POP CHARITIES: 2 YEARS OLD AND STILL ACCOUNTING

Over the last two years, six pop charities have declared war on African hunger, American homelessness and the debts of the family farmer.

By the latest accounting, they will start out 1987 with an estimated $87 million to $97 million in the bank.

In the estimation of a growing number of professionals within the international community of relief agencies, ranging from the National Coalition for the Homeless to the International Refugee Committee to the French aid organization Doctors Without Borders, the sum is disturbingly large, considering the continued urgency of the causes.

The charities--the Band Aid Trust, USA for Africa Foundation, Live Aid Foundation, Sport Aid, Farm Aid and Comic Relief--all continue to maintain offices, pay phone bills and keep at least skeleton office staffs on duty two years after the height of Western interest in the Ethiopian famine that launched the current movement of mixing pop music with social causes.

More than $117 million of the $242.2 million that the pop charities have earned to this point has been spent on African or American relief and at least another $23 million has been allocated for expenditure.

But the size of the unspent balances, coupled with a reticence to report financial information to government and private charity watchdog agencies, has rankled even the more ardent supporters of pop relief.

“For two years, we spent an awful lot of time submitting proposals to Live Aid, Band Aid and USA for Africa,” said Al Kaftner, an official of the International Rescue Committee that specializes in aiding refugees. “We made several changes in the proposals at their request, but ultimately we struck out with Live Aid and Band Aid.”

The agency, founded in 1933, dispatched 85 professionals to the Sudan border in 1984 to help feed, clothe and shelter a million Ethiopian famine refugees. Based in New York City, the agency has an annual operating budget of about $18 million, Kaftner said. Last year, it ran up an $850,000 deficit because of its African efforts, Kaftner said.

The emergency is over and most of his organization’s volunteers have pulled out of Sudan now, but three weeks ago, Kaftner finally got word that the IRC had won its first pop-charity grant.

“We’re going to get $100,000 from USA for Africa for health training programs,” he said. “The check is almost in the mail.”

The National Coalition for the Homeless issued a public “demand” on Dec. 24 that USA for Africa immediately release $15 million that it netted from its celebrated Hands Across America project last May.

It is not the first time that the foundation created with royalties from sales of the hit record “We Are the World,” has been criticized for slow disbursement. But it is the first time that a close institutional ally has publicly chided the foundation.

Ten months ago, USA for Africa officials asked the coalition to help them spend $2.2 million on programs for the homeless. It was seen as a quick and efficient way of establishing USA for Africa’s credibility as a force in American relief work--a complement to its work on behalf of Africa. The coalition helped select 160 projects in 25 states that put the money to fast and efficient use.

But since the Hands Across America event--which attracted an estimated 5.5 million Americans who were asked to contribute $10 apiece and form a transcontinental line of linked hands--USA for Africa has established its own fund distribution process. The foundation is spending its Hands Across America money without advice from the National Coalition.

USA for Africa Executive Director Marty Rogol defends his organization’s methodical spending on grounds that it is fair, democratic and will help establish long-term programs that ultimately will serve the causes better in the long term than quick spending for food, blankets or temporary lodgings.

Both USA for Africa and Band Aid have taken a similar attitude toward African relief. Pop charities in general--and USA for Africa in particular--are spending most of their money on long-term development rather than on emergency items.

“I think they (pop charities) are aware of the mistake of simply throwing money at the problem,” said Ken Waters, public relations director for World Vision, the Christian relief agency based in Monrovia.

Waters applauds the long-term development concept, pointing out that simply issuing daily rations to famine victims could eventually turn most of northern Africa into a welfare state.

“Sometimes, spending $5,000 over two or three years is better than spending $50,000 all at once,” he said. “Just like Ethiopia, we’ve had droughts in Southern California, but all they’ve done is keep us from washing our cars. It took 100 years of development before we got this far, though.”

USA for Africa has contributed $1.2 million to World Vision development projects in Chad, Senegal and the Sudan; Band Aid granted $1.4 million to World Vision for an Ethiopian agricultural project.

Still, the big surpluses of pop charities and their nascent bureaucracies are a potential problem, even to a staunch pop charity supporter like World Vision.

“Because we’re on the receiving end, obviously, big bank accounts and all the office space are an issue,” said Waters.

The larger problem, though, is public attitude, Waters believes. He blames the “quick fix” mentality of the West for much of the current criticism of pop charity.

“The American people want to solve a problem now and move on to the next problem. Well, you can’t always do that, and USA for Africa understands that.”

Charity watchdog agencies, from the Internal Revenue Service to the Council of Better Business Bureaus, are more concerned with the slow accounting of the pop charities than they are with slow fund distribution.

Band Aid accountant Philip Rusted told Calendar, in explaining why the London-based organization hasn’t filed an audit with the British Charities Commission since July of 1985, that “We’ve had significant trouble getting information back from the port authorities in Ethiopia and Sudan.”

Rusted, who contributes his services to the trust founded by Irish rock star Bob Geldof, noted that some Band Aid donors and the Fleet Street press have criticized the organization for not spending the money more quickly.

Geldof’s pledge to spend virtually every donated dollar directly on African aid has kept the criticism muted though, Rusted said. “Bob told us to keep it (expenses) to a minimum and that’s what we’ve tried to do,” he said.

The unaudited figures for Band Aid show that the first and most famous of the pop charities has raised $84.6 million during its two years of existence. During that same period of time, its total overhead--including the cost of staging the London half of the Live Aid concert in Wembley Stadium--was $650,000, Rusted said.

By comparison, the Live Aid Foundation, which grew out of the American half of the concert staged in JFK Stadium in Philadelphia, spent $4.3 million on concert expenses alone. Post-concert expenses for administration as of two months ago came to nearly $2.2 million, according to the most current audit.

Almost all of the concert and administrative costs were covered by $6.3 million in corporate sponsorship and broadcast license fees, paid by ABC-TV, General Motors, Kodak, AT&T; and Pepsi Cola. But the fact that the same concert and administrative overhead in Britain totaled 10% of the U.S. expenses “tells you something about America,” Rusted said.

“You do seem far more money-minded than us,” he said, adding wryly, “Unfortunately, the figures do speak for themselves.”

According to Live Aid treasurer Jeff Benjamin, U.S. tax law would not recognize contributions made directly to Geldof’s charity in London, so the Live Aid Foundation, based in Marina del Rey, was created a month before the July 13, 1985, Live Aid concerts to allow U.S. citizens to pledge tax-deductible contributions.

Three months ago, Live Aid stopped paying $3,000 a month for office space and utilities, cut off its $700 monthly phone, mail and messenger services and reduced its total operations to accepting orders for Live Aid commemorative sweat shirts over its 800-LIVE-AID telephone number.

More than a year after the concert, orders and pledges continued to come in through last summer at the rate of $10,000 a month, according to Benjamin.

Live Aid has not been punctual in filing government-required financial disclosures, but both of its annual audits have been made public.

“Sometimes it’s hard to believe, but it really does take quite a bit of time for bills to come in and to get an accounting so you can get the numbers out,” Benjamin said.

The most current audit, released last month, shows that the foundation raised $27.3 million, spent $6.6 million on overhead, spent or allocated $12.9 million on African relief and still has almost $8 million in the Bank of America.

Though the board does convene periodically to approve further spending, Live Aid’s directors have relied heavily on the recommendations of Georgetown University’s Center for Immigration Policy and Refugee Assistance in weeding out 186 proposals from 250 African relief projects that sought grants from Live Aid. Ultimately, Live Aid money is actually shipped to London for disbursement through Band Aid, according to Benjamin and British concert promoter Harvey Goldsmith.

Goldsmith and Geldof are the only trustees who sit on the boards of both the Band Aid Trust and the Live Aid Foundation.

There are other distinctions between the two:

Band Aid’s charter requires its spending to be exclusively for Ethiopian and Sudanese aid; Live Aid money is spent on northern and eastern African nations other than Ethiopia and Sudan.

Band Aid trustees and staff continue to meet each Thursday in London to discuss spending strategy, pending projects and logistics; Live Aid trustees and staff meet two or three times a year in Los Angeles and handle routine business, such as audit approval and review of the Georgetown University recommendations.

The ultimate goal of Live Aid is to phase itself out of existence. Geldof originally proclaimed Dec. 31, 1986, as the date that the Live Aid Foundation would die, but continued contributions, sweat shirt orders and the $7.7 million in unspent African relief will keep Live Aid alive for at least another six months.

Like the Live Aid Foundation funds, at least half of the estimated $32 million collected in the name of Sport Aid last May will ultimately be spent by Band Aid.

Under an agreement Geldof drafted one year ago with UNICEF, half the receipts from the worldwide series of 10-kilometer runs in more than 150 countries last May 25 will go to Band Aid. The other half remains with UNICEF, which has taken responsibility for accounting for the Sport Aid contributions and the estimated $2 million in operational overhead.

Sport Aid’s “Race Against Time” runs drew more than a million runners around the globe the same day as USA for Africa’s Hands Across America event. Each participant was supposed to ante up $10 in order to run or to purchase a Sport Aid T-shirt. According to UNICEF controller Karen Laukhaug who is currently auditing Sport Aid, the preliminary figures suggest that most runners, from Japan to Burundi, did in fact come through with their pledges.

“We expect to release our report shortly after the first of the year,” Laukhaug said.

After paying the $2 million in expenses, UNICEF should get a $15 million to $16 million share to help pay off $105 million in African relief projects the organization undertook last spring, according to special projects director Peter Hansen.

“As soon as the money is received, it’s spent on general resources,” he said.

Band Aid’s $15 million to $16 million share of the Sport Aid money has not yet arrived in London, according to Band Aid accountant Rusted. When it does, the total gross proceeds raised for Band Aid from all sources, including the Live Aid Foundation, will come to $127 million, Rusted said last week.

Founded in December, 1984, with $10 million in royalties from sales of the hit single “Do They Know It’s Christmas,” the Band Aid Trust is probably the richest of the pop charities.

Even without the Live Aid and Sport Aid contributions, the Band Aid Trust currently has about $33 million left to spend, according to executive director Penny Jenden.

“The figures are very approximate because it’s being spent almost daily,” Jenden said in an interview.

Much of the money is committed to 153 African rehabilitation projects, ranging from beekeeping to reseeding to irrigation. But it will take another year or two for Band Aid to finish spending all of its money and monitoring exactly how it is spent, Jenden said. When that is done, Band Aid will compile and make public a report on exactly how the money was spent.

Nothing is being spent on more fund raising, she said, but various “Aid” projects continue to arise of their own accord and send their proceeds to Band Aid. During the past year, Visual Aid (professional painters selling their work for charity), Fashion Aid (models and designers contributing their efforts) and Educaid (pupils at 2,500 British schools collecting donations on behalf of African relief) have all forwarded their contributions to Band Aid.

“For 1985 and all through 1986, we’ve spent under $400,000 on administrative overhead,” Jenden said. “The whole of Band Aid was run solely on a volunteer basis for the first eight months.”

Office space is rent free and most labor continues to be volunteered. There are eight paid staff members, two of whom monitor how Band Aid money is being spent in Africa.

“The information’s been a bit slow in coming, but I have no reservations about finishing the audit and satisfying (the Charities Commission),” Rusted said.

On the other side of the Atlantic, the call for audit information is a bit more intense.

The Connecticut attorney general’s charity unit sued USA for Africa in October for failure to file its 1985 financial disclosure statement. The suit was withdrawn a month later when the Century City-based charity founded by Harry Belafonte, Quincy Jones and Ken Kragen filed a 1985 nonprofit income-tax statement with the organization.

Last month, the national Council of Better Business Bureaus found USA for Africa to be in noncompliance on seven voluntary council standards.

According to Bennett Weiner, manager of the council’s Philanthropic Advisory Service, USA for Africa’s first annual report “did not include a clear description of financial activities,” among other points.

Weiner said that the council will reappraise USA for Africa in January when it receives more detailed financial information.

Though USA for Africa seems to have received the bulk of the publicity about slow fund distribution and financial disclosure, it is not the only pop charity that has been criticized on both points.

“Very often, new charities have a more complete plan when they start out on how they’re going to spend the money,” said Margery Heitbrink, vice president of the National Charities Information Bureau.

The NCIB, a clearinghouse for information on American charities founded in 1918, has dealt with slow financial disclosure and big bank balances in the past, but not on the scale of pop charities, according to Heitbrink. Celebrity involvement, media attention and memorable music combined to raise money, enthusiasm and hope on a grand scale and it represents something new, she said.

“But charity, to a degree, is institutionalized, and there are all kinds of requirements imposed by the federal government and the states,” she said. “When you put yourself in the public eye this way, people want to see what has been done with the money. On the other hand, the pop charities would be crazy to just throw the money away.”

Comic Relief vice president Dennis Albaugh, a former United Way executive from Los Angeles with decades of experience in charity fund raising, attributes the slow fund distribution and financial disclosure to inexperience.

“It’s my sense that most of the people involved in this kind of fund raising are of good heart and intentions, but they just don’t realize how extensive the process is,” he said.

This spring, Albaugh said he hopes to initiate a convention of representatives of all the pop charities and the existing agencies, like UNICEF, who have been direct beneficiaries.

“In the afterglow--and after-burn--of these first big events, I think collectively we could do a lot of good for each other,” he said.

His own charity allocated most of its money within five months of the Home Box Office comedy all-star telethon that netted $3.3 million after $1.4 million in expenses. Before the first anniversary of the Billy Crystal-Whoopi Goldberg-Robin Williams headliner show, Comic Relief will have filed its nonprofit organization tax Form 990 with the IRS and financial disclosure statements with the California Attorney General’s Office of Charitable Trusts, the NCIB and the Philanthropic Advisory Service of the Council of Better Business Bureaus. A disclosure statement is already on file with the Los Angeles Department of Social Services, the local charity watchdog agency.

Though they filed several weeks after the 30-day post-event deadline that Los Angeles City Ordinance requires of charity events, both the Live Aid and USA for Africa foundations also have financial disclosure statements on file with the Department of Social Services.

But only USA for Africa and Farm Aid have filed with the National Charities Information Bureau, according to Heitbrink. Most of that financial information is more than a year old, she added.

Comic Relief’s Albaugh said there may be a Comic Relief II, but among the biggest pop charities only Farm Aid is committed to yet another mega-event.

Farm Aid III will be held next September in Lincoln, Neb., with Willie Nelson attempting to reprise the very successful Farm Aid I concert in September, 1985, in Champaign, Ill.

That concert raised $9 million, according to Farm Aid executive administrator Carolyn Mugar. Farm Aid II, held last July 4 near Austin, Tex., was not nearly as successful. Less than $1 million was raised, according to pre-audit estimates.

So far, said Mugar’s assistant Janet Corpus, Farm Aid has allocated $4.8 million and still has about $3.1 million in an Illinois bank. According to Mugar, there is no timetable for spending it and, up until now, the money has been spent for the most part in stocking local food banks, establishing farm crisis hot-lines and holding conferences for farmers who stand to lose their farms to high mortgages and other debts.

In the meantime, Farm Aid maintains administrative headquarters in Cambridge, Mass., and runs “a tight office,” according to Corpus. She put its total operating and fund-raising overhead since Nelson incorporated it on Sept. 4, 1985, at $1.1 million. Most of that was for putting on the two concerts in Illinois and Texas. Actual administrative costs during the last 16 months have been less than $200,000, she said.

Like the other pop charities, Farm Aid has received its share of criticism for not moving quickly enough to spend its money on its stated cause, which, according to its articles of incorporation, is “to provide assistance to poor and needy families in rural farming communities. . . .”

Nevertheless, Farm Aid has evolved into a permanent institution that will not fade either by design or by default, said Mugar and Corpus. While Geldof has publicly stated his intent to wind down Band Aid and some of the founding celebrities of USA for Africa appear to have grown disillusioned (“We Are the World” co-author Michael Jackson, for example, recently resigned from the foundation board), Willie Nelson will continue to hold Farm Aid concerts until he is satisfied that America’s family farmer is no longer in jeopardy, according to Mugar.

“I know that Willie Nelson has a strong commitment to continue helping the family farmer,” Corpus said. “Farm Aid will continue along the lines of that commitment evidenced in our first year.”

POP CHARITY FINANCES Figures in millions of dollars as of last week and are unaudited (except for Live Aid)

Raised Expenses Relief BAND AID $84.7 $.7 $50.6 (100% for relief and development in Ethiopia and the Sudan) USA FOR AFRICA FOUNDATION We Are the World 52.2 Est. 1.0 30.0+ (90% for African famine relief; 10% for American homeless, hungry) Hands Across America *33.0 *16.3 0.6 (100% for American homeless, hungry) COMIC RELIEF 4.7 1.5 1.7 (100% for medical aid for U.S. homeless) SPORT AID 32.0 2.0 Est. 14.0 (100% for African relief) FARM AID 9.0 1.1 4.4 (100% for relief for U.S. family farmers) LIVE AID FOUNDATION **27.3 **6.6 13.0 (100% for African relief and development in nations other than Ethiopia and Sudan) TOTAL $242.9 $29.2 $114.3

Unspent BAND AID $33.4 (100% for relief and development in Ethiopia and the Sudan) USA FOR AFRICA FOUNDATION We Are the World Est. 10-20.0 (90% for African famine relief; 10% for American homeless, hungry) Hands Across America Est. 15.0 (100% for American homeless, hungry) COMIC RELIEF 1.5 (100% for medical aid for U.S. homeless) SPORT AID 16.0 (100% for African relief) FARM AID 3.5 (100% for relief for U.S. family farmers) LIVE AID FOUNDATION 7.7 (100% for African relief and development in nations other than Ethiopia and Sudan) TOTAL $87.1-97.1

* Includes $8 million in sponsorship contributions from Coca-Cola, Citibank and other corporations. ** Includes $2 million in corporate contributions from General Motors, Pepsi, AT&T; and Kodak and about $4 million in licensing fees from ABC-TV and radio and independent TV stations that broadcast the July 13, 1985, Live Aid concerts.