Kars4Kids charity misleads donors, report says

One of the country's largest vehicle donation charities, Kars4Kids, is the subject of a troubling report from Minnesota's attorney general that accuses the non-profit of misleading donors. 

The Minnesota attorney general is joining a chorus of states with complaints against the charity about how much of the money raised by car donations is going to kids and where that money is being spent, reports CBS News correspondent Tony Dokoupil. 

The well-known Kars4Kids' jingle makes a simple request, "donate your car today…" and has weathered the wrath of comics. 

"Shut up, shut up, what is this charity?" said "Last Week Tonight" host John Oliver. 

However, new revelations about the charity are no laughing matter. According to the Minnesota attorney general, between 2012 and 2014, Kars4Kids raised $3 million in the state through car donations. But less than $12,000, less than one percent of what was raised, went to Minnesota kids. 

"I think it's important when people donate to a charity, that they have information in terms of where their money is going," said Minnesota Attorney General Lori Swanson. 

Where does the money go? Ninety percent of the monies donated go to a sister organization, Oorah, a New Jersey-based charity that operates Jewish youth summer camps in New York. 

"My main concern about Kars4Kids is that people don't know what's really happening with this charity," said Daniel Borochoff, the president of CharityWatch.

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Minnesota Attorney General Lori Swanson at the State Capitol building in St. Paul, Minn., on Friday, Feb. 10, 2017.

Anthony Souffle / AP

"That's fine if people want to raise money for orthodox Jews, but they need to be clear and state that's what the purpose is," Borochoff said. 

Kars4Kids issued a statement addressing the allegations.

"Since we are headquartered in the northeast, many of our programs and recipients naturally come from this area," the statement reads.  "We believe Minnesota residents…appreciate that their generous donations to Kars4Kids help children both in and out of state."

The Minnesota attorney general had other concerns as well. Among them, that the charity lost almost $10 million in real estate transactions.

"Oorah invested the money and then lost the money. And we think that, too, is something important for people to know," Swanson said. 

The 2015 budget for their ads? Seventeen million dollars, according to CharityWatch, which is even more than Kars4Kids gave to Oorah.

"So when one makes a donation to Kars4Kids, they're basically paying for those ads," Borochoff said.

In 2009, Kars4Kids paid settlements in Oregon and Pennsylvania after those states charged the charity with misleading donors.

As for Minnesota's report, the charity said they have had conversations with the attorney general's office and are reviewing their suggestions.