Minnesota's attorney general is taking a Minnesota-based car donation organization to task for not donating very much of the proceeds it collects to actual charities, and steering some 80 percent of what it collects to two for-profit companies owned by the group's founders.
In a compliance report released Wednesday, Attorney General Lori Swanson accused Car Donation Foundation, which operates Wheels for Wishes, of only turning over 20 percent of the proceeds it collects from vehicle donations to local Make-A-Wish chapters.
When CDF receives a car donation, it either sells or scraps the vehicle and pays a percentage of the proceeds to local chapters.
According to Swanson, between 2011 and 2014, CDF spent 78-82 percent of the gross proceeds from donated vehicles on fundraising, advertising, and overhead, with only 18 to 22 percent of the proceeds going toward a charitable purpose.
Cozy relationship between nonprofit and for-profits
In addition, those fundraising services were provided by two for-profit companies owned by Bill Bigley and Randy Heiligman, the same people who run the CDF. Swanson claims the two companies received $36 million over the past four years, while Make-A-Wish chapters were paid $23 million.
One of the for-profit firms, National Fundraising Management, managed the charity's fundraising and operations activities. The other, Metro Metals Corp., managed the vehicle donations by arranging for towing, scrapping or selling them through auction, the Star Tribune reports.
DriveSafely.net, a site that promotes traffic safety, did a review of the CDF earlier this year and urged its readers not to donate through the organization.
DriveSafely.net did the math on how much of a car's value actually goes to Make-A-Wish if it's donated through Wheels for Wishes:
If the vehicle sells for scrap or at auction for $500, Make-a-Wish gets $90. The remaining $410, minus the fees and costs related to processing, goes to:
- Bigley and Heiligman's for-profit fundraising company, National Fundraising Management.
- Bigley and Heiligman's for-profit auto salvage company, Metro Metals Corp.
- Bigley and the Heiligmans' compensation for running the nonprofit.
As for that compensation, the writer looked at tax returns filed by the CDF for 2012, and reported these findings:
- CDF President Bill Bigley's compensation was $265,261; he worked an average 30 hours per week.
- Vice President Randy Heiligman's compensation was $266,599; he worked an average of 10 hours per week.
- Secretary Roberta Heiligman's compensation was $117,169; she worked an average of 10 hours per week. She is married to Randy Heiligman.
Swanson also said CDF has been misleading donors in its ads by using the name Wheels for Wishes along with Make-A-Wish, but not disclosing that CDF is the recipient of the donations, KARE 11 notes.
Swanson said Make-A-Wish and the CDF have 30 days to respond to the issues raised in the compliance report, and she has the authority to take legal action if she believes it's warranted.
FOX 9 reports that Swanson has also forwarded her report to the Internal Revenue Service, which could scrutinize the CDF's tax-exempt status.
Neither Bigley nor Heiligman has responded to several media requests for comment.