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Minnesotans donated $3M to Kars4Kids, but charity only spent $11,600 here

Lori Swanson says Kars4Kids doesn't make clear how it spends its donations.
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Minnesota's Attorney General has criticized well-known car donation charity Kars4Kids, accusing it of giving a false impression of how much donated money it spends on charitable programs.

AG Lori Swanson found that between 2012 and 2014, more than $3 million was donated by Minnesotans to the nonprofit known for its catchy radio jingle, yet just $11,600 was spent on programs in the state during that same period.

She accuses the charity of failing to disclose where most of its donations are spent, after finding that the majority of money raised by Kars4Kids was being used to promote Orthodox Judaism to Jewish children in New York and New Jersey.

A compliance report published by her office on Thursday has been forwarded to the Internal Revenue Service, which has the power to investigate and potentially revoke the tax-exempt status of any charitable organization.

Here are some of the concerns Swanson has raised about Kars4Kids.

– Kars4Kids acts as the fundraising arm for New Jersey-based Oorah Inc. Of the $87.8 million in proceeds from 160,000 donated vehicles Kars4Kids received between 2012 and 2014, $40 million went to Oorah. Kars4Kids only spent $3 million on other charitable activity, including the $11,600 in Minnesota.

– Oorah uses the money to promote Orthodox Judaism primarily in New Jersey and New York. Swanson says Kars4Kids radio, TV and internet adverts do not disclose that its charitable funds are being used in this way.

– As of March 2015, only three Minnesota children had taken part in Oorah's summer camp and tuition assistance programs.

– Kars4Kids is failing to monitor the management of its money. Between 2007 and 2014, Oorah and Kars4Kids lost $9.7 million in donations on real estate projects that went bankrupt or foreclosed.

– It fails to disclose how much of its donations are actually spent on advertising and overheads. The report found less than 44 percent of the organization's donations were used for charitable purposes.

In a statement sent out with the report, Swanson said: "Donors need accurate and straightforward information to make informed choices. We hope this report sheds greater transparency on Kars4Kids, one of the nation’s largest vehicle donation programs."

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