Making Money Off the Homeless?

By Leon Mumford

     They are told to "keep smiling and keep dialing," ... because every donation pledge they sell on behalf of the homeless goes towards a total revenue in excess of $1 million a year.
     Operating from their 12-station telephone headquarters on the corner of West 32nd and Lorain, "WeShare" tele-solicitors make about 180,000 calls a month to residents of Cuyahoga County, Cleveland and its surrounding suburbs.
      But according to Ron Reinhart, program coordinator at the Bishop Cosgrove Center, Downtown, WeShare is stealing rather than giving to the homeless, "even if they are doing it legally."   Reinhart was asked to join WeShare by trustee-owners Carl Woodman and Tom Warholic when they were first setting up the company in 1988.
     "I had been involved with some of these operations before," Reinhart said, "but it was on the cutting edge of being dishonest, so I decided not to go in with them. "Reinhart believes that the percentage of money actually being distributed to the homeless is the central issue exploited by a lot of similar telemarketing companies.
     "To be perfectly honest, I think a lot of people are gullible," he said, "they need to realize that the people who run these companies are getting their share of the money too."
       Is WeShare taking its fair share of the well intentioned donations? Nobody seems to know.
       In registration forms filed with the state Attorney General since 1991, WeShare claim that their primary purpose is "to support job training and personal development programs for the homeless."
        But, in 1993, they also reported that they distributed $374,377, or 38.2% of their revenue, directly to the poor. That's 11.2% more than what they spent on their "Job Training Program [See article on the job training].
       Warholic explained WeShare's direct assistance policy. He says that WeShare allocates a certain amount of money to various referral agents, usually social workers, who screen needy applicants and then sends them to WeShare for immediate help.
        "Once they come to us, we'll cut them a check directly to their utility company to pay an outstanding debt, or to their landlord for rent," says Warholic.
          The Tremont Opportunity Center, the Rainbow Babies and Children Hospital and the Spanish American Committee sprang to Warholic's mind as prominent examples of the referral system used by WeShare to help the homeless.
         But each of these well established charity programs say they are receiving very little or no assistance from WeShare.
        "We haven't received anything from them since the end of July," says Donna Peters, directing coordinator at the Tremont Opportunity Center. "They keep telling us they have limited funds."  Peters does not believe that WeShare has ever been a significant contributor to their cause. "Every day we help six clients with rental needs," she says. "That costs about $1000 daily."
         Before the four month contribution drought, WeShare used to allow up to $500 a month to be spent on referrals screened by Tremont Center agents, Peters said. "But the money was used up very quickly," she continued.

          Meager WeShare funds are being absorbed by The Rainbow Babies and Children Hospital, too. Although social worker Susan Hancharik, who used to be the pediatric supervisor at Rainbow, is satisfied with the contributions made by WeShare she estimated that only five referrals are aided by WeShare donations every month. "Sometimes they spend as much as $100 on a patient (referral)," said Hancharik, "other times it's $20-$30, or they help by donating a household appliance... like a refrigerator."
           Hancharik said that she appreciates the flexible, immediate service provided by WeShare. But their actual contribution amounts to an absolute maximum of $500 a month in cold hard cash. That's an annual expense of $6,000, or 1.6%, of their $374,377 direct assistance revenue.
   And that's not taking into account the occasional month that WeShare has not been able to provide any help. "Sometimes," said Hancharik, "they tell us they don't have funding until next month."
           Leo Serrano, executive director of the Spanish American Committee, has not been receiving any money from WeShare lately.   "I decided to terminate our relationship with WeShare about a year ago, when I was made the executive director," he said, "because they would not give us any financial audited statements." "They were using our name and I wanted to know how the money was being spent on the referrals we were giving them," continued Serrano.
            That's familiar territory for WeShare to be stepping on. Because they've butted heads with the establishment for using names in the past.   Chip Joseph, director of emergency assistance programs at Catholic Charities, who coordinates all catholic fund raising, encouraged every program under the Catholic Charity umbrella to stop accepting any WeShare contributions in September, 1991.
           "They were using the names of some of our programs for their own promotional purposes and they were being investigated by the Attorney General's office," said Joseph, who went on to stress that none of his programs have been affiliated with WeShare for five years.
           "I have lodged a complaint with the Attorney General," said Joseph, "because they have continued to use the name of West Side Catholic Center and Shelter when they in no way support either. I don't care what else they do, but it is against the law to falsely represent who you are supporting," said Joseph.
            "One of our tele-solicitors must have made a mistake," said Treasurer Bob Woodman in WeShare's defense.
           But that seems to be a mistake that has been repeated quite a few times during WeShare's history. Leading representatives of St. Augustine, San Juan Batuista, St. Vincent De Paul Society and West Side Catholic Center, all involved in assisting the needy in WeShare's immediate geographic area, said that they have formally asked WeShare to stop mis-representing their programs.
           Agnes Hoskins, director of the West Side Catholic Center, says "WeShare's telemarketing script is confusing and leads people to believe that we are associated with them ... We get calls weekly, inquiring how much help WeShare gives us."
According to ex-telemarketer, Reinhart, companies like WeShare have to use the name of other organizations so that they can tell potential donors where their money will go. If that is the case, WeShare seems to be rapidly running out of names they can use to endorse their business.
           Bill Roberts, general manager of St. Vincent De Paul Society's six thrift stores throughout the city, said that their veiled relationship with WeShare is now "under review." Even though the St. Vincent is subordinate to Catholic Charities, Roberts has been receiving clothes and poverty stricken people with WeShare vouchers for about a year.
           "They asked us to initiate a voucher system because they said they had so many people in need," said Roberts. Under the system, people in need of clothing receive a voucher from WeShare representatives, which is transferred to a letter of introduction at St. Vincent De Paul's main office at 5309 Superior Ave., then converted to a clothing voucher valid at any one of the St. Vincent's stores.
            Usually, vouchers and donated clothing are processed through St. Vincent DePaul Conference sessions and various county agencies such as the Welfare Department, the Inner Church Council or United Way, said Roberts, so that the volume of donations are recorded. But it appears that Roberts made a special arrangement with WeShare general manager Jim Woodman. "We channeled their request," said Roberts "and we treated them as an agency because they said they had so many people in need."
            DePaul has been picking up WeShare's excess clothing donations as often as three times a week because they have better storage facilities, according to Roberts, who admitted that his branch stores have benefited from the WeShare contributions.
The homeless, however, have not benefited from the relationship. Roberts said that only 160 WeShare vouchers have been processed since June. That's not really much of an increase to his store's traffic, considering that approximately 30-40 vouchers are processed by the St. Vincent Society every day.
            Although Roberts was quick to point out that St. Vincent De Paul Society is in no way affiliated with WeShare, a message echoed by the St. Vincent's executive director Lawrence Leuter, WeShare has received DePaul receipts for all of the clothes that they left for the DePaul truck to pick up.
           Tele-solicitors from WeShare could, quite legitimately then, say they work with St. Vincent DePaul Society to help the homeless... even though WeShare is "in no way affiliated" with the St. Vincent Society.
           Through all the confusion surrounding the "name game," it is becoming increasingly difficult to understand where that $374,377 of assistance money was spent, especially considering that WeShare only hands out direct assistance once, and once only, per person.
           Tom Warholic says, for instance, he has lost count of the amount of checks WeShare have made out to the Jay Hotel, in Tremont, just to keep desperate homeless people off the streets for a night or two.
           Perhaps this is where a more significant portion of the direct assistance money was spent. But according to the Jay's general manager, Harold Dubber, a maximum of two WeShare guests a month are sheltered at his hotel for up to a weeks stay at a time. A single room at the Jay costs $21.47 a night, but Dubber offers a special weekly rate of $81.58. He declined to comment further after he spoke to "a WeShare owner." Using his most extreme estimates, however, it appears that WeShare allocated a maximum of $1,958 of their $374,377 worth of direct assistance money to provide shelter for homeless people at the Jay Hotel.

         Hardly the significant contribution implied by Warholic when he said that he had lost count of the amount of checks he had sent to the Hotel on behalf of the homeless. In fact, it's only 0.5% of the assistance revenue.
           "Because of some enormous loop-holes in our laws," said a skeptical Reinhart, "organizations like WeShare will continue to operate."
Reinhart is partly referring to WeShare's non-profit status. According to assistant attorney general Monica Maloney, WeShare are registered as an incorporated non-profit organization.
           Because they are soliciting for a charitable purpose, they must register with us on an annual basis," said Maloney. The registration process demands the payment of a flat fee and the disclosure of a "financial report." Most organizations soliciting for charity file for a 501c3 because, as well as granting solicitation rights, this status also authorizes an organization to accept tax deductible monies.
           "99% of charitable contributions are 501c3 tax deductions," said William Joseph, an attorney specializing in non-profit law at Western Herd. "I've never heard of an organization soliciting without a 501c3."
            501c3 organizations are also required to file 990 returns to the IRS, information which is available for public scrutiny.
           "The one asset all my programs have is their non-profit 501c3 status," said Chip Joseph, "it legitimizes [them] because it says that you have a certain amount of full disclosure to the state through the Attorney General's office."
           But WeShare has not applied for 501c3 status. They are only required to file a "financial report" with the state attorney general. "They do not necessarily have to file a 990 return to us or the IRS," said Maloney. Instead, under section 1716.04 of the Ohio revised code, WeShare arbitrarily dictates their own financial balance sheet at the end of every fiscal year, to the Attorney General.
           Maloney defended the apparent weakness of this code. The attorney general further investigates all organizations soliciting for a charitable purpose, she said, when there is an obvious discrepancy in the financial reports they send to us.
            "We would investigate, for instance," said Maloney, "if their was something wrong with the amount of money they distribute in relation to their income." And non profit attorney, Joseph said that the attorney general's "financial report" requirements are not as strict as 501c3 tax exempt requirements.
            Nevertheless, according to the financial report WeShare filed with the Attorney General in 1993, they distributed $374,377 directly to the homeless and needy in that year.
            Considering that their contribution income for 1993 totaled $979,720 it would appear that WeShare gave 38.2% of their revenue to the homeless and the needy. This percentage must have been an acceptable ratio, because the Attorney General did not question WeShare's registration application for 1993.
            But the people supposedly benefiting from WeShare's direct assistance program have said that they are either receiving little or nothing from WeShare. And a surplus of $252,691.05, generated by WeShare over the four years they have reported to the Attorney General, remains unaccounted for. This is accomplished by showing a year end surplus, and not including the surplus in the next year's report.
           Maloney would not reveal the results of the investigation on WeShare made by the Attorney General in 1991. "I cannot even tell you if there was an investigation," she said.
           Meanwhile, officials from WeShare remain optimistic about the future. "We are now contacting corporations through direct mail marketing," said Woodman. It appears that Woodman, who used to work for General Electric as a tax auditor, has discovered another legal absurdity. Despite the fact that WeShare is not allowed to accept tax deductible donations, because they do not qualify for 501c3 status, Woodman said that IRS Code Section 162 (a) provides for an allowance to deduct "ordinary and necessary expenses from income tax."
           Woodman further explained that if the management and directors of a corporation wanted to make a contribution to WeShare and if they thought that the contribution would help the working environment of some of their employees, then that would be considered an "ordinary and necessary expense," allowing the Corporation to deduct it from their returns.
           Woodman is expecting this new form of income to make a big difference. "Once this publicity comes out, we will be really legitimate," he said. "Corporations will make substantial contributions to WeShare," continued Woodman. That's in addition to a 50% increase in total revenue, a result expected by WeShare officials after the installation of a fully automated dialing system about a year ago.
            Woodman persistently points out that WeShare distinguishes itself from other charitable organizations, because the money that they receive goes directly back out to the poor, without involving any administrative costs.
            Ron Reinhart, however, is part of a growing number of people with unresolved suspicions about WeShare's management.
           "They use the homeless to get money. That is the only real difference between WeShare and the established charity agencies," says Reinhart.
           "I am sure they do help the homeless a little," said Tammie Taylor, who used to be one of WeShare's top writers earning up to $3,500 of mailed in pledge money a week. "But I am saying I have seen the amount of money they make and the number of people they turn away... and it just doesn't add up," she continued.
            Another former employee of WeShare who asked to remain anonymous said, "I brought in about $80,000 in pledges [a year] with 90 percent of the people sending in the money, and I wasn't even the best one on the phones." He claimed there was a great deal of secrecy with the money collected, and said the money was used for nice meals and trips.
            Taylor is now completely disillusioned with her former employers. She is homeless again. The only nourishment she has been able to find of late comes from West Side Catholic Center, who serve free lunches daily... directly across the street from a company called "WeShare," the self-proclaimed "Voice of the Homeless."

Copyright NEOCH and the Homeless Grapevine published January – February 1996 Issue 13