Wyclef Jean's Yele Charity Not The Only One With Dirt

Jan. 22, 2010 — -- Haitian-born musician Wyclef Jean has come under intense scrutiny over alleged mismanagement of his Yele charity. But the Grammy-award winning star isn't the first to spark a scandal in his quest to do good. The American Red Cross, Salvation Army and United Way, to name a few, have all come under attack in recent years for inappropriate, and in some cases criminal, actions.

The financial misconduct at Jean's Yele charity has thrown some nasty light on Haiti's relief efforts. Jean has not admitted to wrongdoing, but the group's most recent tax filing shows some financial imprudence.

Yele, also known as the Wyclef Jean Foundation, raised more than $2 million after the earthquake through text messages, after Jean called on fans to donate $5 by texting "Yele" to 501501.

Most of the criticism against Jean has focused on what's considered dubious spending, and records show that in 2007, the most recent year for which a filing is available, Yele earned $79,126 but spent $569,050. Critics also point to the close connections between Jean's business and charity ventures, pointing out a $250,000 payment made to buy airtime on a Haitian television station owned by the Grammy award- winner and his business partner.

"Have we made mistakes? Yes," Jean said at a press conference Monday. "Did I ever use Yele money for personal benefit? Absolutely not."

Hugh Locke, a spokesman for Yele said the airtime was used to publicize the charity's activities and produce a hip-hop competition for youths from Haitian slums. Buying time from Jean's station was cheaper than going through competitors, he said.

Experts said Jean's missteps don't amount to a crime but admit that the organization is facing some "administrative challenges."

"There's no fraud here. You'd be hard-pressed to find anyone who cares more about Haiti than Wyclef Jean," said Art Taylor, president and CEO of the Better Business Bureau's Wise Giving Alliance. However, Jean could allay donors' concerns by offering more information about how he intends to spend donations. "People are seeing a lot of money coming in, and they're not quite sure how the money is going to be distributed," said Taylor.

Of course, Yele is just one of many charities helping with the recovery in Haiti, and donors have a wide range of choices. In fact, 29 U.S. nonprofits collected more then $275 million in donations in the first week following the earthquake, outpacing support following the Asian tsunamis of 2004, according to the Chronicle of Philanthropy.

Many Charities Have Dirt

Large international organizations such as the Red Cross and Oxfam, which have received millions of dollars through text messages, are raking in the biggest contributions, and many of these large organizations have had their own share of scandals over the years.

We took an indepth look at a few of the largest nonprofits operating in Haiti to give a better idea of each group's strengths and some of the problems that have plagued groups in the past.

American Red Cross Focused on disaster relief, the 128-year old American Red Cross is one of the country's most established nonprofits, with 35,000 employees and an annual budget of $3.4 billion. Its focus is disaster relief, although it's also active in community service, support to military members, blood collection and international development.

Haiti Donations So Far: $112 million

Projects in Haiti: Currently focused on providing food, water, shelter and first aid through 11 mobile first aid posts. Domestic chapters are providing support to Haitian-American evacuees arriving in the United States.

Staff on the ground: 24

Strengths: The Red Cross has been working in Haiti since 2004. With low administrative expenses, the group receives a high ranking from nonprofit watchdog Charity Navigator. The Red Cross is also the only charity that has received texted donations: Phone companies will be holding on to most of those donations for up to three months, until customers pay their phone bills and honor their pledges, reports the Chronicle of Philanthropy.

The Dirt: The American Red Cross has been plagued by scandals over the past few years resulting in a string of resignations. Its past president, Mark Everson, resigned in 2007 after admitting to an affair with an employee. Previous presidents resigned over the bungling of distributions after Hurricane Katrina and lack of accountability for donations raised after the attacks of Sept. 11.

Salvation Army

Founded in 1865 in England, the Salvation Army is an evangelical Christian organization whose mission is to "preach the gospel of Jesus Christ" and to help improve the health, education, economic and spiritual conditions of poor people around the world. With a U.S. budget of $3.05 billion, the group has invested $118 million in projects overseas.

Haiti Donations So Far: $4.79 million

Projects in Haiti: Providing immediate relief through food, water, shelter and medical care. Once these needs have been met, the Salvation Army said it would turn its attention to long-term rebuilding efforts.

Staff on the ground: Dozens of relief workers have joined the local staff of more than 700.

Strengths: The group has had a strong presence in Haiti since 1950, operating schools, clinics, food programs and church-related activities.

The Dirt: Salvation Army has been involved in many controversies over the years. In December, it was accused of discriminating against illegal immigrants after it demanded Social Security numbers from people participating in a Christmas gift charitable program. The group has been accused of discrimination before, and has regularly drawn protests from gay and lesbian groups over its reputed bias against gay employees and same sex partners. As a church, the group is exempt from filing tax returns, leaving nonprofit analysts in the dark about its financial practices.

United Way of America

Another large organization with global reach, the United Way was founded in 1887 and has 1,300 branches in the U.S. Its mission focuses on education, income and health. It has no offices in Haiti and has been mobilizing efforts there through its regional staff in Jamaica, Puerto Rico and other Caribbean islands.

Haiti Donations So Far: $1 million

Projects in Haiti: No local recovery is under way now, but the group said it plans to help with long-term efforts to rebuild schools, coordinate food and water distributions and help with the transportation of medical supplies. It's also pushing a bill in Congress to make Haiti donations eligible for 2009 charitable tax deductions.

Staff on the ground: None so far; the group has sent one staff member to the Caribbean to evaluate its long-term strategy.

Strengths: One of the country's largest nonprofit organizations, the United Way receives $4 billion in annual donations. As a network of smaller nonprofits, the group offers donors a wide range of ways to target their contributions.

The Dirt: The United way has been plagued by scandals for years. In 2004, its CEO Oral Suer went to prison for stealing funds, and his replacement Normal Taylor resigned after he was accused of financial mismanagement. The group's entire board has been replaced since then, but its image has been tarnished, leading some local member organizations to defect to competitors.