Charity promised to help feed the hungry. State suit said it misled donors

California Attorney General Xavier Becerra this week sued the charity Aid for Starving Children for deceptive solicitations that earned its administrators $6.2 million between 2011 and 2018.

The lawsuit, filed Wednesday, contends the Sonoma County-based charity used only a small fraction of its overall revenues for its stated goal of combating starvation internationally.

According to the lawsuit, about 93 percent of the money it claimed to raise from 2011 to 2018 came in the form in “gifts-in-kind,” mostly drugs donated by pharmaceutical companies that were incorrectly valued at U.S. list prices rather than the prices in the countries where the drugs were actually used.

And the drugs were primarily for dementia and high cholesterol - not diseases commonly associated with either starvation or children, the suit said.

Of the $7.4 million the charity received in cash donations, most was used for administrative expenses, the state said.

But by using the inflated values of the gift-in-kind contributions, Aid for Starving Children was able to report a deceptively low administrative and fund raising rate (AFR), which represents the percentage of dollars spent on administration. It thereby “misled donors,” the lawsuit said.

According to the suit, less than $1.3 million, or just over 1 cent for every dollar of the charity’s reported $105.2 million revenue, went directly to the causes that the charity purported to champion.

The Attorney General’s lawsuit charges the charity with misrepresentations in charitable solicitations, misrepresentations in reports filed with the Attorney General, and breach of fiduciary duty.

A call seeking comment from the charity’s officials at its headquarters in the town of Windsor was not answered; nor were calls to several of the defendants named in the lawsuit.

The lawsuit comes in the wake of Assembly Bill 1181, introduced by Assembly Member Monique Limón, D-Santa Barbara, aimed at “promoting transparency in the reporting and fair valuation of non-cash donations,” the Attorney General’s Press Office’s press release says.

In 2018, the Attorney General sued two other charities, the National Cancer Coalition and Giving Children Hope, for deceptive reporting of gift-in-kind donations, a California Department of Justice spokesperson said in an email.

This story was originally published May 30, 2019 at 5:11 PM with the headline "Charity promised to help feed the hungry. State suit said it misled donors."