Wyclef Jean's Charity Under Scrutiny

(AP)  Groups that vet charities are raising doubts about the organization backed by Haitian-born rapper Wyclef Jean, questioning its accounting practices and ability to function in earthquake-hit Haiti.

Even as more than $2 million poured into The Wyclef Jean Foundation Inc. via text message after just two days, experts questioned how much of the money would help those in need.

Watch CBS4 Miami's investigation of Jean's foundation below

"It's questionable. There's no way to get around that," said Art Taylor, president and chief executive of the Better Business Bureau's Wise Giving Alliance, based in Arlington, Va.

Additional Coverage of the Haitian Earthquake

Complete Coverage: Devastation in Haiti

Taylor reviewed Internal Revenue Service tax returns for the organization also known as Yele Haiti Foundation from 2005 through 2007. He said the first red flag of poor accounting practices was that three years of returns were filed on the same day - Aug. 10 of last year.

In 2007, the foundation's spending exceeded its revenues by $411,000. It brought in just $79,000 that year.

"Here's the bottom line: for an earthquake of catastrophic proportions, do people really believe that this organization is in a position to do anything right now?" he said.

Jean, a 37-year-old Grammy-winning artist, has been imploring followers to text "Yele" to 501501 to donate $5 to his foundation in support of Haitian earthquake victims.

The foundation, founded in January 2005, intends to airlift supplies using a FedEx plane into Haiti early next week carrying medical supplies, water and Clif Bars, according to foundation president Hugh Locke.

An Associated Press review of tax returns and independent audits provided by Jean's foundation showed that it was closely intertwined with Jean's businesses.

Three of the five foundation board members - Jean, Jerry Duplessis and Seth Kanegis - are involved in his personal music and business endeavors.

According to an IRS tax return from 2006 reviewed earlier by the Web site The Smoking Gun, the foundation paid $250,000 to buy airtime from Telemax S.A., a for-profit TV station in Haiti that is majority owned by Jean and Duplessis.

Part of that money went to pay for a concert in Haiti put on by Jean himself, Locke said.

Another $160,000 that year was spent on a concert in Monte Carlo that Jean participated in, of which $75,000 paid for backup singers and $25,000 went to Jean through a company he owns with Duplessis, Platinum Sound Recording Studios Inc., Locke said.

"I'm not saying he didn't benefit from it," said Locke, who says his own salary is $8,100 a month after taxes. "We were paying that to Platinum Sound because that covered the cost of him participating in the event."

Locke argued that the foundation took in "several hundred thousand" dollars in exchange for Jean's work through the proceeds of an auction.

The foundation also rents office space from Platinum Sound, paying about $2,600 a month in New York. Locke said the foundation also plans to partner with Jean's Sak Pase Records to build a music studio to provide vocational training to Haitian children.

Sandra Miniutti, vice president of marketing for Charity Navigator, an organization that evaluates charities, said the foundation was too small to have been examined recently, although the current flood of goodwill may change that. Its revenue in 2008 was $1.9 million.

"My concern is it goes against our first tip, and that is to give only to groups with experience with disaster relief," Miniutti said. "I think it's very hard for a new organization even with the best intentions to handle something on this magnitude."

Locke said the foundation has been directly involved in delivering food and providing clean-up services in many disasters, including the hurricanes that devastated Haiti in late 2008. Jean's standing among Haitians can help the foundation gain access to gang-controlled or other troubled regions, he said.

"We have a niche which no one else occupies," Locke said.

He said the foundation is now seeking bridge financing to allow it to use money that has been pledged in unprecedented volumes by text message.

It could take at least a month for donors' money to flow in because it is not released until they pay their phone bills.

That delay presents a challenge and an opportunity, the Better Business Bureau's Taylor said.

"The challenge is they can't do anything until they get the money," Taylor said. "The opportunity is that some people may change their minds and decide that $10 or whatever they text to him might be better used somewhere else."

Local Video from CBS4 in Miami

---

- -

On the Web

Better Business Bureau Wise Giving Alliance: http://www.bbb.org/us/charity/

Charity Navigator: http://www.charitynavigator.org/

[kamsack50]

I'm sending my little bit to Bush and Clinton. I believe they'll get it to where it should go. How about you?

[medwards476]

As far as the article:

http://www.globalpost.com/dispatch/haiti/100113/haiti-earthquake-aid

That mostly addressed the issue of out-dated and misunderstood medicines and how it was wasted or had to be destroyed; I completely understand that.

Yes, I believe well intentioned companies should send money, but not everday people who may not have it to give, but could perhaps give what clothes or blankets they do not use anymore.

As far as money, a "little" to one, is a lot to another.

Just like my mom & myself. She makes $22.57/hr that is over 1/2 tank of gas for her car....I make $7.25/hr, which is not but a little over 2 gallons for my car (at $3/gallon)....see the difference?
Someone's "very little" $5 or $10 is a lot to someone else.She makes 3x what I do, so you can see how we differ on what is a "little"; Iam not begging or complaining--but EXPLAINING...

What I was trying to convey is gently used or near-new clothing & blankets could be sent. Why can they not be distributed by aid workers from the Red Cross?? How on Earth could that be WORSE for the victims??

If the locals don't understand the labels, then the aid workers down there could help them, aren't we sending people down there to help?? In some cases even if it is too loose, it is better than nothing.

And how could blankets or towels be misunderstood or misused?

That article is a convenient excuse to beg for money.

Yes, money is needed for medicine, shelter, food, clean water, clean-up & rebuilding--NOT FOR clothing, blankets & towels....that stuff could be pre-sorted here, then taken down there by the aid workers who are going anyway and they could distribute them.

No, I don't think people should send it down there directly, but perhaps donate to a charity here, then it should be taken down to Haiti. I don't think all the aid workers from the US are going down there.

I am not advocating sending toys, medicine or 1/2 open tubes or containers of STUFF--that is too gross or sick to imagine....but clothing, blankets & towels--PRACTICAL ITEMS that are more desperately needed, that way what money that can be collected can go for more important items--food, clean water & medicine.

[rondivoo]

Do NOT send "stuff" to Haiti. Even though it is well-intentioned, it is a disastrous thing to do and only makes things much worse. To find out why:

Everyone who is planning to send "stuff" ... i.e., clothing, food, personal items, etc. should go to this website and read the informative and accurate article:

http://www.globalpost.com/dispatch/haiti/100113/haiti-earthquake-aid

[nowhiningallowed]

This is what happens when people don't stop and really think about where they're sending their donations. Instead, they get easily duped into thinking that someone from Haiti must be legitimate. Anyone who donates to a charity without knowing fully what its track record is will end up filling the pockets of the unscrupulous. And, anyone who takes advantage of tragedies like this and the gullibility and decency of those who donate are criminals and need to be punished.

[sandy19731]

"Whatsoever you do,
to the least of my brothers,
that you do unto me..."

[spencer1020]

DONATE TO THE WORLD FOOD BANK. THEY RUN AT ABOUT A 7% ADMIN COST WHICH MEANS 93 CENTS OF EVERY DOLLAR GOES TO THE VICTIMS. Go to www.wfp.org/haiti to donate.
This musicians charity is totally self serving !! Go to the Red Cross website if you think that is better but wfp.org is very trusted and they supply food biscuits and hi-nutrient pastes for the kids that needs no cooking. It is immediate caloric help.
DO NOT GIVE CLOTHES YET. can't get them there yet.....too bulky and it is a tropical island......crisis is at the stage that cash is best.....which is too bad because alot of us don't have extra cash at the moment.....Skip Wyclef Jean and go to Red Cross or WFP.ORG

[blindersoff]

Thank you for the World Food Bank tip. The only thing I know is there are charities that give 90% or more to their cause and have minimum overhead.

[ramos1129]

FOLKS, THE IRS, EVERY GOVERNMENT AND PRIVATE GROUP HAS IMPLORED PEOPLE TO MAKE DONATIONS ONLY TO ESTABLISHED CHARITIES LIKE RED CROSS, SALVATION ARMY, DOCTORS WITHOUT BORDERS, ETC. FORGET PARASITES LIKE THE ONES IN THIS STORY.

[medwards476]

This is why I am quite reluctant to send money. I would prefer to send items they could use NOW--clothing, blankets & other items (personal care stuff, etc).

Even if we were to clean out our closets and wash then donate GENTLY USED or NEAR-NEW clothing, that would be more than what these people have now--it would help NOW, not later.

Yes, it wouldn't be new, but isn't it better to give the item a 2nd chance rather than throw it away in a landfill?

I have some clothes ready to donate I only wore 1-2x; I am sure one of the women down there would appreciate a CLEAN shirt....

Sadly, money can be mis-handled; clothing & blankets can not.

[I_am_me1953]

While your idea and thoughts are nobel; I was reading an article where they (the relief workers on the ground) request that things like clohing, food, medications, not be sent.

People wanting to help often cleanout thier closets and medicine cabinets and send so much "stuff" that it takes too muchg time to sort and distribute.

There was an article here recently telling how there were literally tons of medications sent after the tsuami that were old and had to be thrown away. Clothes that weren't needed, etc.

That is why they ask for donations of cash. They need to buy food,water, particular medicines, equipment to repair the infrastructure. They don't need just whatever is in your closet and you want to get rid of.

If you want to get rid of the clothing, Goodwill and the Salvation Army will take whatever you have.

As far as "giving" to the relief. Cash to reputable charities; United Way, Salvation Army, Red Cross (one of the least efficient since they pay big salaries to their execs.), even your local churches mission projects is more helpful.

Forget texting the $$, thye don't get that until you pay your bill, and you may change your mind.

[rondivoo]

Those administering aid to the victims don't want people to send 'stuff'... it is too big a headache to go through all the 'stuff' and try and find victims who can use it... i.e., people require different sized clothing. Donate money to reliable charitable organizations, such as The Salvation Army. Select the charities who give the largest percentages to the victims and those who have experience and a history of handling the magnitude of aiding people who have suffered a catastrophic disaster.

[puzzler125]

...and this is one of the five charities that the money from the telethon will go to? HA!

[brianbwb-2009]

"My concern is it goes against our first tip, and that is to give only to groups with experience with disaster relief," Miniutti said. "I think it's very hard for a new organization even with the best intentions to handle something on this magnitude."

I have a feeling Miniutti's real concern is that money that goes to Yele, will not go to Miniutti, and thus opportunities for graft, corruption, and tax write-offs will be missed.

I was on the ground in Aceh, 3 days after the tsunami that devastated the area, helping set up computer networks cor command and communication.

There were so many bodies in the still receding flood, that after a while, out drivers were instructed to stop trying to avoid running over them, as we would never have reached our destination.

In the midst of this disaster, even the international relief agencies were engaging in corruption, selling the in-kind donations to "agents" who then sold the goods to whoever had money. Soldiers and relief workers, both foreign and local were demanding sex, family valuables, and other items in exchange for food, blankets, water, and other necessities.

First aid centers had to pay bribes to the soldiers and the "agents" to receive medical supplies.

Even well-known organizations like the Red Cross, Red Crescent, and other organizations were in on the game, some because they had no choice, but most because there was money and other "items" to be had. Kickbacks went back along the chain, and I suspect that, as with all kickback chains, it eventually reached to the top.

This is why I cautioned on the very first day about this, as I have seen the evil with my own eyes.

So ask yourself, since we know corruption will definitely occur no matter who is delivering aid, whom would you rather assist, someone who knows the people and the area, and has the respect of a large part of the population, or those who come in cold, knowing no one and nothing about the reality of life there?

Also ask why Miniutti is more concerned with Wyclef, than his own efforts to help, that answer might be interesting...