Scrutiny for Freedom Alliance

March 31, 2010

Imagine how much fun it is to read criticisms—from the political right!—of the self-righteous Fox yakker, Sean Hannity, and his role in a nonprofit called Freedom Alliance.
Hannity has been on a multiyear nationwide “Freedom Concert” tour that raises money for Freedom Alliance, which purportedly funds college scholarships for the children of members of the military who died in Iraq. Iran/Contragate miscreant Oliver North is identified on its website as founder and honorary chairman.
A conservative blogger named Debbie Schlussel alleges that only some 4 to 7 percent of the money given to Hannity’s group went to tuition payments. (Note: Hannity is clearly the star performer in these Freedom Concerts, but he is not listed as having an official governing or staff role in the organization on either its website or on the information posted on GuideStar.org.) According to Schlussel, tuition payments were in the $1,000-$2,000 range and none was more than $6,000.
Hannity and the Alliance have released a statement characterizing Schlussel’s charges as “false and malicious.” The Freedom Alliance response says that the organization spends plenty on “program services,” that it has given out $3.4 million in scholarships (including $800,000 in 2008), and put $15 million into a Scholarship Trust Fund pledged to future tuition payments. Freedom Alliance makes grants to wounded vets in addition to scholarships for kids.
A look at the Alliance’s 990s reveals little about the Scholarship Trust, giving some support for Schlussel’s contentions.  Here’s our review of the Freedom Alliance’s 990s:

990 Year  Total Revenues  Total Expenses  Total Grants Paid     Surplus     End-of-Year Balance
  2008       $8,781,431      $6,745,717       $1,370,063       $2,035,714       $19,260,574

  2007      $12,459,317      $7,461,350         $895,347       $4,997,467       $19,354,588
  2006      $10,822,785      $7,064,839         $397,900       $3,757,946       $14,503,615

  2005      $10,058,234      $6,400,231         $295,285       $3,658,003       $10,803,554

Perhaps the fund balance is the “trust fund” that Freedom Alliance alleges to have created, but it’s not stated on the organization’s 990s. In fact, the 990 suggests a more political operation at Freedom Alliance than simply grants to students and wounded vets.The 2008 990 cites $2.324 million in expenses for a program of “public policy and education” (in all caps, as in the 990):
FREEDOM ALLIANCE CONDUCTS RESEARCH AND OFFERS ANALYSIS ON PUBLIC POLICY MATTERS-ESPECIALLY THOSE ISSUES WHICH IMPACT AMERICA’S NATIONAL SOVEREIGNTY, NATIONAL DEFENSE, FOREIGN POLICY, AMERICAN HISTORY, AND THE ROLE OF GOVERNMENT GENERALLY.  FREEDOM ALLIANCE EDUCATES THE PUBLIC ON THESE MATTERS THROUGH THE PUBLICATIO OF POLICY PAPERS, NEWSPAPER COLUMNS AND GRASSROOTS COMMUNICATIONS.  FREEDOM ALLIANCE ALSO HOSTS OR CO-HOSTS CONFERENCES AND SEMINARS AND PROVIDES OPINION AND ANALYSIS ON ISSUES OF CONCERN THROUGH THE INTERNET, TALK RADIO, TELEVISION TALK SHOWS, AND NEWSPAPERS.
$553,610 of the $1.37 million in grants were part of a $1.277 million “support our troops” program area:
FREEDOM ALLIANCE’S SUPPORT OUR TROOPS PROGRAM CREATES OPPORTUNITIES FOR THE AMERICAN PEOPLE TO SHOW THEIR APPRECIATION OF OUR MILITARY FOR THEIR SERVICE AND SACRIFICE…DURING 2008, THE SUPPORT OUR TROOPS PROGRAM SPONSORED SIXTY-NINE TROOP APPRECIATION EVENTS ACROSS THE COUNTRY FOR SEVERAL THOUSAND SERVICE MEMBERS AND THEIR FAMILIES. SOME OF THE ACTIVITIES INCLUDED DINNERS AND LUNCHES FOR MILITARY PERSONNEL TO EXPRESS APPRECATION FOR ALL THEY DO.  THE SUPPORT OUR TROOOPS PROGRAM ALSO SPONSORED GOLF TOURNAMENTS, FAMILY FUN DAY.
On the organization’s website, another program offered is the Freedom Alliance Military Leadership Academy, a summer camp for high school students aged 14 to 18 that uses “the fundamental doctrines of military training to cultivate leadership potential and develop character in our participants.”
Is the nonprofit sector paying attention? Perhaps not enough. For example, despite all these questions—and an “F” rating from the American Institute of Philanthropy—Freedom Alliance is one of the approved charities allowed to participate in the Combined Federal Campaign, the workplace giving payroll deduction charitable campaign conducted in federal government worksites, according to the True/Slant blog. That site says that the CFC has Freedom Alliance posting an 11.1 percent overhead cost.
Charity Navigator, in contrast to the AIP’s “F,” gives Freedom Alliance an overall rating of four stars, though only three stars for “organizational efficiency”—reporting that the Alliance devotes 81.5 percent of revenues to program, 13.5 percent to fundraising, and 4.8 percent to administrative expenses.
Why the inconsistent information among the AIP, Charity Navigator, and the Combined Federal Campaign? The numbers don’t add up.
One wonders whether foundations should have concerns. Among Freedom Alliance’s foundation supporters are politically conservative foundations such as the F.M. Kirby Foundation ($125,000 between 2003 and 2009) and others. But the major foundation source for grants to Freedom Alliance come from community foundations, including over $657,000 through the Community Foundation of the National Capital Region, $163,000 from the Austin Community Foundation, and smaller amounts from others. Presumably these are grants from donor advised funds, not from the foundations’ general funds. However, even if the sources are donor advised, aren’t community foundations supposed to do more than simply verify recipients’ public charity status? Wouldn’t potential discrepancies in cost allocations and questions about what program services are being delivered warrant some investigation by the community fund managers or, for that matter, the private foundations that have funneled support to the organization?
Hannity’s defense is that he isn’t pocketing any money here, though Freedom Concert expenses are opaque enough to hide lots of emoluments and indulgences for Hannity and his entourage if Freedom Alliance chose to do so. But for a highly paid radio and TV guy like Hannity, clipping a few pennies from Freedom Alliance is chickenfeed, as he earns a pretty penny from Fox and others. One would think that Hannity’s fellow performers at last year’s Freedom Concerts, such as Charlie Daniels, Hank Williams Jr., Tony Orlando (sans Dawn), and Susan Lucci, plus featured pols and pundits like Ann Coulter, David Limbaugh (Rush’s brother), Curtis Sliwa (founder of the Guardian Angels), and former Congressman Tom DeLay, would be none too happy if Hannity were misusing charitable dollars. (Well, given DeLay’s use of ostensibly public charities for political purposes, we can probably remove him from that list.)
On Monday the nonprofit Citizens for Responsibility and Ethics in Washington (CREW) watchdog group filed complaints with the FTC and IRS against Freedom Alliance, North, Hannity, and the Freedom Concerts.
At issue is whether Freedom Alliance is doing what it claims to be doing—whether it’s presenting information accurately for the public’s correct interpretation and analysis. Whether there is or isn’t a scholarship trust fund, whether the funds are banked for future payments or not, whether tuition payments in the $1,000 to $6,000 range (certainly low for many colleges and universities) are serious or inconsequential, there’s a lot more to Hannity’s charity than scholarships.
This is one political nonprofit that merits continuing scrutiny—from the right and the left. 

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