Charity soars on fundraising

Las Vegas mom Rebecca Lindley says without Miracle Flights for Kids, her daughter Jessica, who suffers from a rare muscle disorder, wouldn't be able to walk, run and play like a normal 7-year-old.

"It's unbelievable that there's an organization out there that is always there to help,'' Lindley said.

It's that kind of support that Ann McGee says should be the yardstick for measuring her organization, which provides free air transportation to sick children in need of care outside their home states.

McGee herself was recently honored as one of 18 CNN Heroes finalists. For that recognition, she received $10,000 as well as additional national exposure.

McGee, 60, proudly notes the tens of thousands of clients her organization has helped over the decades, but watchdog groups say the charity isn't all that charitable. They say little of the public's donations go directly to flights and more goes toward telemarketing.

According to Miracle Flights' 2006 IRS Form 990, the company claimed nearly $3.3 million in total revenue for last year, $2.3 million of which came from direct public support and $900,000 from in-kind contributions.

Of the total revenue, Miracle Flights claims nearly $847,000, or just under 26 percent, was used for air transportation of children. Meanwhile, roughly $1.4 million was paid to several out-of-state telemarketing and communication agencies for professional fundraising.

The Chicago-based American Institute of Philanthropy estimated 31 percent of Miracle Flights' donations in 2006 went toward assisting sick children with flights. AIP periodically releases reports that grade the nation's top 500 charities, including Miracle Flights.

Grades are based on a charity's audited financial statements, annual reports, IRS Form 990 filings and other data.

Charities typically receive high grades if at least 75 percent of donations directly benefit the mission and the charity spends $25 or less to raise $100.

Since 1998, Miracle Flights has received an "F" grade from the group because it consistently spends a small percentage of its revenue on transporting sick children.

The amount spent on flights has been as low as 25 percent in recent years, according to the American Institute of Philanthropy and other watchdog groups.

In AIP's view, it would be "reasonable" if 60 percent or more of donations directly went to those served by a charity, said Daniel Borochoff, founder and president.

Miracle Flights' own Web site says 78 cents of every dollar is "allocated to helping children get to their treatments." But much of that percentage includes expenses used for professional fundraising.

McGee says the fundraising benefits the mission because the public is educated in the process about the organization and ultimately more children are served.

McGee, listed as Miracle Flights' founder and national president, paid herself $196,000 last year.

Her husband, William, is listed as Miracle Flights' community development director. He was paid about $51,000 last year for that work.

Miracle Flights has 12 employees and, according to IRS forms, between 100 and 500 volunteers.

Borochoff couldn't comment on whether Ann McGee's salary was high for a nonprofit, but he said spending 31 percent of its budget on program services should be of concern to donors.

"I don't think that's what the donor wanted when he or she donated their dollar,'' he said. "If donors were aware they (Miracle Flights) were spending most of the money on telemarketing, I don't think the public would be too happy.''

Pablo Eisenberg, senior fellow at Georgetown University's Public Policy Institute, called McGee's salary "too much for such a small outfit.''

Eisenberg, an author who writes books and a column on philanthropy, also questions why a nonprofit that arranges flights for children needs a community development director.

"Community development has nothing to do with arranging flights,'' he said. "Why would the husband need to be employed by a nonprofit his wife runs?''

McGee disagrees with Borochoff and anyone else questioning how she runs the nonprofit or how much she pays herself. She said Miracle Flights has helped thousands of children who ordinarily wouldn't have been able to get the care they needed. Telemarketing is a necessity to achieve those goals, she said.

As for her salary, McGee calls it a culmination of work she has put into the nonprofit the past 20 years, including several years when she didn't get paid or didn't get raises.

"This is purely a business decision, and I don't know of a better way. I don't know any business that wouldn't put more money into their future business, and I don't think the watchdog groups are saying we're doing such a terrible thing,'' McGee said. "What about the flights we provided? What about the impact we've had on the lives of sick children? Why isn't that graded?''

Additionally, McGee says she doesn't answer to groups that review charities, just the federal government, which requires her to file a 990 form.

A former early childhood development teacher, McGee started Miracle Flights from her apartment on Decatur Boulevard in 1985. At the time, it was known as Angel Planes. McGee coordinated flights with Las Vegas pilots who owned small planes on behalf of sick children whose parents could not afford the travel.

Under McGee's direction, pilots would fly children wherever they needed to go, and as often as they needed, for follow-up exams or treatment. Early on, flights were mostly to and from neighboring states. But as the nonprofit expanded its wings, trips got longer and the need became greater.

Today, the majority of flights are purchased commercially. McGee said that is because the greater distances make traveling by small plane difficult.

The nonprofit averages about 400 flights per month. In September, 717 flights were scheduled, setting a record for Miracle Flights, McGee said at her office as she stood before a large dry-erase board containing the names of children, flight times, destinations and airlines.

McGee said flights are being coordinated in 22 countries.

In addition to McGee's 12 employees, Miracle Flights also has an executive board and national board of directors.

The national board includes Olympic gold-medalist Bruce Jenner and Las Vegas entertainer Wayne Newton, according to Miracle Flights' Web site. A representative for Jenner said the athlete hasn't been involved with the nonprofit for at least 15 years. Newton could not be reached for comment.

Making up the local executive board are former Las Vegas City Councilman Michael McDonald, Richard Henry, Jeana Yeager, Larry Scheffler and McGee.

McGee said most of Miracle Flights' donations come from individual donors and everyday people, though a few corporations do donate to the nonprofit. One of them, Las Vegas-based Desert Radiologists, designated Miracle Flights as its corporate charity the last two years.

Michelle Crawford, a spokeswoman for the radiology group, said Miracle Flights was given $25,000 in 2006 and again this year. The nonprofit was named the group's corporate charity because of the impact it has had on the lives of children.

So far, the company has documented more than 90 round-trip flights for roughly 40 children and their families because of its donations, Crawford said.

When asked if Desert Radiologists knew of Miracle Flights' telemarketing costs, Crawford said it did not.

"We don't delve into a charity's finances when making our decision to donate,'' she said. "We make sure the charity is reputable and look at their overall reports. In the two years we have worked with Miracle Flights, we didn't notice any problems.''

Watchdog groups decry McGee's approach, however, to how fundraising expenses are characterized. Of the $1.4 million in professional fundraising fees, McGee on her IRS form listed more than $951,000 as going toward "program services." Miracle Flights also includes portions of telephone, postage, printing and supply expenditures as part of those services. The nonprofit's 990 form tabulates its total fundraising expenses at $619,535.

"All of those opportunities are used to bring children to us," she said.

But Borochoff said that is a way charities disguise costs. He noted it is legal, but it's not the most effective way to reach sick children.

"That's nonsense, absolute nonsense,'' Eisenberg said about the notion that portions of fundraising should be considered as program services. "I don't think it is fair or just to count any of that money. They should call it for what it is: fundraising.''

Jenner himself could raise $1 million for children just on name recognition alone, Eisenberg said. He also said Miracle Flights could hire two good fundraisers for less than $200,000 and do the same job as the telemarketing firm.

Those fundraisers could seek out flight deals through the airlines and speak directly with potential donors, which is what charities similar to Miracle Flights are doing, said Jim Weaver, vice president of Angel Flight West's Foundation, a Los Angeles-based operation that also provides free flights to sick children.

The nonprofit, which is part of a larger national charity aviation network known as Air Charity Network, uses volunteer pilots and their planes to fly children to their medical destinations.

Weaver said Angel Flight West has hundreds of volunteers within 13 Western states who go out and talk to people about the service it provides. The nonprofit sends volunteers to state and regional medical trade shows to create a buzz. Volunteers also meet face-to-face with hospital executives, physicians, nurses and social workers about children who need help.

"Most nonprofits spend less than 10 percent of what they raise toward fundraising efforts. When you use telemarketing, you actually go in reverse,'' Weaver said. "You can raise a bunch of money from telemarketing; but as someone who works with a nonprofit, I would struggle using telemarketing in good conscience. ... I think Miracle Flights has moved away from volunteerism all together.''

McGee says she has tried in the past to approach hospitals and social workers. For a number of reasons, her efforts didn't work, she said.

For one, hospital personnel change jobs or locations so the information gets shuffled around or lost. Also, McGee said physicians aren't as concerned about how a child gets the care. Doctors just tell parents where treatment is available, she said.

Scheffler, chairman of Miracle Flight's board of directors, said the nonprofit is efficient because of the 50,000 flights provided to sick children in the last 20 years. And though he recognizes telemarketing is a "nasty word'' and one that nonprofits try not to associate with their operations, it's the only way Miracle Flights has been able to fulfill its mission.

"Do I like it? No. But without it there would be no Miracle Flights,'' said Scheffler, who has been on the board for 20 years.

Scheffler said the board meets roughly once every 30 to 45 days. Board members, with the exception of McGee, are unpaid.

The nonprofit in its early years held charity events such as air shows, which have received media coverage. However, those events didn't bring in as much funding or attention as telemarketing, he said.

Criticism of the organization has been long-standing, if often out of the public eye.

In the late 1980s, four pilots told the Review-Journal that McGee, then Ann Mishoulam, would not fully divulge how money was spent that was raised locally. She said at the time she went over the books with them but they became disgruntled when the board decided to no longer reimburse pilots for flights.

Even then, in 1988, the bulk of the charity's $167,000 budget went toward promoting, expanding and administering the organization, according to documents provided by the nonprofit. Only about $2,000 went toward actual flight costs.

In 1994, the Idaho Consumer Protection Unit discovered that more than 80 percent of each donation received by what was then Angel Planes went into the pockets of for-profit telemarketers making the charitable solicitation.

That violated Idaho's Charitable Solicitation Act, and Angel Planes settled with the state, according to documents from the unit. The documents say the nonprofit agreed to provide restitution to donors and reimburse the unit for fees and costs, and that telemarketers had told people that all donated funds went toward transport of sick children to medical facilities.

Borochoff said AIP officials have spoken with Miracle Flights on multiple occasions about the need to tell the public "basic things, such as how many miles are flown and the number of children actually referred to them through the use of telemarketers.''

Borochoff, who testified before Congress on Friday about how charities for veterans are disguising costs, said Miracle Flights' response was that it would start disclosing the number of flights and mileage. But, he said, the nonprofit continued to claim some of the fundraising and telemarketing costs as education and, therefore, part of program services.

According to Charity Navigator, another organization that rates nonprofits, Miracle Flights has made small improvements. Charity Navigator relies on data provided to it by Miracle Flights to arrive at its own figures.

According to Charity Navigator, Miracle Flights spent 21.3 percent of its budget on fundraising expenses in 2006.

The vast majority of charities Charity Navigator rates spend 10 percent or less on fundraising. Furthermore, Miracle Flights spent 25 cents to raise a dollar while the majority of other charities rated by Charity Navigator spent about 13 cents.

In previous years, Miracle Flights spent as much as 38 cents to raise a dollar and as much as 36.4 percent of its budget on fundraising, according to Charity Navigator.

Lindley, the Las Vegas mother, has used Miracle Flights for the past 12 years to transport both Jessica and her 13-year-old sister, Sarah.

Lindley said she was surprised to hear about how much Miracle Flights was spending on telemarketing, adding she would never say anything negative about the nonprofit considering how beneficial it has been to her family.

Sarah, who suffers from severe retardation, used Miracle Flights when she was younger.

Jessica has arthrogryposis, a rare muscle disorder that causes chronic loss of joint motion at birth and affects joint movement and mobility.

Since birth, Jessica has flown with Miracle Flights more than 25 times, mostly to Seattle Children's Hospital for surgeries.

Lindley said Angel Flight West couldn't fill her daughter's need to fly to Washington state.

"Twelve years ago, I couldn't find anyone else," Lindley said. And, she noted, "Most commercial flights give you one trip in your child's lifetime."

Contact reporter Annette Wells at awells or (702) 383-0283.