MIA Facts Site

Report of the
Senate Select Committee
on
POW-MIA Affairs:
Section 22

 Fundraising

In stark contrast to the vast majority of volunteer POW/MIA
organizations, stand a few private organizations who solicit money
from millions of American households. In response, the American
public has contributed tens of millions of dollars to the POW/MIA
cause since Operation Homecoming. In many instances, however, well
over half of the money raised was spent on fundraising. This
exorbitant rate, while not illegal, would certainly come as a
surprise to those who contribute and is inconsistent with standards
set by nationally recognized organizations which monitor the
fundraising activities of public charities.

Congress, Government officials, POW/MIA families and members of the
public and others have raised questions about the propriety of
fundraising activities conducted by the handful of POW/MIA
organizations which raise millions of dollars with the help of
professional fundraisers who have a financial stake in campaign's
success.

The Committee found that professional fundraisers created
solicitation materials designed to maximize the emotional impact of
the POW/MIA issue by stating that POWs remain alive in Southeast
Asia and by stating that for a few dollars more, a private
organization can rescue them. In virtually every case, materials
relating to the existence, identity and location of POW/MIAs and
attempts to rescue them were held out as factual but were based on
circumstantial and hearsay evidence far weaker than claimed.
Solicitations to millions of potential donors consistently omitted
critical facts about the failure to actually locate and/or
repatriate any POW after Operation Homecoming such as, in one case,
the fact that the boat used in the operation had not left port for
three years.

These materials were misleading -- not because they asserted that
POWs remain alive in Southeast Asia, but because they failed to
disclose critical information including that the reported
information was usually second and third-hand rumors.

The Committee's investigation was hampered by the refusal of the
most active fundraising organizations to cooperate, in particular
when it tried to verify statements made in the fundraising appeals
of Account for POW/MIA, Inc. (Skyhook II), Operation Rescue, Inc.,
American Defense Institute, Inc., Homecoming II, Inc., and Veterans
of the Vietnam War, Inc. The Committee did not seek court
orders requiring these witnesses' testimony because most
fundraising information was available from their professional
fundraisers and tax forms that non-profit groups are required to
file.




Amounts Raised

Operation Rescue, Inc. reported on federal tax forms that during
the period 1985 through 1990 it received $2,283,472 in
contributions; spent $2,028,440 on fundraising expenses and
$312,125 on program expenses. According to Operation Rescue's own
figures, its fundraising expenses constituted 88.8 percent of
contributions.

Veterans of the Vietnam War, Inc, reported on federal tax forms
that from 1983 through 1990, it raised $11,366,557 in
contributions. For years in which it filed relevant information
regarding its fundraising expenses, they ranged from 28.1 percent
to 42.8 percent of its contributions.

Skyhook II (Account for POW/MIAs, Inc.) reported to the IRS that
from 1988 through 1991 it raised $1,528,223 in contributions and
had fundraising expenses of $395,327. However, information
contained in these tax forms can be misleading. For example,
information obtained from Skyhook II's fundraiser revealed that
from 1987 through late 1992 the fundraiser collected $1,897,730 in
contributions on behalf of Skyhook II and retained $1,678,890 of
that amount. Thus, Skyhook II actually received only $218,839 of
the $1.9 million raised. The fundraiser's figures show that the
organization actually received only 25.8 percent of the money
raised.

Homecoming II reported to the IRS that it paid Ted Sampley, its
founder and the publisher of U.S. Veteran News and Report, more
than $300,000, ostensibly for t-shirts sold at Homecoming II's
stand at the Vietnam Veterans Memorial in Washington, D.C.
Sampley has fought all efforts by the National Park Service to stop
merchandising the t-shirts and other merchandising on national park
property, and at publication time was involved in a lawsuit over
his right to use the picture of the memorial statue without paying
the artist. Another lawsuit, against the National League of
Families, also is pending. Despite promises of cooperation,
Sampley refused to provide financial records to the Committee for
his tax-exempt organization.

The Committee notes with concern that its survey of amounts raised
by various POW/MIA organizations was hampered by the unwillingness
of some POW/MIA organizations to disclose their financial
information to the Committee.




Professional Fundraising Techniques

In their depositions before the Committee staff, professional
fundraisers consistently stated that for a fundraising appeal to be
successful, it must be based on a current event and it must have a
strong emotional appeal.

The POW/MIA issue clearly meets both of these criteria. Indeed,
the POW/MIA issue was exploited by fundraisers who, recognizing its
income potential, actively sought out, and sometimes even created
POW/MIA groups. For these fundraisers, this activity offered an
opportunity to expand their client base.
The business of raising money typically involves the creation and
use of mailing lists (for direct mail campaigns), and phone lists
(for telemarketing campaigns) which identify potential donors who
statistically can be determined to be susceptible to the particular
charitable appeal. For example, in the case of raising funds for
POW/MIA organizations, professional fundraisers have determined
that females over the age of 50 are the most likely demographic
group to donate.

Contracts between professional fundraisers and their clients
typically give the fundraiser sole responsibility for designing
solicitation materials or scripts; the client's role is to review
and approve these materials or scripts.

Solicitation materials used by professional fundraisers on behalf
of POW/MIA organizations frequently include petitions which the
prospective donor is asked to sign and return; a representation is
generally made that the petition will be presented to the Congress,
the President or some other government official. These petitions
are called "engagement devices" because they seek to actively
engage the prospective donor in the cause associated with the
solicitation. Frequently, these engagement devises were not
delivered as promised but rather were used to expand the client's
potential donor list. In at least one case, these engagement
devices were routinely discarded or warehoused.

Operation Rescue, Skyhook II and Vietnam Veterans of the War all
used such engagement devices, but paid little attention to the
petitions, concerning themselves only with the money which often
accompanied the petitions.

Once solicitations are prepared and approved by the client, they
are routinely mailed to hundreds of thousands of persons, at bulk
rates available to charitable organizations. In the case of
telemarketing campaigns, thousands of telephone calls are placed.
Contributions from as few as 2 percent of those solicited by mail
can be deemed successful. For telephone solicitations the figure
is somewhat higher.

In some instances, fundraisers and charities will engage in
"prospecting" appeals, at a financial loss to the charity (but not
to the fundraiser), in order to generate a list of known
contributors. Donations are expected to exceed expenses as the
known contributors are subjected to repeated, urgent solicitations
for money. Because the professional fundraiser's profits are
considered expenses of the prospecting appeals, it is possible for
the professional fundraiser to earn a profit even when donations
from a particular campaign do not exceed expenses.
The fundraising materials and scripts used by various POW/MIA
organizations typically contain themes designed to have maximum
emotional appeal. One common theme is that the group is on the
verge of rescuing a POW and if the recipient does not send money
promptly, boys who have survived against all odds for 20-plus years
will die. For example, the following are sample statements
contained in direct mail solicitations of the American Defense
Institute:

It is important to get American People to support action
to rescue our POW hostages.

Too many years have passed now for us to let our men
languish in torture cages any longer. Our national honor
hangs in the balance.

I promise to tell all of our hostages, when they are
finally freed, of the vital role you played in their
release. I wish you would write a brief note on the
enclosed donation card, which I will personally hand to
the first man to regain his freedom.

Samples of statements contained in direct mail solicitations sent
out on behalf of Operation Rescue, Inc.:

If I can't raise $13,671.77 by October 31, vital
intelligence gathering cannot continue.

You may wake up tomorrow morning and hear that the first
American POW has been rescued. We are that close.

Those of us here have only until December [1987] to get
them out. After that, no telling what the savage
communists might do.

We are very, very close to freeing one of our valiant
Americans.[December, 1988]

Samples of statements contained in direct mail solicitations sent
out on behalf of Skyhook II:

We're close to making contact with an American POW who
has been alone since his fellow prisoner died of natural
causes less than a year ago. That effort could fail for
lack of funds. [This quotation is part of a letter that
Skyhook II mailed one time to its donors in March, 1987.]
They relocated the 17 we were trying to contact. [This
quotation is part of a letter that Skyhook II mailed to its
donors one time in March, 1987.]

If enough concerned citizens respond . . . we should
gain the $64,300 we need to launch a carefully planned
mission . . . built around a small elite force. . . .
[This quotation is part of a letter that Skyhook II
mailed to non-donors in March and September, 1988.]

We must move quickly before they get word of us and
force-march the POWs . . . Timing is critical to make
sure Papa has the financial backing to rescue the first
POW. [This quotation is part of a letter that Skyhook II
mailed one time to its donors in April, 1988.]

Operation Rescue, Inc.

Operation Rescue employed Eberle and Associates as its professional
fundraisers from 1983 through 1986. Bruce Eberle is the chairman of
the board and a majority owner of Eberle & Associates, a Vienna,
Virginia based direct marketing company which provides fundraising
services to nonprofit and for profit organizations. Linda Canada,
an employee of Eberle & Associates, and handled Jack Bailey's
Operation Rescue, Inc. account.

In approximately three years Eberle prepared more than 40
solicitations on behalf of Operation Rescue and mailed them to
hundreds of thousands of potential donors at bulk rates. They
brought in contributions of approximately $2 million.

According to Eberle, the basis for the representations in the
solicitation letters came from Jack Bailey. Eberle believed
Bailey, although he had no more than Bailey's word that POWs
were alive and suffering from malnutrition.

Canada designed most of Operation Rescue's solicitations from 1984
to 1986, sending solicitation letters along standard emotional
appeals to Bailey for his approval before disseminating them to the
public. She never questioned the reliability of Bailey's
statements and told investigators that she could not provide
the Committee with any facts to back up her statement in a 1985
solicitation that "men are in terrible shape. Their time is
running out."

In a 1986 letter, Operation Rescue told potential donors that
unless it received $13,671.77, vital intelligence-gathering
missions might have to be stopped. If those missions did not
continue, there was no hope for the return of POW/MIA's held
captive in Vietnam, the letter stated.

In April, 1985 solicitations stated that Bailey had just returned
from an intelligence-gathering mission and confirmed the location
of live American POW's. The solicitation stated that the men were
in terrible shape and their time was running out. The solicitation
was designed as a "Post Gram" stating that Operation Rescue had
more evidence of live Americans. This Post Gram and another
solicitation purporting to be a copy of a letter written by Bailey
while aboard his rescue ship, the Akuna II in the South China Sea,
were not what they appeared to be.

These scenarios were concocted by Bailey's fundraisers. A
memorandum dated April 2, 1985 from Eberle to Canada laid it out:

In addition to the two fundraising appeals which I drafted
today, I have an idea for three more packages on behalf of
Operation Rescue. Here they are:

1. Some sort of an international cable gram sent from
Thailand to the donor describing the "evidence" that
Americans are still being held captive and the urgent
need for tax-deductible contributions in support of the
rescue efforts.

2. A handwritten or hand printed letter on lined note paper
written by firelight during an intelligence gathering
mission either inside of Cambodia or Vietnam, or at least
on the banks of the river which divides Thailand and
Cambodia. Same message.

3. A letter originated in Thailand, either on hotel
stationery or on Akuna II stationery stating that the
Akuna is in port and can't leave again unless a certain
amount of money is received. Letter could even be
drafted on the deck of the Akuna. Once again, this letter
should either be handwritten, hand printed or typed on a
portable typewriter. Same message.

Linda, obviously these are take-offs on your current package.
They could be used as "challenger" packages to test against
your current control package. They should be tested head to
head with the control package and any other challenger
packages which you mail.

During the relevant period, the Akuna never left Songkhla Harbor
according to a telegram from the Department of State dated
September, 1986, which quotes a letter from the Harbor Master:

. . . [the Akuna] has been anchored in Songkhla for
roughly two years (Actually three), never leaving its
mooring . . . The Akuna has not performed any useful
service, and that it has not received maintenance for a
long time. In this regard, it notes that the skeleton
crew of two watching over the ship has absolutely no
knowledge of how to maintain it.

The Post Gram and the handwritten letter are clear examples of
misleading solicitations.

Skyhook II

Skyhook II's modus operandi is similar to Operation Rescue's. One
1985 letter claimed that POW's are starved and clad in filthy rags
and airmen are kept chained in tiny bamboo cages and made to work
like animals. Another 1986 letter stated that brave fighting
men are treated worse than animals cooped in jungle cages.
Skyhook II's materials state that these recent reports all come
from refugees whose claims have been verified by lie- detector
tests. In 1986, Skyhook II represented that "we are close to making
contact with an American POW who has been alone since his fellow
prisoner died."

Fundraising techniques used by Skyhook II included a script used by
Akron, Ohio telemarketer, Infocision Management, Inc. on October
13, 1992 which claimed that:

. . . our effort to have the government admit to live
POW/MIA's in Southeast Asia has been so relentless that
last week the Senate Subcommittee subpoenaed our records.
. . .We are now closer than ever to bringing these war
heros home. . .

Additional scripts were drafted to prepare telemarketers to
overcome objections by people who were on fixed income, unemployed
or ill, or the widows or widowers of prior donors.

From July, 1985 through August, 1992, Skyhook II used the services
of Response Development Corporation, a professional fundraising
organization which has been in the direct mail business since 1945.



RDC prepared and sent solicitation letters using POW/MIA
information provided by former LeBoutillier, and Skyhook II's agent
in Thailand, Al Shinkle. RDC's writers never independently checked
the veracity of this information, which included purported live
sighting reports and photographs determined to be unreliable by
DIA. However, RDC routinely collected information and media
reports concerning the POW/MIA issue in order to corroborate, to
the extent possible, the information provided to them by
LeBoutillier and Shinkle. RDC's highly emotional, urgent appeals
for money, often promised that the money raised would be used to
rescue live POW/MIAs; in some cases, however, 100 percent of the
money raised was used to pay debts LeBoutillier owed to RDC.

In August, 1992, RDC terminated its efforts for LeBoutillier and
Skyhook II, citing a dearth of "good conservative donor files" and
media attention which discounted the evidence used in the
fundraising appeals before the donors had a chance to respond to
them.

Of the nearly $1.9 million raised by RDC for Skyhook II, RDC kept
nearly $1.7 million. Despite the fact that RDC kept 88.5 percent of
the money it raised, accounting regulations allow charities to
include portions of the fundraising packages into program expenses
(as opposed to fundraising expense) if the package contains certain
informational/educational content. This is accomplished by
counting the lines of text in the letter that actually ask for
money, and then calculating a percentage of the letter that is
"education" as opposed to "solicitation." In this way, Skyhook
II's fundraising expenses are reported as closer to 50 percent of
revenue than 88.5 percent. In some solicitation packages, however,
as much as 75 percent of the content was considered "program"
rather than "solicitation." This technique is a standard industry
practice, but unknown to the donating public.

Veterans of the Vietnam War, Inc.

Veterans of the Vietnam War, Inc. (VVnW) engaged The Creative
Advantage, Inc., a professional fundraiser to prepare its mail
solicitations. Marilyn Price of Fairfax, Virginia is the President
and majority stockholder of The Creative Advantage, Inc., a company
which provides fundraising services to national and international
nonprofit organizations. She is also owner and president of
Creative Management Services, Vvnw's management consultant.

Price's testimony explained how a professional fundraiser can
virtually create a client. According to her testimony, Price first
learned of Vvnw in the summer of 1982 by reading an article in Life
magazine about veterans and their children injured by Agent Orange
exposure. The article contained a photograph of Michael Milne,
executive director of VVnW. Price found the Life magazine article
compelling and sought to contact Milne because another client also
was interested in Agent Orange.

At that time, Price was working for another fundraiser, Response
Dynamics. Shortly thereafter, she left Response Dynamics and
formed her own company, The Creative Advantage, Inc. Milne's
organization, VVnW, was Price's client, first at Response Dynamics
and then at The Creative Advantage, from 1982 until September,
1991. From 1985 through 1991, more than 2.5 million highly
emotional, urgent solicitations were mailed on behalf of VVnW
claiming that live U.S. servicemen were being held captive and that
rescue could be achieved through VVnW. One, sent in 1991, stated:

Thanks to your support, Veterans of the Vietnam War, Inc.
has sent a delegation to Vietnam to negotiate for the
release of our POW's. During these meetings in Vietnam,
the Vietnamese leaders told our representatives that
American POW's are still alive in Southeast Asia! THEY
ADMITTED IT -- FINALLY! This confirms live sighting
reports collected by the other "core" groups. We're
making some important progress as negotiations continue.

Marilyn Price drafted and signed a solicitation letter in January,
1991 on behalf of VVnW which stated in part:

Our representatives have been to Southeast Asia to meet
with government leaders to break the deadlock. The
Vietnamese have admitted that some of our men are still
alive!

Another solicitation from VVnW claimed that Norwegian workers in
Vietnam had seen POW's who had called out to them. In all,
solicitation materials prepared by Price were sent to hundreds of
thousands of Americans netting more than $11,000,000 since 1984.

In one fundraising campaign, Price of The Creative Advantage, Inc.,
arranged for the production and broadcast of a television
commercial asking viewers to call a toll-free telephone number to
get a petition to the President of the United States. They would
sign and return it to VVnW for delivery to the U.S. Government to
show the wide-spread desire to bring missing servicemen home. The
petitions urged the Administration to "do everything humanly
possible to secure the immediate release of our brave American
Vietnam War heroes, held hostage in Southeast Asia, under sub-human
condition."

The commercial contained footage of prisoners (taken during the
war, prior to Operation Homecoming), government officials, a family
member and an appeal by actor Cliff Robertson. Broadcast over the
Christian Broadcasting Network and numerous cable television
channels, the advertisement was extremely successful, resulting in
more than 125,000 requests for petitions. Those who signed the
petitions were requested to provide their addresses and phone
numbers. When these petitions were signed and mailed to a post
office box controlled by the fundraiser, the petitioners'
identifying information was transferred to mailing lists and
telephone directories for future fundraising use.
Rather than delivering these petitions to the President of the
United States, as promised, VVnW simply collected and stored the
petitions, adding the names on those petitions to its mailing and
phone lists to be used in additional fundraising solicitations.
This petition drive was little more than a way to build a list of
potential donors to be subject to repeated solicitations, both to
fund additional television commercials and to contribute to VVnW's
"rescue" efforts.

According to an affidavit provided by Michael Milne, National
Executive Director of VVnW:

1. Between 1987 and 1992 we collected 126,812
signatures on petitions.

2. These petitions were delivered to Veterans of the
Vietnam War, Inc.

3. We continued to receive the petitions. We changed
the name on the new petitions from "President
Reagan" to "Mr. President."

4. All of the petitions we collected are stored in a
Wilkes-Barre, Pennsylvania warehouse. Veterans of
the Vietnam War, Inc. provided photographs of these
petitions to the Senate Select Committee on POW/MIA
Affairs.

In response to the Committee's request to substantiate the
information in its solicitation materials, VVnW provided field
reports from overseas agents, including Al Shinkle who apparently
worked for VVnW after he ceased working for Skyhook II. The field
reports document the thrust of some, but not all, of the statements
contained in VVnW's solicitation materials.

One report, in the form of a letter dated December 10, 1989 from
Shinkle to Milne, warned Milne about an agent whom Shinkle had
learned was being sponsored by VVnW:

I found [the agent] to be of average or slightly below
average intelligence but with a vast amount of energy and
a deep-set conviction that he could collect intelligence
information from inside Laos and recover living POWs
better than anyone else.

During that short time frame he distinguished himself by
being bilked out of a respectable sum of money by con
artists (not his money, but that of another), being
arrested for violating Thai Internal Security Operations
command and placed on a watch-list for actions not in
keeping with then current Thai foreign policy, wenching
and drinking so frequently that he still has a reputation
for so doing in Nakhon Phanom, Thailand.

. . . In my opinion, he is a rank amateur with some kind
of personal mental problem which makes him unreliable and
controllable. In short, and in words that are easily
understood, he is an accident looking for a place to
happen.

In July, 1989, the agent wrote a letter to Milne discussing what he
had learned:

During my stay I learned more in a short time than the
Government has learned in 15 yrs. I learned where many
of our people are, and actually negotiated for the
release of several of them. I worked with many of the
agents who have been scamming Americans for yrs. but in
my case we were working under a different set of rules.
I worked with former Pathet Lao military personnel, and
some still in the service. I worked with refugees from
Laos, and Thai nationals also.

I learned that there are 253 Americans still being held
in Laos, with a total of approx. 500 in all of S.E. Asia.
A great number of the men being held in Laos are
constantly being observed by friendly agents working for
other Americans in the area, to maintain a knowledge of
their presence at all times.

Another thing I learned is this, no one in S.E. Asia
thinks the Government is interested in live Americans.
[E]veryone, Everyone that I talked to especially from
Laos is under the impression that remains are the only
thing of value. This is because live Americans are not,
nor ever have been mentioned in any talks or negotiations
with the government of Laos.

An example of this particular case in point is this -- In
1988 a Pathet Lao soldier brought a fresh set of remains
and Dog-tags to an American in Bangkok, to sell. The
soldier, believing that the only value to this American
POW was his remains, Killed him and cooked the flesh from
the bones, bleached them, and then tried to sell them.
If he had been successful and gotten a good price for
them, he actually intended to kill the remaining 2 POWs
in his care.

This soldier was shocked, and disappointed to learn that
we wanted LIVE Americans. Negotiation are presently
under away to try to gain the release of the 2 survivors.
Our governments policy of remains only "caused this man's
death." There is no telling how many more have lost
their lives in a similar fashion.

Price also arranged for VVnW to utilize the telemarketing services
of Infocision Management Corp. During its campaigns approximately
300,000 telephone calls were placed to prospective donors,
using urgent, emotional appeals seeking money to rescue POWs. As
part of this arrangement, Price elicited from Infocision a three-
percent kickback.

In addition, Price entered into a management consultant agreement
with VVnW that was to net her $5,000 a month plus 10 percent of the
net income of VVnW. At her insistence, the agreement stated in
part:

Expenses related to the performance of this agreement
will be categorized as program expenditures [not
fundraising expenses] on the client's financial
statements and tax returns. Neither the existence nor
the details of this agreement will be discussed by
either party with any member(s) of the press.

VVnW has balked at paying some of Prices fees and was in litigation
with her at publication time.

DIA's Analysis of Fundraising Solicitations

In 1987, DIA analyzed representations such as those set forth above
and found that unwary potential donors might easily conclude that
the organizations making those representations possessed
substantial intelligence from reliable sources who were in direct
contact with American prisoners of war. The little noticed report
concluded in part that:

. . . nothing could be further from the truth. Some of
the claims are undoubtedly the invention of the authors.
. . . [F]or all their proof and untold millions of
dollars raised, none of these groups or individuals have
yet to furnish even the slightest shred of evidence of
POW's, much less secure the return of a living American
captive.

In reviewing the materials, we find they include little
or no substantive data but instead are rambling
discourses filled with inflammatory rhetoric.

Use of Proceeds: Fundraising vs. Program Expenses

In many cases fundraising expenses top 50 percent of the total
amount donated by the public. The issue of how much money a
charity should spend to raise money and whether and how the public
should be informed of the high cost of fundraising has been the
subject of much debate.

In 1989, the Subcommittee on Antitrust, Monopolies and Business
Rights of the Senate Judiciary Committee held hearings on abuses in
charitable gift giving that showed how professional fundraisers
sometimes dupe well-meaning charities into contracts that result in
huge consulting fees with little or nothing left over for the
charitable purpose. Of concern to the Select Committee is
that while professional fundraisers often raise enormous sums, very
little goes to the cause. The Committee's investigation revealed
that many POW/MIA organizations receive as little as 13 percent of
the money generated by their professional fundraisers. Creative
accounting often boosts that figure closer to 50 percent, as in the
case of Skyhook II.

In at least one instance, state regulators have attempted to
challenge excessive fundraising expenses. A pending civil suit in
Illinois seeks injunctive and other relief against the fundraiser
for VietNow, a Rockford, Illinois based POW/MIA organization. The
State alleges that:

Since July 1, 1987 to the present, Defendants . . . have
acted as professional fundraisers and solicited
charitable donations from the public for VietNow's
charitable purposes through their own acts and in concert
with others in an amount of at least $1.524 million, with
VietNow receiving only $224,000 (14.6 percent) in that
period. . . . By taking possession and control of said
charitable funds upon the Defendants' representation to
the public that the funds would be used for charitable
purposes, the Defendants had a fiduciary duty to fairly
and reasonably deliver said funds for VietNow's purposes,
but in charging the fee amounts they charged they
breached their duty and defrauded the donating
public.

Disclosure of Fundraising Expenses

Another concern of the Committee and others, including the National
Association of Attorneys General, is what donors are told about
where money donated to the cause actually goes. According to a
recent law review article:

Legislatures and courts have engaged in a tug-of-war over
the regulation of charitable fundraising. Legislatures
have tried to control overall fundraising costs by
limiting the amount a charity can spend on fundraising if
it wants to continue to solicit funds. Fundraising cost
limits, however, sacrifice the rights of individual
charities that have high costs for good reasons. They
also restrict the donating public's choice of which
charities to support. The judiciary, beginning with the
United States Supreme Court's 1980 decision in Village of
Schaumburg v. Citizens for a Better Environment, [444
U.S. 620 (1980)] moved to protect both the rights of
charities with inherently high fundraising costs to
solicit funds and the public's right to choose to give to
these charities. Unfortunately, following Schaumburg,
the Court moved too far in protecting the rights of
charities and ignored the contributors' interest in
ensuring that charitable contributions be used for
charitable purposes. In 1987, in Riley v. National
Federation of the Blind, [487 U.S. 781 (1988)] the Court
extended the striking of fundraising cost limits to
include a statute that required charities to disclose
fundraising costs at the time of solicitation. . .


Given the current state of the law, the public's ability to inform
itself of a charity's fundraising expenses depends largely on the
accuracy and clarity of information filed with the IRS. The
Committee has reviewed several Forms 990 filed by various POW/MIA
organizations and found that in some instances these forms are
incomplete and inaccurate on their face, even when prepared by
major accounting firms.

Since these charitable organizations are exempt from taxation,
there is little incentive for state and federal regulators to audit
them closely. This, combined with the complexities of accounting
standards governing the allocation of expenses forces the public to
rely on private watchdogs such as the National Charities
Information Bureau.

Canada, the account executive for Operation Rescue, testified that
it would undercut the success of a fundraising campaign to disclose
the involvement of a professional fundraiser. A typical
donor wants to believe that one person is writing to them as a
donor: if the fundraiser disclosed his or her role it would
"completely destroy the success of the mailing." The issue
of public disclosure is an issue that states have tried to address
but recent Supreme Court decision have restricted states' ability
to regulate raising costs.

Price, the fundraiser and management consultant to VVnW, drafted a
contract with VVnW specifying that the charity record her
management fee as a program cost not a fundraising cost in their
financial statements and tax returns. Such accounting
measures have been a concern to not only this Committee but to the
states which attempted to regulate accounting practices of the
charities. In 1989, Connecticut's Attorney General testified that
new accounting rules permit a charity to shift a generous portion
of the cost of raising money into program services in its expense
statements. This exaggerates the amount of money spent on the
cause.

Other POW/MIA Groups

The staff invited more than 50 of the hundreds of grassroots
POW/MIA organizations to provide information on a voluntary basis
concerning their educational, fundraising and other activities.
More than 30 organizations responded and investigators took
testimony from officials and members of numerous POW/MIA
organizations and families.
Most POW/MIA groups are all-volunteer efforts ranging to
memberships of several thousand. Most operate on budgets of less
than $20,000 per year and raise funds through local activities,
membership dues and personal mailings. Most have done an exemplary
job in keeping the POW/MIA issue alive, and it is their voices that
have sounded a continual demand for the return of any remaining
POWs and the fullest possible accounting of all MIAs.

The Committee believes the following sampling is representative of
the tireless efforts of hundreds of bona fide organizations
throughout the country. The listing is alphabetical, and it is by
no means intended to be exhaustive:

BRAVO

BRAVO, The Brotherhood Rally of All Veterans Organization, was
organized in 1971 as an annual picnic for veterans, their families
and friends and has developed into a multi-media communications
vehicle for military and veterans related activities, opportunities
and events.

From 1982 through 1985 BRAVO published The Veterans Observer, and
since 1985, publishes The Veteran's Outlook, a bi-monthly,
military/veterans publication distributed internationally. BRAVO
also produces the only weekly television program exclusively
dedicated to veterans affairs. Over 600 half-hour segments of
"Sound Off!" have been produced and distributed over the Public
Broadcasting System. BRAVO has been instrumental in disseminating
information about Agent Orange, post traumatic stress disorder,
POW/MIAs and a host of other military and veterans issues. BRAVO
has participated in rallies, vigils and other events throughout the
nation, collecting and distributing information, and reporting to
the veteran community.

BRAVO's efforts are worldwide in scope. In 1990, BRAVO members
were part of the delegation of the National Vietnam Veterans
Coalition which travelled to the former Soviet Union to assist in
establishing their own POW committee. In addition, Tony Diamond,
BRAVO's Executive Director, travelled several times to the region,
working with high level officers and Afghan leaders to develop a
dialogue of mutual assistance, working toward the release of all
POWs from all nations and all wars. In addition, on March 6, 1992,
BRAVO participated in the first International Veterans Telemarathon
in Moscow, Russia -- a television broadcast aired around the world
which asked that anyone who knows of POWs to inform the
organization, or the powers that be.far from exhaustive.

Georgia Committee for POW/MIA, Inc.

The Georgia Committee was formed by JoAnn Shaw, the sister of Major
James William Reed (MIA in Laos since July, 1970) and its main
objective is the return of, or accounting for, missing servicemen.
It furthers its goal through public awareness activities and relies
completely on volunteers to produce a newsletter, public addresses,
slide presentations, ceremonies, and to meet with elected officials
about the POW/MIA issue. Georgia Committee officers have made
numerous appearances on television and radio, and have traveled
extensively, at their own expense, to appear on behalf of the
POW/MIA issue. In addition, the Georgia Committee maintains close
ties with the National League of Families, and disseminates League
information to its membership.

Funding for the Georgia Committee comes from membership dues, from
the sale of POW/MIA memorabilia (POW bracelets, T-shirts, flags,
etc.) and donations. Its average annual budget is approximately
$8,000.

The Lima (Ohio) Area MIA-POW

The two principals of the Lima Area MIA-POW, Jack and Wilma
Laeufer, are cousins of USAF Col. Owen G. Skinner, an American
pilot missing in Laos since 1970. The Laeufer's sell POW/MIA items
by mail in order to raise public awareness of the POW/MIA issue and
do not solicit public donations. From 1984 to 1991, the Laeufers
also have donated $107,300 to 24 other non-profit organizations who
devote their efforts full-time to the return of missing American
servicemen.

The Laeufers also have been involved with planting "freedom trees,"
building and displaying simulated POW cages, conducting candlelight
vigils, participating in Christmas tree festivals and many other
POW/MIA related activities. In October, 1992, the Laeufers
attended the dedication of the Australian Vietnam Forces National
Memorial in Canberra, Australia at their own expense.

Minnesota League of Families/Minnesota Won't Forget POW/MIA

Minnesota Won't Forget POW/MIA and the Minnesota League of Families
are "sister" organizations which function independently but
coordinate with each other for special events and functions.
Minnesota Won't Forget POW/MIA is comprised of veterans and
concerned citizens; the Minnesota League of POW/MIA Families is
comprised of family members of missing servicemen from Minnesota.
Both are volunteer organizations whose efforts have effectively
raised the level of awareness of the POW/MIA issue in Minnesota.

MWF/MLF's accomplishments include lobbying for state legislation
requiring the POW/MIA flag be flown over the State Capitol;
pressing to have an 18' X 28' POW/MIA flag flown in the Metro Dome;
initiating state legislature hearings on the POW/MIA issue;
organizing petition drives resulting in the delivery of thousands
of petitions to the President, the Vietnamese Mission in New York,
the Lao Embassy, the Russian Embassy and the Pope; and the
Minnesota Won't Forget POW/MIA 46-member flag unit has marched in
more than 100 parades.

Their current work includes placing billboards and flags throughout
the state, provide speakers and donate videos to a variety of
organizations, maintain a POW/MIA merchandise booth at the
Minnesota State Fair, produce a free newsletter with a circulation
topping 2,000; and co-producing programs for POW/MIA Recognition
Day and Prayer Day.

POW Network

The POW Network was founded in 1989 by Chuck Shantag of Davenport,
Iowa. It offers a bulletin board service that lets users ask
questions, obtain information and post new information as it
becomes available. The service is available 24 hours per day and
is free of charge, but its operators ask for a five-dollar monthly
donation. The POW Network is an all-volunteer organization.

Prisoner of War Committee of Michigan

The Prisoner of War Committee of Michigan ("POWCOM") was organized
in 1970 for the purpose of protecting and furthering the interests,
rights and welfare of American prisoners of war, missing in action
and their families. Of the 2,264 servicemen still unaccounted for
from the Vietnam war, 73 are from Michigan.
POWCOM's primary function is to raise public awareness about
POW/MIAs and the many discrepancy cases that have yet to be
resolved and its efforts to educate the public include publication
of a newsletter and reading list, speeches, an annual foot race,
advocacy of POW flag legislation, memorial construction, and vigils
and many other events. POWCOM also coordinates activities with
other POW/MIA and veterans organizations. It funds its operations
through private donations and has not used professional fundraisers
to send out mass mailings.

Red River Valley Fighter Pilots Association

The "River Rats" was formed during the Vietnam War by pilots who
flew missions over Route Pack VI of North Vietnam. Originally
intended as a series of tactical conferences, the participants
continued meeting after the war to maintain the fellowship among
air crewmen who fought together.

The River Rats' mission nationally is to provide scholarship
assistance to the children of U.S. servicemen killed or missing in
action in Southeast Asia, Iran, Libya, Grenada, Panama, and Desert
Storm. To date, the River Rats have awarded more than 600
scholarships totalling more than $760,000, based on scholastic
ability and need. In addition, several local chapters have
organized personal assistance for POW/MIA families, including
picnics, house repairs and chores, ball games, camping trips,
family outings and other social events. As of 1992, there were more
than 70 local chapters, who meet at a "practice reunion"
(practicing for the reunion with pilots lost during the Vietnam War
until all are accounted for).

Discussion

Clearly the intentions of the vast majority of those involved with
POW/MIA issue at the private level have been honorable and the
commitment to keep the issue alive has been genuine. Only a small
number of organizations have employed professional staffs and slick
fundraisers. Among those who did, however, fundraising goals often
outweighed the concern for making sure that representations were in
fact accurate and that what was promised, such as petitions or
action, was in fact carried out.


While all of the fundraisers who were deposed laid responsibility
on their clients for the representations made in solicitation
materials, it is equally clear that they all played a major role in
crafting and disseminating the misleading representations. The
Committee's examination of the professional fundraisers reveal
skilled professionals who engaged in practices that the Committee
finds troubling.

Professional fundraisers specifically targeted and exploited women
over 50 years old based on emotional appeals of anxiety and
hope. Canada admitted (as did all the other fundraisers who
testified before the Committee) that the POW/MIA issue was
successful due to the strong emotional response it evokes from the
American people. All of the fundraisers deposed by the
Committee conceded that solicitations stating there was "evidence
of live POW's" would be more successful than solicitations without
such evidence. Therefore, claims of live POWs can in part,
be traced to fundraisers' carefully crafted emotional solicitations
and not to reliable intelligence or genuine information.

Many of the issues raised in the Committee's evaluation of the
professional fundraising methods used by POW/MIA organizations
should be addressed in the next Congress with appropriate
legislation. Clearly, legislative initiatives designed to make
corporations and individuals more accountable for the
representations appearing in solicitation materials are warranted.
In addition, legislation is needed to address the creative
accounting methods which currently permit charities to distort
their fundraising expenses in reports filed with the IRS. The
Committee recommends that these issues be addressed by the
Subcommittee on Consumer of the Senate Committee on Commerce,
Science and Transportation as well as the Subcommittee on Taxation
and Debt Management of the Senate Finance Committee.

Significantly, the continuation of misleading solicitation
materials over a period of years was fostered, in part, by a DIA
directive classifying POW/MIA reports received after August, 1979.
This well-intentioned policy, imposed to protect the whereabouts of
any Americans who may be alive, had the effect of denying the
public access to professional intelligence assessments of evidence,
and fostered a cottage industry of bogus claims.

This policy was inconsistent with a long-held view within the armed
services and the organizations of POW/MIA next of kin that there be
full disclosure of all information about the fate of POW/MIAs. It
also may have indirectly led to a belief in the existence of
thousands of credible POW/MIA live sighting reports which to date
are open to interpretation.

The failure of the U.S. Government to account for its POW/MIAs
created a situation in which a broad spectrum of citizens including
decorated war veterans, former POWs and others, sought to force an
accounting through the dissemination of photographs of purported
POWs and the use of solicitation materials predicated on the
assumption that POWs remained captive in Southeast Asia after
Operation Homecoming.

It also led to an environment ripe for adventurers and would-be
rescuers who sought to find answers by conducting their own
reconnaissance and rescue missions overseas -- sometimes with the
covert assistance of the Government. Those missions serve as
further examples of how Government attempts to use private
organizations in clandestine overseas operations can go awry.
Contributors were misled, money lost, time wasted, participants
duped, and international relations between the U.S. and foreign
governments tarnished.

The reconnaissance and rescue missions also raise questions about
the role that the Lao resistance forces have played in producing
questionable evidence about the existence of American POWs in
Southeast Asia.
 

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