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Using Children's Welfare Charity to Turn a Profit

The National Center for Missing and Exploited Children (NCMEC) has, ironically, found that exploiting children turns a profit. It has been doing so since its creation in 1984 under Ronald Reagan, who created the quasi-governmental agency. It enjoys liberal funding from the Department of Justice and a level of privacy other non-profits don’t have.

The horrifying subject of missing children often obscures questions of budget allocation, employee compensation, and the accuracy of statements the organization releases.

NCMEC, for example, exaggerates its figures, saying that over 2,000 children go missing every day, almost 800,000 every year. More than 95% of those cases, however, are run-aways. Another 4 to 5% are abducted by family members, usually a parent who was denied joint custody. In the end, the number dwindles down to 115 "stranger" abductions.

The foundation doesn’t ignore these cases. They’ve helped many times to reunite missing children with their families by featuring their portraits on milk cartons and the IRS website. There is a level of care at the foundation that must be acknowledged.

But it capitalizes on the process. It paid its longtime CEO, Ernie Allen, some $1.3 million last year while eleven other top executives were paid over $150,000. NCMEC also spends more than $700,000 on travel expenses each year.

Allen’s pay has surpassed that of the top executives at the American Red Cross and the Smithsonian Institution, which also get funding from the government. Both have bigger budgets than that of NCMEC.

This moneymaking organizational structure has influenced the creation of similar groups, many of which focus on children’s welfare, like Operation Lookout, which was started two years after the creation of NCMEC and does the same kind of work. Over the past decade or so, solicitors at Operation Outlook have held on to 82% of the $19.6 million raised, according to data compiled by the Tampa Bay Times in 2011.

In the past 15 years, there has been a surge in these sorts of organizations that exploit the public’s emotions for profit. They couple this scheme with a demand for funding from the government.

In the case of NCMEC, the government has not only appropriated funding to the group but has approved it for exemption from Freedom of Information Act requests.

NCMEC also enjoys free advertising space on the blank pages of the annual IRS manual, both online and in print. It used to be that Citizens’ Utility Boards (CUB) had rights protected by the government to the empty spaces on billings mailed to ratepayers – CUBs kept a check on utility companies and kept them from scamming their customers – but the government struck down that provision and instead given priority to organizations that use the language of the public’s interest to turn a profit.

Watchdog groups say that no more than 35% of donations should go to fundraising costs. Operation Outlook has faced fines and penalties for this in Florida and Iowa, where callers soliciting donations lied about how much of the money goes to the charity. 

There are tens more groups that use the image of children to rake in donations. Others, identified in the Tampa Bay Timescompilation of America’s Worst Charities, include Kids Wish Network, Children’s Wish Foundation International, Children’s Cancer Fund of America, Children’s Cancer Recovery Foundation, Youth Development Fund, all of which are top twelve out of a total of fifty organizations on the list.

There needs to be more oversight of the organizations like these, which – along with 501(c)(4) social welfare groups – are exploiting their tax-exempt statuses and putting a strain on the economy.