exposure is free: According to one media monitoring service, Wreaths Across America was mentioned more than 1,500 times on radio, TV and online just from Dec. 3 to Dec. 10.
But the wreaths that Wreaths Across America uses aren’t free and they’re not donated. They’re paid for with donated money. Individuals pay $15 to sponsor one wreath, $30 to sponsor two, and so on. The organization’s online form explains its most popular donation is $75 to sponsor five wreaths.
And therein lies a potential problem with the way this nonprofit operates.
Wreaths Across America was started by a for-profit company that makes and sells wreaths
According to its website, Wreaths Across America was founded in 2007 by the Worcester family. The patriarch, Morrill Worcester, is president of Worcester Wreaths, a for-profit wreath-making company. His wife, Karen Worcester, is the executive director of the nonprofit Wreaths Across America.
Every wreath used by Wreaths Across America is purchased with donated money from the for-profit company that started it, Worcester Wreath.
The relationship between the company and nonprofit isn’t hidden. It’s easy to find on both the Worcester Wreath site and the Wreaths Across America site. But this relationship should raise the eyebrows of anyone donating to this charity. When donations to a nonprofit are used to purchase goods from the for-profit company that founded it, it raises the potential for problems. Is the nonprofit overpaying for its wreaths? Is the for-profit enriching itself at the expense of donors?
How much does Wreaths Across America pay Worcester Wreath?
One way to understand what’s going on with any nonprofit is to take a look at its tax return. All 501(c)(3) charities, such as Wreaths Across America, are required to make the returns available to the public.
Here’s the latest tax return for Wreaths Across America, which I found with a simple Web search. Transactions between interested parties (e.g., Worcester Wreath and Wreaths Across America) are required to be disclosed, so we can see how much Wreaths Across America paid the for-profit Worcester Wreath. The amount for the tax year ending June 30, 2014, was $4,865,805. (You can find it Schedule L, Part 4, line 1.) That’s more than 70 percent of the $6.6 million the nonprofit took in.
The tax form also reveals that on the board of directors, which supervises the nonprofit, three members are also members of the founding family.
There’s nothing illegal about this. The related transactions were disclosed and, as I’ve explained, both the for-profit and nonprofit are upfront about their relationship. But anytime a nonprofit is raising millions from donations, then transferring a large chunk of it to a related for-profit, it’s time to start asking questions.
Questions I asked Wreaths Across America
I interviewed Wreaths Across America representative Tobin Slaven by phone, then followed up with some questions via email. Here are three of those emailed questions, along with his responses. I’m leaving his entire responses intact so you can see how much unrelated information I received in response to my direct questions.
Question: How much does Wreaths Across America pay for the wreaths it purchases from Worcester Wreath? You mentioned [in our phone conversation] there was a contract between Wreaths Across America and Worcester Wreath for these purchases naming Worcester Wreath as the sole provider of wreaths. Can I get a copy of that contract?
Answer: Wreaths Across America provides all required annual reporting but does not publish unit pricing or contractual details for any of its business relationships.
Worcester Wreath sells wreaths wholesale to Wreaths Across America for less than $10. (This) is an exceptional price when the quality of Worcester Wreath wreaths are considered. When you are remembering and honoring fallen heroes, anything less than the highest quality would be a frank disgrace. We cannot imagine placing thin, shoddy wreath on a veteran’s grave. Worcester Wreath utilizes a host of proprietary processes, coupled with balsam evergreens harvested from American soil, to guarantee the fullest, greenest, and highest quality. The fact that its tag reads made in America, and with American grown balsam is a significant statement to the folks who support Wreaths Across America.
Question: Does Worcester Wreath make any profit whatsoever, in any form, on the sale of wreaths to Wreaths Across America? Does Worcester Wreath receive any benefit whatsoever from the sale of wreaths to Wreaths Across America? (For example, spreading Worcester Wreath fixed and variable costs of things like land, buildings, equipment, utilities, salaries, etc. via its relationship with Wreaths Across America is a direct financial benefit to Worcester Wreath, since it lowers costs for the for-profit’s other business activities.)
Answer: While I do not represent Worcester Wreath, I do think they benefit from (the) opportunity of showing the world the quality of their wreaths, as well as the deep meaning that a wreath can represent. As far as your question about lessening Worcester Wreath’s fixed and variable costs with things like land, building, equipment, utilities, salaries, etc., that is simply not the case with Wreaths Across America. For example, Wreaths Across America only uses a small amount of office space and labor, which is miniscule when compared to a major production operation like Worcester Wreath.
Moreover, to understand the kind of people that you are dealing with here, it’s important to consider the Worcester family’s history. They filled trucks with thousands wreaths to place on graves at Arlington for 15 years, without fanfare or financial support, before the nonprofit was even founded. The nonprofit was then founded in response to a call from the general public to expand the effort. This effort is lead by (a) truly dedicated family that feels a strong call to the mission, far beyond what might be reflected in dollars or contracts.
Question: When a nonprofit is created by a for-profit and buys all its products from that for-profit, that’s a potential conflict of interest. That conflict should be a major concern for anyone considering donating to the nonprofit, yet it isn’t addressed anywhere on either the Wreaths Across America or Worcester Wreath websites, or at least nowhere that I could find. If it is addressed, can you point me to it? If it’s not, why not? And if asked by a potential donor, how would you respond to this concern?
Answer: When Wreaths Across America was formed in 2007, we took great care to appoint an awesome board of directors to safeguard our mission and protect against all conflicts of interest. Two quick examples include our Chairman of the Board, Wayne Hanson, who served in Vietnam and earned two Bronze Stars, and our Vice Chair, Sir Stanley Wojtusik. Sir Stanley enlisted in the Army to fight and be captured in the Battle of the Bulge, later to earn a purple heart, two bronze stars, and then to receive the received knighthoods from the governments of Belgium and Luxembourg. Sadly, we lost Stanley this September.
A quick review of the rest of our Board of Directors will reveal an extraordinary group of people committed wholeheartedly to furthering our important mission. For example, our Board reviews the relationship between Wreaths Across America and Worcester Wreath bi-annually, ensuring that all of their minimum standards are met from all angles, including price, quality, logistical requirements, and their strong commitment to ensure that our Wreaths are sourced and manufactured in the United States. All Worcester-related members also recuse themselves from those discussions. Finally, while we profile our prestigious Board on our website, we plan to provide more information about how they work to safeguard our mission, which includes protect against conflicts of interest, before the 2016 season.
Is this a charity you’d donate to?
My questions had nothing to do with the integrity of the Worcesters, the quality of their wreaths, the righteousness of their cause or the dedication of their board. They were simply about where donor money goes, and that’s something anyone giving to any charity should be concerned about.
I asked specifically for the price Wreaths Across America paid to Worcester Wreath per wreath, and was told the charity “does not publish unit pricing,” although they did volunteer that they paid “less than $10.”
I asked whether Worcester Wreath profited in any way from its relationship with Wreaths Across America — a yes or no question — and got basically no answer, other than, “I do think they benefit from (the) opportunity of showing the world the quality of their wreaths, as well as the deep meaning that a wreath can represent.”
Since whether the for-profit Worcester Wreath financially benefits by selling wreaths to the nonprofit Wreaths Across America is central to this story, I contacted Mr. Slaven again and explained that I’d really like a simple answer to this simple question. He asked me to hold the story until he could contact Mr. Worcester and get a response. Minutes before the story was due to be published, I got the following statement from Morrill Worcester of the Worcester Wreath Company:
We are not in this to make a profit, because if we were we would have stopped years ago. I would not argue that we benefit from being known as the family that started Wreaths Across America. It has certainly helped our brand and awareness of our commercial business. Although the business relationship is severable, our other working relationship and its services is integral.
The more involved our family has become with veterans and Gold Star families, we see the impact and what this mission means to the volunteers nationwide – we are more dedicated to it than ever before, and we will continue to do everything we can, to honor as many veterans as we can. We are proud of our support of Wreaths Across America.
Once again, this is not an answer to the question I asked.
Why am I the only one asking these questions?
As I’ve explained, the potential conflict of interest that exists between these two organizations is obvious and easy to find. Yet people in the business of asking questions, namely major news outlets like Fox, apparently didn’t bother investigating this relationship before promoting this charity multiple times to millions of Americans. My emailed questions for Wreaths Across America also asked about this.
Question : Did Fox News ask these sorts of questions before publicizing Wreaths Across America?
Answer : While Fox News did not cover these questions specifically in the interview with Chairman Wayne Hanson, they delved deep into what Wreath Across America stands for, and how we approach our mission, asking many hard and important questions. The most poignant moment was when Wayne spoke about (how) this grew from one man’s vision to a mission that now engages hundreds of thousands of volunteers nationwide.
I do expect that as our Organization continues to grow, these are legitimate questions and concerns that people will and should ask. We feel we have a unique and compelling story to share with the World, about who we are, how we do it, and why we do what we do. So I want to thank you for helping us do that.
What does a watchdog think?
Am I making a mountain out of a molehill? I sent my questions and their responses to Sandra Miniutti, the CFO of charity watchdog, Charity Navigator. Here’s part of her response:
- The Form 990 clearly shows that out of total expenses of roughly $6.6 million nearly $4.9 million dollars went to the Worcester Wreath Company and that two employees of the company are on the board of the nonprofit. In other words, 74 percent of every dollar the charity spent went to the for-profit firm.
- We find the practice of a charity paying such a substantial amount of money to a business owned by several of that charity’s board members atypical as compared to how other charities operate.
- Another big concern is that the charity doesn’t have a whistleblower policy or a conflict of interest policy in place to help ensure it is behaving ethically.
- Donors should lead with their heart, but stop and use their head before they donate.
The bottom line: Don’t confuse medium and message
Laying wreaths on the headstones of veterans is obviously a noble pursuit. Our veterans, living and dead, have earned both our respect and recognition. But is Wreaths Across America the best way to accomplish that goal? Is it enriching a for-profit company? Could it pay less for wreaths from a different provider? Could it lay more wreaths for the same money?
Based on the information provided by this nonprofit, these questions are impossible to answer. Personally, that alone would prevent me from donating to it. Whether you feel the same way is something you’ll have to decide for yourself. But the lesson here is that before donating to any charity, it’s critical to look beyond what the charity does and check out how they’re doing it.
What’s your opinion of Wreaths Across America? Is it a charity you’d donate to? Share your thoughts below or on our Facebook page.
This article was originally published on MoneyTalksNews.com as 'Should You Donate to Wreaths Across America? A Lesson in Charitable Giving'.