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5 Reasons to be Skeptical of Charities

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The Not-For-Profit sector of our economy pulls in a lot of money. In 2006, Americans dug deep and gave a record $295 billion to charity, roughly 2.2 percent of our collective take-home income. Not one penny of that came from me. Here's why.

1. They're not as efficient as you think

As with any financial endeavor, and big charities definitely fit the bill, part of the goal is just to bring cash in. Take VietNow, for example. The charity itself is well meaning, striving to address hardships that face many of the men and women who've served in the military in the last half century. But in order to reach as wide of a base as possible, VietNow employs a telemarketing group to solicit members and benefactors. It's a strategy that has worked greatly in expanding the public's awareness of the group, and over $7 million were raised between 1987 and 1995. There's a catch, however: The telemarketing company kept eight-five cents on every dollar donated, leaving a meager 15 cents on the dollar for the charity itself. Subtract further administrative costs from that, and the money that actually made it into the hands of the people who needed it most becomes meaningless.

Often the charities that are spending to send you things in the mail or call you at home have an overhead that's so expensive that most of the money received ends up cycled back into the system, just paying for more postage and telemarketers.

And like any business, there are those who make a living out of it, like Roger Chapin, the self-dubbed "non-profit entrepreneur," who's run nearly 30 non-profits over the years with names like "Citizens for a Drug-Free America," "Americans United to Conquer Disease," Coalition to Salute America's Heros Foundation, " and "Help Hospitalizes Veterans," which preforms the daunting, yet necessary task of supplying injured soldiers with arts and crafts kits while in the hospital. "HHV," for short, was by far Chapin's most successful charity to date, bringing in over $71.3 million in donations. Unfortunately, only about nine percent of that actually went to purchasing these gifts, 85 percent went to pay for the direct mailing and television campaigns. Five percent of that 71 mill was spent on administrative fees, including a $43,000 down payment on a pair of condos, a $135,000 loan to finance a friend's divorce settlement, a $17,000 country club membership, and a combined salary of over half a million dollars for Chapin and his wife, who edits the "HHV" newsletter.

2. Giving could land you in Guantanamo

It may sound extreme, but if you give money to the wrong people, you can be arrested as a terrorist. Here's how it works: Let's say you're a socially conscious American Muslim. And let's say you read the headlines and see how bad things are for people who live in northern Mali, so you decide to donate money to a charity that funds projects there- in this case, a well for clean drinking water. The Islamic American Relief Fund does just that. You write the check, post it and then let the warmth of philanthropy wash over you. But if it happens that a few of the men paid to dig the well had been paid to dig other wells in the area, and any of those wells had been paid for by Hamas, government watchlists place those men on Hamas's payroll and identify them terrorists. When this line of thinking is carried out to its extreme, that means that the Islamic American Relief fund gave money to terrorists, which means you gave money to terrorists. And that makes you a terrorist.

Sound far fetched? Not under to the USA PATRIOT Act. If you give money to an organization that, in turn, gives it to people on the Defense Department's growing list of "terrorist" organizations, then you can be arrested and sent off to wherever they send those people off.

3. Just because it's a non-profit, doesn't mean it's a charity.

The Baptist Foundation of Arizona was never technically a charity. In fact, its investors expected to see their investments returned to them. When Richard and Susan Kimsey deposited $100,000 into the trust, they were told that they were doing the Lord's work. They were also told that the money was going into a mutual fund and that the interest would be used to fund Baptist and humanitarian causes"“providing food and shelter to Arizona's poor and spreading the gospel.

Unbeknownst to the Kimseys, as well as 13,000 other investors, not only had the foundation failed to make any charitable contributions, it had also become a money pit.

The BFA was founded in 1948, and ran fine until the eighties, when the foundation's trustees invested heavily in the booming Arizona real estate market, which tanked soon thereafter. Rather than dissolving and returning as much money as possible to investors, the foundation instead solicited new donations in order to keep up with interest payments on its failed investments. Eventually, this scheme grew out of control. The BFA created dummy subsidiaries to buy the failed investments at inflated prices with money borrowed from the foundation, and issued loans that these subsidiaries could not possibly pay back. With a little creative paperwork from auditor Arthur Anderson, the foundation looked like it was staying afloat, while good intentioned, elderly "investors" continued to throw their retirement funds into the fire.

When the BFA was finally investigated by Arizona state regulators after a decade of litigation, the foundation's losses topped $350 million. Half of that was paid by Arthur Anderson in a court settlement. Further, three BFA members, including the foundation's treasurer, plead guilty to fraud charges.

4. Wealthy People Use them as Tax Shelters

Picture 232.pngNon-profit organizations have the luxury of being tax-exempt, and sometimes rich folk, aided by crafty lawyers and accountants, take advantage of them. Example: the America3 Foundation. Millionaire William Koch, who was on Forbes' "400 richest people in America" in the early 1990s, created and funded the so-called charity as a tax-shelter to support his yachting hobby. More specifically, he was using it to compete for the America's Cup. Koch described his crew as "amateur athletes" which helped him get his non-profit registration, though team members were getting paid between $30,000 and $40,000 per year, with housing and expenses included. His motivation for the foundation? Apparently, yachting year round can get pricey, and, according to him, the cost of running a campaign for America's Cup is "obscene and wasteful." Through the America3 Foundation he could save, "a couple million bucks."

Of course, Koch's means isn't the only way to game the system. In the mid-nineties, CEO of InsMark, Robert Ritter, developed a scheme called, "charitable split-dollar insurance," which allowed very wealthy people to set-up a life insurance policy in the form of a tax-exempt charitable fund, like founding a charity to support your children after you're gone. It was an abusive tax shelter technique that played off a loophole in the tax code. In 1999, Congress passed legislation banning the practice.

5. You could be subsidizing someone's love life

United Way of America president William Aramony was sentenced to seven years in prison for "25 counts of conspiracy, mail and wire fraud, the filing of false income tax returns and transactions involving criminal property." Not only did Aramony syphon off over $1.2 million from the charity's headquarters, he also diverted these funds towards his mistress in the form of chauffeured limousines, trips across the world (to accompany him, of course), checks for "consulting" services, and the use of a New York City condo. Added to the list of unethical actions was the fact that his muse was only 17 when the 59-year old executive first met her.

Of course, Aramony didn't draw straight from the company well. Instead, he set up Partnership Umbrella, Inc. with $900,000 in United Way seed money, as well as several other spin-off entities. It was through these side organizations that he masked his massive personal spending. The scandal surrounding his trial led to a sharp drop in donations to local branches of the United Way, which was unfortunate because only one cent of every dollar received at the local level goes to the national headquarters. Oddly enough, some still praise Aramonay for the advances he made in the efficiency and efficacy of the organization.

Author's Note: But I still think you should still give

For me, the number of people who've abused the system makes me uncomfortable with the idea of giving to charities. But that doesn't mean I'm not charitable. I have my own philanthropic foundation: it's called, "Pocket Change." My mission: To keep a lot of spare change and a few dollars always handy. That way, when I'm walking to work and a homeless guy asks me for money, I can give it to him.The money stays in my own community, I know it's going directly to who needs it, and I get the instant gratification of seeing the thankful look on someone's face. There's a chance he's just going to spend it on drugs and liquor, but from what I've seen, there's no guarantee that my charitable dollars aren't going to be squandered no matter who I give them to.

Of course, my "Pocket Change" approach isn't for everyone. (There's a definite downside in that you can't write off donations on your taxes.) If you're giving to non-profits, I'd suggest, before you give your money away, do your research. Be wary of organizations that are spending on mailings and telemarketers. And be doubly wary if you're asked for donations using hard sell tactics like this.

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25 Things You Should Know About Tucson
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The west is still wild in Tucson. Surrounded by breathtaking mountains, Arizona’s second-largest city attracts artists, astronomers, outdoorsy types and at least one rare cat. Read on for more Tucson trivia.

1) Some of the earliest evidence of corn cultivation in North America comes from Pima County, Arizona, where Tucson is located. Archaeologists have recovered kernels estimated to be 4000 years old within 60 miles of the city.

2) Towering above the downtown area is an iconic mountain called Sentinel Peak. Look at it from a distance and you may notice that the base is darker than the summit. The native Tohono O’odham people called this landmark Ts-iuk-shan—which is a corruption of their word for “black base.” Spaniards later turned Ts-iuk-shan into Tucson.

3) On March 20, 1880, a passenger train rolled into Tucson for the first time. Mayor R.N. Leatherwood sent out telegrams to dignitaries to publicize the occasion, writing to Pope Leo XIII that the railroad now linked "this ancient and honorable pueblo" with the rest of the Christian world. Newspapers began calling Tucson “the A. and H. Pueblo,” which gradually shrunk to its current nickname, “the Old Pueblo.”

4) If you’re a stargazer, Tucson is one of the best spots in the U.S. for astronomy. In 1972, Pima County enacted a “dark sky” code to regulate the brightness and number of outdoor bulbs in an effort to help local observatories like one at Kitt Peak. Now Tucson suffers from far less light pollution than most cities do, allowing stars and planets to shine through the darkness.

5) Above Broadway Boulevard, you can walk through the belly of a giant metal snake. A covered bridge for pedestrians and cyclists, this serpentine structure is designed to look like a diamondback rattlesnake, whose gaping jaw and fangs form the entrance.

6) By day, it looks like a big plastic doughnut. But after sundown, the solar-powered Desert O sculpture lights up in an array of vibrant colors. The ring, owned by the city of Tucson, is 6 feet in diameter and uses LED lights to create a brilliant display with a different color combo for every night of the week.

7) In 1970, then-mayor Jim Corbett called Tucson's East Speedway Boulevard the "ugliest street in America." At the time, it was enveloped by garish billboards that obscured the city's beautiful vistas. Then Life magazine ran a two-page photo of the forest of road signs and advertisements. The embarrassing spotlight led to Tucson's sign code, passed in the 1980s, which gradually limited billboards and tacky signage.

8) According to Guinness World Records, Davis-Monthan Airforce Base in Tucson has the largest aircraft repair shop and storage facility on Earth. Covering 2600 acres, it could house 4200 aircraft and 40 aerospace vehicles at one time, while still leaving room for 350,000 production tools.

9) In 2013, a new species of scorpion was discovered in the Santa Catalina Mountains, which are visible from downtown Tucson. Biologist Rob Bryson Jr. discovered the species in the Santa Catalinas' "sky islands"—isolated mountaintop habitats known for their biodiversity.

10) Cyclists should consider dropping by on the last Saturday before Thanksgiving for El Tour de Tucson, Arizona's largest and longest-running cycling event. The series of races attracts more than 9000 bike enthusiasts per year and usually raises about $2 million for local charities.

11) Hugo O’Conor, an Irish colonel in the Spanish army, is regarded by some as the founder of Tucson. Although a Spanish mission had been operating in present-day Tucson since 1692, and Native American communities before that, O’Conor arranged to have a military base for Spain's army set up on the site in 1775, resulting in a population boom for the city. O'Conor's red hair and courage in battle gave him the nickname “The Red Captain.”

12) The United States Handball Association Hall of Fame is located on North Tucson Boulevard.

13) Five years after peace was declared in the Mexican-American War, the U.S. bought the lower third of Arizona, which included Tucson, from Mexico. The $10 million transaction, known as the Gadsden Purchase, was finalized in 1854 and added a 30,000-square-mile territory to the United States. The expansion allowed Gadsden, a railroad promoter, to build a transcontinental railroad through the new territory.

14) One of the largest rock shows in the country, the Tucson Gem and Mineral Show attracts around 50,000 people annually. In addition to hosting gemstone scholars and dealers, the annual convention has exhibited the most dazzling rocks in existence—like the Hope diamond, lunar rocks collected by NASA astronauts, and the eye-popping Logan sapphire.

15) The Arizona State University Sun Devils and the University of Arizona Wildcats have a longstanding rivalry that dates back to their first meeting in 1889. Each year, the teams compete for the Territorial Cup, the oldest rivalry trophy in college football. The Wildcats play regular home games in their 56,000-seat stadium in midtown Tucson.

16) Speaking of the University of Arizona, it was founded in 1891—21 years before Arizona achieved statehood.

17) Tucson's world-class culinary scene was recognized by the United Nations Educational, Scientific, and Cultural Organization (UNESCO) in 2015 as a “Capital of Gastronomy.” Only 18 cities around the world have been given this title, and no other American city has cracked the list yet. Jonathan Mabry, a historic preservation officer in Tucson, filed the application for the city. “There are more heritage foods grown within 100 miles of Tucson than any other city in North America,” he told Smithsonian.com.

18) The Fourth Avenue Underpass doubles as a one-of-a-kind photo gallery. Roughly 7000 tiles bearing black and white portraits of 21st-century Tucsonans line the walls.

19) Four national flags have flown over the Old Pueblo. Spain ruled Tucson and the rest of Mexico until 1821. Then Mexico itself took over, but sold Tucson and much more territory to the United States in 1854 (see #13). When the Civil War broke out, the city joined the Confederacy and flew the Confederate flag from February to June 1862. Then Union forces, bearing the American flag, took the city back

20) Tucson is the oldest incorporated city in Arizona (and has been since incorporating in 1877).

21) For a few weeks in 1933, radio listeners in Tucson could enjoy a local show hosted by a very young Ray Bradbury. At age 12, he landed a gig at KGAR reciting comic strips on the air every Saturday night. “My pay was free tickets to see King Kong, Murders in the Wax Museum, and The Mummy,” he later reminisced. “You can’t do any better than that.”

22) El Charro Café is the oldest Mexican restaurant in the U.S. continuously operated by the same family. It may also be the birthplace of the chimichanga. As the legend goes, they were invented by Monica Flin, who established El Charro in 1922. She once flipped a burrito right into the fryer, splattering oil everywhere. Since kids were within earshot, she resisted the urge to curse and yelled “chimichanga,” a slang word that means thingamajig, instead.

23) The Mini Time Machine Museum of Miniatures is truly larger than life. A gallery of scale models, it boasts more than 300 tiny room boxes and houses. Some examples predate the Revolutionary War.

24) Downtown, a street known as Calle Carlos Arruza honors one of the greatest bullfighters in history, Mexican-born Carlos Arruza, whose nickname was El Ciclon (The Cyclone). According to historian David Leighton, Calle Carlos Arruza is one of the very few streets—possibly the only street—in the U.S. named after a bullfighter.

25) Only two non-captive jaguars, the largest cats in the New World, are known to reside within the U.S. One of them, nicknamed El Jefe, is a Tucson celebrity. Discovered in 2011, he can be found stalking the Santa Rita Mountains 25 miles south of the city. Jaguars are a near-threatened species: biologists estimate that about 15,000 are left in the wild.

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The Night the Brat Pack Was Born
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If Emilio Estevez had opted to pay for his movie ticket, the Brat Pack might never have been born. It was spring 1985, and Estevez—then the 23-year-old co-star of St. Elmo’s Fire—was being profiled in New York Magazine. The angle was that Estevez had just signed a deal to write, direct, and star in his own feature, That Was Then... This is Now, an opportunity that was rarely afforded to young Hollywood talent. Estevez was two years younger than Orson Welles was when he performed similar duties for 1941’s Citizen Kane.

That youthful exuberance was on display as New York writer David Blum followed Estevez in and around Los Angeles for several days gathering material for the story. With Blum in tow, Estevez decided that he wanted to catch a screening of Ladyhawke, a fantasy film starring Matthew Broderick. For reasons not made entirely clear, he preferred not to have to pay for a ticket. According to Blum, Estevez called the theater and politely asked for free admission before entering an 8 p.m. screening.

It's likely Estevez was just having a little fun with his celebrity. But to Blum, it was indicative of a mischievous, slightly grating sense of entitlement. Blum’s assessment was that Estevez was acting “bratty,” an impression he felt was reinforced when he witnessed a gathering of other young actors at LA’s Hard Rock Cafe for the same story.

What was supposed to be a modest profile of Estevez turned into a cover story declaration: Hollywood’s “Brat Pack” was here, and they had decided to forego the earnest acting study preferred by their predecessors to spend their nights partying instead.

The day the story hit newsstands, Blum received a call from Estevez. “You’ve ruined my life,” he said.

The June 1985 cover of New York magazine
New York, Google Books

Blum’s label had its roots in the Rat Pack of the 1960s, so named for the carousing boys' club led by Frank Sinatra, Dean Martin, and Sammy Davis Jr. Whether it was accurate or not, the performers developed reputations for squeezing every last drink, perk, and joke they could out of their celebrity well into middle age.

That dynamic was on Blum’s mind when New York dispatched him to cover Estevez. After he arrived in California, Blum took note of the fact that a tight cluster of actors seemed to have formed a group, both on- and off-screen. Estevez was close friends with Rob Lowe and Tom Cruise, and all of them appeared in 1983’s The Outsiders; Lowe and Estevez were co-starring in St. Elmo’s Fire, a coming-of-age drama that also featured Andrew McCarthy and Judd Nelson; Estevez and Nelson gained a lot of attention for 1984’s The Breakfast Club.

To Blum, Estevez was more than just a multi-hyphenate; he appeared to be the nucleus of a group that spent a lot of time working and playing together. And in fairness to Blum, Estevez didn’t dissuade the writer from that take: Fearing he was coming off as too serious in the profile, Estevez asked Lowe and Nelson to hang out with him at Los Angeles’s Hard Rock Cafe so Blum could see the actor's lighter side.

Nelson would later recall that he felt uneasy around Blum. “Why is this guy having dinner with us?” he asked Estevez. Lowe, meanwhile, was busy flirting with women approaching their table. The group later went to a "punk rock" club, with a Playboy Playmate tagging along.

As celebrity hedonism goes, it was a tame evening. But Blum walked away with the idea that Estevez was the unofficial president of an exclusive club—attractive actors who were soaking up success while idling late into the night.

Blum returned to New York with a different angle for his editors. He wanted to capture this “Brat Pack,” a “roving band” of performers “on the prowl” for good times. Although the magazine had just run a cover story about a teenage gang dubbed “the wolf pack” and feared repetition, they agreed.

As far as Estevez and the others were concerned, Blum was busy executing a piece on Estevez’s ambitions as a writer and director. When Estevez, Nelson, and Lowe appeared on the cover—taken from a publicity still for St. Elmo’s Fire—with his newly-coined phrase, they were horrified.

Blum began getting calls from angry publicists from each of the actors mentioned in the article—and there had been a lot of them. In addition to Estevez, the de facto leader, and lieutenants Lowe and Nelson, Blum had dubbed go-to John Hughes geek Anthony Michael Hall the “mascot”; Timothy Hutton was said to be on the verge of excommunication for his film “bombs”; Tom Cruise, Sean Penn, Nicolas Cage, and Matt Dillon were also mentioned.

To the actors, the effect was devastating. Independent of how they spent their free time, all of them were pursuing serious careers as performers, with producers, directors, and casting agents mindful of their portrayal in the media. Being a Brat Packer was synonymous with being listless, or not taking their craft seriously.

Nelson recalled the blowback was immediate: Managers told him to stop socializing with his friends for fear he’d be stigmatized as unreliable. “These were people I worked with, who I really liked as people, funny, smart, committed to the work,” he said in 2013. “I mean, no one was professionally irresponsible. And after that article, not only [were] we strongly encouraged not to work with each other again, and for the most part we haven’t, but it was insinuated we might not want to be hanging out with these people.”

Universal Pictures

Some of the actors went on The Phil Donahue Show to criticize the profile, asserting that their remarks to Blum had been off-the-record. (Blum denied this.) Lowe told the media that Blum had “burned bridges” and that he was “no Hunter S. Thompson.” Andrew McCarthy called Blum a “lazy … journalist” and found the idea of an actor “tribe” absurd—he had never even met Anthony Michael Hall.

Unfortunately, the name stuck. “Brat Pack” was infectious—a catch-all for the kind of young performer emerging in the ‘80s who could be seen in multiple ensemble movies. While Blum would later express regret over the label, it’s never quite left the public consciousness. In 2005, Universal released a DVD boxed set—The Breakfast Club, Weird Science, and Sixteen Candles—as The Brat Pack Collection.

Nelson, Estevez, and Lowe never again appeared in a movie together. “Personally, the biggest disappointment about it is that ‘Brat Pack’ will somehow figure in my obituary at [the] hands of every lazy and unoriginal journalist,” Estevez told a reporter in 2011. “Warning: My ghost will come back and haunt them.”

Nelson was slightly less forgiving. In a 2013 podcast, he chastised Blum for his mischaracterization of the group of young actors. “I would have been better served following my gut feeling and knocking him unconscious.”

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