ST. PAUL, Minn. (KMSP) - The largest car donation charity in the United States is accused of using the Make-A-Wish Foundation’s name to solicit donations, while sending just 20 percent of its revenue to local Make-A-Wish chapters. Minnesota Attorney General Lori Swanson says the other 80 percent of the money was spent on administrative costs and payments to for-profit companies owned by the founders of the Car Donation Foundation.
Swanson issued a compliance report Wednesday that questions the payments and solicitation tactics of the charity. Swanson said advertisements and marketing materials were misleading because they failed to disclose that the Car Donation Foundation, rather than Make-A-Wish, was the recipient of the donated vehicles. Solicitations instead featured the “Wheels for Wishes” name alongside the Make-A-Wish name.
It’s illegal in Minnesota for charitable organizations to use names or symbols that are closely related to another charity in situations that could confuse the public about the recipient of the donation.
“Donors need transparency to make informed decisions, including who they are donating to and how their donation will be spent,” Swanson said. “They haven’t been given that here.”
How it works
The Car Donation Foundation solicits donations of used cars, giving donors a charitable contribution receipt for itemized tax returns. The Car Donation Foundation then sells or scraps the donated vehicles.
Following the money
The attorney general says that from 2011 to 2014, Make-A-Wish chapters received just 20 percent of the Car Donation Foundation’s revenue, while nearly $36 million was paid to National Fundraising Management, Inc. and Metro Metals Corporation -- a pair of for-profit companies owned by Car Donation founders William Bigley and Randy Heiligman.
'Worst Charity' list
In 2014, Car Donation Foundation was placed on the South Carolina Secretary of State’s “Scrooge List” and the state of Oregon’s “Worst Charity List.”
Request for IRS investigation
Until mid-2013, Bigley and Heiligman controlled the Car Donation Foundation as board members. When the IRS looked into the executives’ overlapping control of the charity and their for-profit companies, Bigley and Heiligman resigned from the foundation board but continued to manage the charity as “co-executive directors.”
The attorney general’s office has forwarded its compliance report to the IRS, calling for an investigation into the Car Donation Foundation’s 501(c)(3) status. Under federal tax law, a charity must operate exclusively for tax-exempt purposes and may be sanctioned by the IRS if it improperly benefits private individuals.
Swanson’s office is now reviewing several other charitable vehicle donation programs that operate in Minnesota.