DVNF

VIA FEDERAL EXPRESS

June 5, 2012

The Honorable Max Baucus
The Honorable Richard Burr
United States Senate
Committee on Finance
Washington, DC 20510–6200

Re: Disabled Veterans National Foundation

Dear Chairman Baucus and Senator Burr:

The Disabled Veterans National Foundation (DVNF) has provided $16.1 million in cash and requested items such as clothing, food, health & hygiene products to tens of thousands of underserved and disabled veterans nationwide. We appreciate this opportunity to share our story and the accomplishments we have been able to achieve in four short years.

DVNF is devoted to serving the men and women who come home wounded or sick after bravely defending our nation’s safety and our freedom.  DVNF brings hope to the veterans who need it most, to underserved veterans desperately looking for jobs, facing evictions or suffering homelessness.  DVNF cares for veterans suffering from both visible and invisible wounds of war.

We believe that following your review of the information set forth in this letter and in the supplemental materials, the Committee will conclude that DVNF has made and continues to make significant progress in the advancement of its worthy mission.

DVNF was founded in the latter part of 2007 by six female veterans who were also state women’s veterans coordinators.  Women veterans coordinators identify and assess the needs of women veterans and provide recommendations for benefits and service improvements to their state’s director of veterans affairs.  They coordinate and perform outreach events to improve benefits and services available, and to increase awareness of the benefits, services, and eligibility criteria for women veterans.  They collaborate with federal, state and local agencies to ensure that women veterans have equitable access to federal and state benefits, including health care, rehabilitation, mental health care, and compensation.

The founders of DVNF, all of whom are acutely aware of the myriad needs of veterans, sought to expand the types of jobs that are made available to veterans.  Collectively, the founders have decades of experience addressing the needs of veterans, with a particular focus on the challenges facing women veterans.  They recognized that the conflicts in Iraq and Afghanistan had resulted in an increasing need to provide ways to help disabled veterans.

The first president of DVNF, Delilah A. Washburn, was also the Houston regional director of the Texas Veterans Commission.  Among her many accomplishments, Ms. Washburn was nominated for recognition of her outstanding leadership by the Texas Veterans Commission and named an “Outstanding Woman in Texas Government” in 2005, 2006 and 2008 by the Governor of Texas.  Following the death of Ms. Washburn in 2010, I became president.

I have spent almost my entire adult life in the service of my country and my fellow veterans.  I am a Vietnam veteran who has devoted over forty years of my life to military and/or civil service.  Following Vietnam, I was awarded the Vietnam Service Medal, which made me eligible to join the Veterans of Foreign Wars (VFW) after the acceptance of female veterans into the VFW in 1978.  In 1985, I became the first female veteran ever elected State Quartermaster and appointed State Adjutant to serve the Department of Louisiana, Veterans of Foreign Wars.  In 2000, I was appointed by Louisiana, Governor M. Mike Foster to be one of the first females to serve on the Louisiana Veterans Affairs Commission for a four-year term.  In 2002, I became the first State Women Veteran’s Coordinator for the State of Louisiana.  In 2005 I was re-appointed by Louisiana, Governor Kathleen B. Blanco to serve on the Louisiana Veterans Affairs Commission for a six-year term, ending in 2011 under the direction of Governor Bobby Jendal.  I am a co-founder and the current president of DVNF.

The original members of the board of directors continue to serve as volunteers.  We receive no compensation or benefits of any kind.  We are reimbursed for some, but not all, of our out-of-pocket expenses.  These dedicated volunteers share a lifelong commitment to serve America’s veterans.  We are ceaseless advocates for the unsung men and women who have fought so hard for freedom.

The answers and enclosures that follow are in the order presented in your May 23 letter.

For calendar years 2009, 2010 and 2011, please provide the dollar amounts raised by your organization.

DVNF annually files anIRSForm 990, prepared by a certified public accountant, and annually is audited by an independent auditor.  DVNF is subject to regulatory oversight by states that review DVNF’s solicitation registrations, including copies of fundraising agreements and the financial results of the activities of the organization.  DVNF has never had its tax-exempt status questioned by theIRS, nor has it been the subject of any investigation in any state.

Enclosed are our Forms 990 for each year, collectively marked Exhibit #1, which reflect contributions and grants received as follows:

2009:   $ 20,959,255
2010:   $ 24,787,094
2011:   $ 29,149,836

Please provide the amounts spent to raise funds for each of these years.

The issue of the costs of fundraising is an important concern, one which DVNF shares with charities throughout the United States.[1]  Because DVNF is a new organization without an established “donor base,” it needed to create one.  To do so, DVNF embarked on an aggressive “donor acquisition campaign.”  The board of directors of DVNF determined that it was in the best interest of DVNF to pursue this campaign on an accelerated basis.  Unfortunately, the onset of the campaign coincided with the recession, which increased the time it has taken to achieve our goal of developing a large donor base.

Nonetheless, despite the unanticipated impact of the recession, the decision of the board of directors has been validated.  DVNF engaged an expert on nonprofit economics to study the strategy and results, which validated the board’s decision.  At the present time, our donor file has approximately two million names – a major achievement given the time and circumstances.

DVNF’s success in developing an extensive donor base in a short period of time during difficult economic times was made possible, in large part, by the willingness of our vendors and consultants to provide liberal credit terms to DVNF, and the willingness of such vendors and consultants to accept possible risk of loss.  DVNF, under the terms of its agreements, is only obligated to pay invoices from our vendors and consultants to the extent funds are received by DVNF from its fundraising initiatives and, further, only from funds in excess of funds reserved to pay the expenses of our operations and provide program services.  The agreements with our vendors and consultants reserve a significant portion of the funds for use by DVNF in its operations and services to veterans.  As set forth in DVNF’sIRSForm 990, which accompany the documents submitted in response to your inquiry, DVNF spent $8,430,490 on program service in 2009 alone.

The amounts spent to raise funds, which are set forth on DVNF’s Forms 990 in Exhibit   #1, are as follows:

2009:   $ 12,606,167
2010:   $ 10,772,550
2011:   $   9,256,075

Please provide a list of the persons or contractors employed to raise these funds and the amount paid to them.

Enclosed are copies of the contracts between DVNF and the professionals we engaged to assist DVNF with fundraising.  They are collectively marked Exhibit #2.  DVNF’s contractors include Brickmill Studios and Convergence Direct.

Please provide the total cost of salaries for staff and management, and any compensation provided to DVNF board members for each of these years.

With reference to the total cost of salaries for staff and management and whether compensation is provided to the members of the board, the schedules found on theIRSForms 990 detail our administrative costs.  In addition, I am enclosing a schedule of current staff and their compensation, which is marked Exhibit #3.  Our board members serve without compensation but are reimbursed for some of their reasonable and necessary expenses.  The total cost of salaries for DVNF staff and management are as follows:

2009:   $ 0
2010:   $ 70,750
2011:   $ 208,122

Please provide an estimate of the number of disabled veterans and/or other veterans assisted by your organization, a detailed description of the assistance that was provided to those veterans, how your organization determined that such assistance could be helpful to those veterans, and the cost of providing the assistance.

DVNF has provided $16.1 million in cash and requested items such as clothing, food, health and hygiene products to tens of thousands of underserved & disabled veterans nationwide.  Exhibit #4 provides a detailed listing of the program services DVNF offers.  The costs associated with providing these services can be found in each year’sIRSForm 990, as provided in Exhibit #1.

DVNF assisted veterans by providing financial assistance, such as cash grants to enable veterans to avoid being evicted from their homes.  DVNF also has provided assistance in the form of items such as blankets, sanitizers, sleeping bags, bottled water, food, furniture and equipment.  Such assistance by DVNF has been made possible by the success of DVNF in soliciting inventory gifts from manufacturers and distributors throughout the United States.

When providing items to worthy organizations, we routinely provide correspondence that includes a proposed inventory list of goods.  Organizations are then given an opportunity to review and revise the list of “in-kind” items before they are sent.  This process has worked to successfully match requested items with facilities, including the Alabama agency highlighted in recent media coverage.

Enclosed are schedules and details, as well as “thank you” letters from agencies and individuals that have been helped by DVNF.  It is indisputable that tens of thousands of veterans have received much-needed assistance from DVNF.  Media assertions that DVNF has not helped veterans are grossly inaccurate.

What percentage of your organization’s financial resources, staff time, and volunteer time are devoted to exempt activities?

Our staff’s time is dedicated to the organization’s pursuit of its mission.  No resources of any kind have been devoted to non-tax-exempt purposes.

What are the organization’s exempt activities?

DVNF has developed a series of wide ranging and innovative programs to address the needs of returning veterans.  In addition to supporting local “Stand Down”[2] events, visiting VA medical centers, and providing goods and essential items to injured or sick veterans being treated at VA medical centers, DVNF also developed key programs to help underserved veterans going through the transition of returning home, including assistance to veterans without homes.

One of the most significant programs is the “Grants to Provide Stability (GPS) Home Program,” which provides grants up to $1,000 to help prevent veterans from becoming homeless and who are in dire financial situations.  These grants can be used by veterans to pay rent, mortgage and essential utilities to prevent evictions and homelessness.  DVNF also makes grants to veterans support organizations to support similar services.  DVNF carefully chooses the organizations with which it works to maximize the return for veterans on its investments.

Last month, DVNF presented its first “webinar” on veteran employment issues.  DVNF hopes to continue this program while it works to help veterans acquire the tools needed to secure employment in these difficult economic times.  DVNF provides scholarships to veterans in financial need to assist in the payment of tuition and related educational expense.  DVNF also provides financial support for activities that benefit veterans confined to facilities and who just simply need some entertainment or a “day out.”

As noted above, DVNF supports a number of “Stand Down” events, and continues to focus on developing and growing essential programs concentrated on our underserved and disabled veterans, women veterans and their families.

Enclosed is Exhibit #4, which describes many of our programs.  The mission to which we are all dedicated is “. . . to change the lives of men and women who come home wounded or sick defending our safety and our freedom.”

Do DVNF and Quadriga Art, LLC share common board members, and/or officers, and/or employees?

No, DVNF does not share any common board members, officers or employees with Quadriga Art, LLC.

What are the terms of Quadriga Art’s fundraising contract with DVNF?

DVNF does not have a fundraising contract with Quadriga Art, LLC.  Quadriga Art provides the following services to DVNF:

Product development;
Promotional items, purchased through outside vendors, which are distributed through mailings that focus on the charitable mission, including public education and raising awareness;
Printing, packaging and processing; and
Mailing services.

Does DVNF have any financial interests or relationships with contractors other than Quadriga Art LLC?

All relationships of a financial nature are with independent contractors.  None are with persons, firms or entities that are disqualified persons as that term is defined by Section 4958 of the Internal Revenue Code.  Such relationships are negotiated, contractual arrangements.  As aforementioned, DVNF’s independent contractors include Brickmill Studios and Convergence Direct.  The respective contracts are enclosed as Exhibit #2.

Please provide a copy of the DVNF’s original application for tax exemption.

Enclosed is a copy of DVNF’sIRSForm 1023.  It is marked Exhibit #5.

Please provide samples of the organization’s solicitations for charitable contributions.

Enclosed are samples of the solicitations that were mailed on behalf of DVNF.  These are cumulatively marked as Exhibit #6.

DVNF apparently attributes a portion of the direct mail expenditures to program service expenses and to management and general expenses, as opposed to fundraising expenses.   What is the basis for DVNF allocating the direct mail expenses to categories other than fundraising?

All of DVNF’s accounting is conducted in accordance with generally accepted accounting principles.  Statement of Position (“SOP”) 98-2, published by American Institute of Certified Public Accountants, requires that when a charity engages in a joint activity, the charity shall allocate the expenses incurred between the two functions.  In this case, the “joint activity” is the combination of an appeal for support with a component of DVNF’s program, i.e. raising awareness of the plight of underserved and disabled American veterans.  TheIRSForm 990 specifically asks whether joint cost allocations have been made pursuant to SOP 98-2.  This accounting standard is required of tax-exempt organizations that comply with generally accepted accounting standards and have financial statements audited in accord with those standards.  DVNF adheres to the methodology set forth in SOP 98-2.  Our compliance with this SOP is monitored by our auditor.

Please provide any written agreements or contracts with fundraisers Brick Mill and Convergence Direct.

Enclosed are copies of contracts between, respectively, DVNF and Brickmill Studios and DVNF and Convergence Direct.  These contracts are marked Exhibit #2.

The Committee is undoubtedly familiar with precedents established by the United States Supreme Court in the area of charitable speech.  See Riley v. National Federation of the Blind of North Carolina, Inc., 487 U.S. 781, 788-89, 796 (1988) (see fn. 10 and the corresponding text).  As the United States Supreme Court stated in Riley, the First Amendment fully protects charitable appeals, regardless of the medium of communication.  The Court noted that the value of a fundraising campaign cannot be measured simply by looking at the cost of the appeal.  Similarly, and for the same reasons articulated by the Supreme Court in Riley, an organization’s program service cannot be measured by the amount of funds received in response to its charitable appeals.  Through each appeal we seek to raise national awareness of the plight of today’s veterans.  That is an essential part of our program.  The mail campaign raises awareness and helps to build name recognition of DVNF, as well as identifying people who we hope will become long-term supporters.

We have provided you with a significant volume of materials to accompany this letter, especially with respect to DVNF’s program accomplishments.  We thought it was important to do so given the serious nature of the issues your letter raised.

If you have any further questions, we will do our best to reply as quickly as possible.

Respectfully yours,

Precilla Wilkewitz
President
Disabled Veterans National Foundation

Enclosures

[1] The Association of Fundraising Professionals (AFP) issued the following statement onMay 22, 2012 regarding fundraising costs for charitable organizations and in response to the recent news story on DVNF:

“Charitable organizations transform our communities, some in high profile ways that appeal to many people, others in ways that are less visible but no less important. That transformation requires an investment of time and money. There are many different forms of fundraising—each appropriate for different circumstances, each requiring different levels of investment and each securing a different rate of return.

Fundraising by direct mail can require a large initial investment. Charities employ direct mail to identify new supporters who might be interested in the work they do and the impact they achieve. It can take several years for the return on that initial investment to emerge, but the long-term results for charities are stronger because of that early focus on developing new supporters.

There are many varying factors that affect fundraising costs. Some causes are more popular than others. Some charities raise funds from foundations and corporate donors while other grassroots organizations solicit small gifts from the community. No two organizations are alike or share the same ratio of investment in fundraising.

Because of the many different factors involved,AFPdoes not recommend a fixed limit on fundraising costs. Donors should look closely at the impact of an organization and then examine what it takes to fund that impact. Donors should always ask tough questions about apparently-high and continued levels of investment in raising those funds and satisfy themselves that the impact of a charity represents an appropriate return on investment.”

See http://www.afpnet.org/Audiences/NewsReleaseDetail.cfm?itemnumber=11494.

[2] “Stand Down” events reach out to homeless and poor veterans in communities all acrossAmerica throughout the year.  Operation Stand Down events are designed to bring homeless and poor veterans together with the community, where the veterans are given counseling, health screenings, food, clothing, and even haircuts.  The term “Stand Down” refers to the long-held tradition among military commanders to provide for their troops a place of refuge in time of war.  DVNF sent $343,000 in supplies to Tennessee Stand Down events in 2010 alone.