GIVE AND TAKE: Most of millions donated to Aurora cop charity went to telemarketer

AURORA | For Aurorans who get a call asking them to support the charitable work of the city’s unionized cops, opening their hearts and checkbooks is often an easy decision to make.

But donors are likely unaware that the vast majority of contributions solicited by phone for the Aurora Police Association Charitable Foundation don’t benefit the charity’s Shop-with-a-Cop events, scholarship fund or other community service programs.

Instead, the money is pocketed by an Arizona telemarketing firm — Outreach Marketing, LLC — which since 2016 has kept more than $2.08 million in donations with the foundation’s express permission out of about $2.86 million raised, according to state and federal financial filings reviewed by the Sentinel.

The APACF’s current contract with Outreach Marketing lets the telemarketer keep as much as 72 cents of every dollar pledged over the phone by community members. In past years, Outreach Marketing was allowed to keep up to 75 cents of every dollar raised.

Nonprofit finance experts described the contract as allowing the telemarketer to take advantage of the foundation’s donors.

“This isn’t a case of a big, mean fundraising company exploiting a poor charity,” wrote Laurie Styron, executive director of the nationally-active nonprofit accountability group CharityWatch. “It’s a case of an irresponsible board of directors agreeing to contract terms that they know are a bad deal for donors, for the cause and for the charity they are responsible for governing.”

Dean Barta — founder of Denver-based accounting firm Barta Business Group, whose clients include small businesses and nonprofits — also described Outreach Marketing’s cut of donations as “exorbitant.”

He said he wouldn’t recommend any of his clients accept a deal where a telemarketer kept around three-quarters of donations.

“I question the leadership,” Barta said. “I question the board of directors.”

The foundation, its board, its accountant and Outreach Marketing did not respond to phone calls, emails and messages that included questions about the relationship between the foundation and the telemarketer, which has been documented inconsistently in public records.

The foundation’s office appeared to be closed the afternoon of March 18 when a Sentinel reporter knocked on the door.

Two months after foundation president Tony Cancino was first contacted by the Sentinel, when he was informed March 18 that an article about the APACF’s fundraising practices would run in the March 21 edition of the newspaper, Cancino acknowledged the questions in a text message but said he “may not get back to you for a bit.”

When Cancino called a Sentinel reporter the following evening, he was apologetic, saying he had “butt-dialed” their phone and did not want to answer questions.

The reporter continued to ask about the relationship between the telemarketer and the charity, and Cancino said the board has not looked into changing how it approaches fundraising or contracting with a company that takes a smaller percentage of donations.

“We have a good relationship with Outreach,” Cancino said. “If somebody has a different plan than we do, and that’s the way they work it, that’s the way they work it.”

He refused to answer when asked if he had concerns about Outreach Marketing keeping roughly three-quarters of donations raised, saying the topic was “APA Charitable Foundation business, and that’s just the way it’s got to stay.”

He also refused to say whether donors are proactively informed of the amount of money kept by Outreach Marketing. As to whether any board member or representative of the foundation had received financial compensation or in-kind benefits in connection with the contract, Cancino again said he had no comment.

“I won’t comment on anything else concerning the foundation and how it works,” he said. “I’m just going to hang up, and then you just go ahead and write your story. And then we’ll read it. And then we’ll decide if we’re going to answer any questions after we read it.”

Cancino eventually hung up.

Additionally, records submitted to the state and federal governments contain numerous inconsistencies that obscure the percentage of donors’ money being whisked away to cover overhead costs, including the cut of telephone donations taken by Outreach Marketing.

Every year, the IRS requires charities to submit a document known as a Form 990 that provides a high-level breakdown of income and expenses, giving potential donors a glimpse into the inner workings of an organization.

Charities that hand over enough money for professional fundraising are also expected to complete the first part of an attached form called a Schedule G, which requires them to disclose certain information about their relationships with fundraisers.

One common measure of a charity’s efficiency is the ratio of money spent on charitable programs to the total dollar amount of expenses reported — all data that the 990 is designed to capture.

Charities like the APACF are required to report a professional fundraiser’s cut of donations in specific places in the 990 and the Schedule G, which ensures this expense and other fundraising expenses can be isolated and contrasted with program expenses.

However, it is unclear whether the foundation has reported the funds handed over to Outreach Marketing in its federal filings at all since 2017, when the foundation last completed the first part of a Schedule G and entered information on the expense line in the 990 reflecting a fundraiser’s cut of donations.

Click here to explore the data that the Sentinel used to report this story

Outreach Marketing, meanwhile, has continued to report the amounts of donations raised and kept in fundraising campaign reports submitted to the Colorado Secretary of State’s Office.

Because those documents do not include other financial information about the charity, and because it is not clear whether or how the relationship between the APACF and Outreach Marketing is being documented in the foundation’s 990s, the ratio of the foundation’s spending on programs to its total expenses is difficult to calculate.

Some years, the police charity reported just a few thousand dollars in total fundraising expenses, despite Outreach Marketing saying it had kept hundreds of thousands of dollars’ worth of donations.

Kevin Doyle, senior director of accountability and finance for watchdog group Charity Navigator, reviewed the foundation’s most recent 990 and said he couldn’t tell whether the foundation had reported the telemarketer’s cut of donations anywhere in the form.

“But you’re seeing that additional disclosure on the state form that says that there is (a) professional fundraising consultant,” Doyle said. “It’s hard for me to really make much more of a conclusion than that.”

He said that, if a charity failed to report this information in its 990s or categorized those expenses as directly related to programs, potential donors could be given a misleading picture of how efficient the charity truly is.

Charity Navigator encourages donors to look for nonprofits that report 70% or more of total expenses going toward charitable programs. In its most recent 990, the foundation reported $518,058 in expenditures for 2022, claiming that $506,690, about 98% of total expenses, went directly to the foundation’s programs.

The foundation declared just $5,373 in fundraising expenses that year, with no expenses reported on the line dedicated to donations kept by a fundraiser.

The time periods covered by the 990s and the campaign reports don’t coincide exactly — while a 990 spans a given calendar year, the campaign report for that year starts between four and 24 days after Jan. 1 and ends as many days after Dec. 31.

Extrapolating from the time periods covered in the 2021 and 2022 campaign reports, the telemarketer raked in roughly $377,745 in commissions on donations during the 2022 calendar year.

If this figure was not reported at all in the foundation’s 990, roughly 57% of the foundation’s expenses would have gone toward program services rather than the 98% claimed.

If the telemarketer’s cut was claimed incorrectly as a program expense, actual program spending would have made up just 25% of total expenses.

Styron wrote that the discrepancies between the APACF’s 2021 federal and state filings suggest the foundation is passing fundraising costs off as program expenses, making it seem as though a greater percentage of donations has been going toward the charity’s mission rather than an out-of-state marketing firm.

“I highly suspect that the charity did not allocate its expenses correctly,” Styron wrote. 

Police with a purpose

The Aurora Police Association Charitable Foundation was established as the community service wing of the Aurora Police Association union in 2015, receiving 501(c)(3) nonprofit status in 2016.

Since then, it has sponsored multiple community programs in Aurora, including Shop-with-a-Cop — an ongoing event series that pairs police officers with children from low-income families, whom officers take shopping for clothing, school supplies and holiday gifts.

The foundation has also operated a scholarship program for the children of Aurora Police Association officers and raised money to share with the families of officers who fall sick or are injured or killed in the line of duty.

“The Aurora Police Association is an organization that is dedicated to serving those who protect,” the foundation’s website reads. “With that philosophy (in) mind, we believe we can make a difference in our community as well.”

In December 2016, the foundation entered into its contract with Outreach Marketing, which let the telemarketer keep up to 75% of donations raised from donors reached by phone between Jan. 1, 2017, and Jan. 1, 2019.

That percentage was scheduled to decrease by 1% every two years until the contract’s end in December 2024, by which time Outreach Marketing would be allowed to keep no more than 72% of donations raised.

Fundraising campaign reports filed with the Colorado Secretary of State’s Office indicate Outreach Marketing raised $2,855,824 on the foundation’s behalf between Jan. 5, 2017, and Jan. 24, 2023, of which it kept $2,087,511 for itself. The telemarketer must report the results of last year’s campaign by April 23.

A limited liability company affiliated with Outreach Marketing, PFR Promotions, also held onto $341,833 out of $476,971 that it raised for the foundation in 2016, according to that year’s Schedule G.

Experts and regulators say the phenomenon of telemarketers keeping most of the charitable donations they solicit isn’t the norm but also isn’t unprecedented.

In its 2022 “Pennies for Charity” report, the New York Attorney General’s Office said telemarketers retained 50% or more of donations in about 158 of the 401 fundraising-by-phone campaigns operated in the state in 2021. Marketplace also reported in October that U.S. telemarketing firms keep about 20-30% of donations on average, though they acknowledged that figure “hides huge disparities.”

However, many professional organizations say paying fundraisers a percentage of donations raised, even in cases where their commission is less than 50%, is necessarily unethical.

The National Council of Nonprofits and the Association of Fundraising Professionals have both come out against compensating fundraisers via commissions on donations, with the association writing in 2016 that “percentage-based compensation can encourage abuses, imperils the integrity of the voluntary sector, and undermines the very philanthropic values on which the voluntary sector is based.”

Aurora’s other police union, Fraternal Order of Police Lodge 49, does not operate an associated charitable foundation. Aurora Fire Rescue members govern the Firefighters of Aurora Benevolent Fund, but the treasurer of that fund, Kyle Dulude, said the fund relies on deductions from firefighters’ paychecks and annual fundraising events rather than a telemarketer.

Other fundraising opportunities created by the Aurora Police Association Charitable Foundation have included golf tournaments and a donation portal on the foundation’s website.

The income received by the foundation through Outreach Marketing’s fundraising campaigns also appears to have been classified under different revenue categories in the foundation’s Form 990 over the years. Because it’s unclear whether the foundation is reporting net proceeds to avoid reporting fundraising fees, which is not allowed under IRS rules, it’s hard to say what portion of the foundation’s revenue actually comes from its contract with the telemarketer.

Aurora isn’t the first city where a skewed fundraising deal between Outreach Marketing and a local police organization has faced scrutiny. For more than a decade, law enforcement groups in Arizona, Kansas and Texas have faced blowback when the public was made aware of their willingness to hand donations over to Outreach Marketing and PFR Promotions.

In November 2014, the San Antonio Express-News dug into the relationship between the Deputy Sheriff’s Association of Bexar County and PFR Promotions, which deputies authorized to keep two-thirds of all proceeds raised for a local Shop-with-a-Sheriff campaign.

Telemarketers told the newspaper that their pitch included falsely claiming that all of the money raised would go to benefit children in the foster care system.

The newspaper also reported that another Texas charity, the El Paso Municipal Police Officers’ Association, parted ways with PFR Promotions over its handling of the association’s Shop-with-a-Cop events.

According to the San Antonio Express-News, a post on the association’s website that is no longer available said the company “was not up to the association’s standards.” The president of that association told the newspaper that the group wanted to move away from using a third-party firm to solicit donations.

PFR Promotions was named in the Aurora Police Association Charitable Foundation’s early 990s as its professional fundraising partner while Outreach Marketing was reporting fundraising on behalf of the foundation to the state.

The two LLCs also shared a business address at the time, and information published by the Arizona Corporation Commission indicates they have some of the same key personnel.

A month after the San-Antonio Express News published its findings, in December 2014, the Police Officers of Scottsdale Association’s decision to let PFR Promotions keep two-thirds of donations raised for that city’s Shop-with-a-Cop campaign was exposed by public radio station KJZZ.

The Police Officers of Scottsdale Association subsequently terminated its contract with the telemarketer, and the president of the association stepped down amidst the controversy.

While the former president said his resignation was unrelated to the revelation of the fundraising agreement, his successor told KJZZ that the former president had instructed PFR Promotions to stop making calls for donations on the association’s behalf around the time he left.

The two telemarketing entities have continued to raise money, mostly for themselves, despite these and other controversies.

Just last year, Kansas City broadcaster KMBC began investigating the Overland Park Police Officers Foundation’s relationship with Outreach Marketing, which had been permitted to keep about three-quarters of donations raised, while a criminal probe of that charity’s former board for various allegations of mismanagement was underway.

KMBC interviewed a former Outreach Marketing employee who shared a script that he said was given to telemarketers raising money on behalf of a police charity in Las Cruces, New Mexico.

In the script, Outreach Marketing telemarketers were told to say that “all the money raised” for a Shop-with-a-Cop event in that city would be spent on needy children. A document filed with the New Mexico Attorney General’s Office indicates the telemarketer kept 70% of proceeds.

Under New Mexico and Colorado law, when an employee of a professional fundraising firm calls a prospective donor, they don’t have to proactively mention the percentages of a donor’s contribution that would go to charity and to the firm, but they also can’t misrepresent that information and must disclose it if asked.

The Aurora Police Association Charitable Foundation and Outreach Marketing did not respond to emails inquiring whether and how the percentage of donations kept by the telemarketer is communicated to donors. As of March 19, the foundation’s website did not include any information about the percentage of donations kept by Outreach Marketing.

KMBC sources questioned whether an inappropriate relationship existed between the charity’s board and Outreach Marketing that could have swayed the board to do business with the telemarketer under the terms of their contract.

An investigative report released after Kansas prosecutors decided not to charge the local police charity’s former board touched on the charity board’s engagement with Outreach Marketing and mentioned how those board members traveled to a golf tournament paid for by the telemarketer, which the local district attorney said was nonetheless “related to the operation of the Foundation and consistent with maintaining and strengthening business ties with partners.”

Styron said she was “suspicious” that APACF did not report paying a single officer or key employee.

“While many members of the donating public think that a charity that pays no salaries is better than one that doesn’t, in my years of watchdog work, I have found the opposite to be true,” she wrote in an email. “In some cases, people associated with a charity might be getting paid another way, such as by having an affiliation with the for-profit fundraiser.”

Because the charity’s board consists of Aurora police officers, who are required by policy to report other ongoing employment to the city in writing, the Sentinel submitted records requests for any such documents submitted by current and former board members.

While the police department turned over documents describing various security jobs held by those officers that could have required them to use their police authority, the City of Aurora declined to release the records in its possession pertaining to other kinds of outside employment.

A city attorney said the documents were “arguably not public records,” but that, even if they were, they were protected under a section of the Colorado Open Records Act prohibiting the release of personnel files.

The foundation’s Form 990s indicate that the foundation has also not enforced its conflict-of-interest policy for board members or required its board to submit annual conflict-of-interest disclosures since 2019.

Styron said lopsided agreements like the foundation’s contract with Outreach Marketing aren’t unheard of, especially among smaller charities. However, she argued this fact did not absolve the board of responsibility for handing the majority of money donated by people contacted by the telemarketer over to that firm.

“If a donor was told by the fundraiser at the point of solicitation, ‘Hey, $74 of your $100 donation is going directly into my company’s pockets before the charity gets anything,’ the vast, vast majority of donors would refuse to give,” she wrote.

“Being small is not a blank check to spend an unlimited amount of donations on overhead costs instead of the programs donors are intending to support.”

When asked what a charity of the foundation’s size could do to raise money while maximizing the impact of donations, Doyle said attracting more donors to the foundation’s website and exploring email marketing could potentially reduce overhead costs associated with fundraising.

Barta said similar nonprofits have also found success by creating matching-funds challenges and working with reputable event planning firms to host industry conferences. He said charities should strive when fundraising to “foster a deeper connection with (the) nonprofit’s mission and donors.”

“Deeper connection can result in deeper donations,” he said.

Not all in the details

At the moment, inconsistencies in the Aurora Police Association Charitable Foundation’s state and federal filings make it hard to say how much of an impact donors are actually having by giving to the charity.

In its federal filings, the foundation provides limited information about the amount of money spent on specific programs. Among the list of questions that the foundation, Cancino and third-party accountant Tim Byers did not respond to were inquiries about which specific programs the foundation operated each year between 2016 and 2023 and how much of the foundation’s income, including donations, actually went toward programs.

Since the charity last reported the amount of money raised and kept by its fundraiser in its 2017 Form 990 and Schedule G, the only source of information about the amount of money raised and kept by Outreach Marketing for the past several years is the telemarketer’s own fundraising campaign reports filed with the Colorado Secretary of State’s Office.

Despite the difference of four to 24 days in the time periods covered by the campaign reports and 990s, recent filings indicate the foundation has not been rolling the fundraiser’s cut of donations reported in one year’s campaign report into a subsequent year’s 990 fundraising expenses.

For example, the sum of the fundraising expenses reported in the 990s for 2021 and 2022 was $9,823, which is still a mere fraction of the fundraiser’s $382,050 share of donations collected during the 365-day period that began Jan. 25, 2021.

It is not uncommon for the amount of donations that Outreach Marketing has reported keeping in its campaign reports to dwarf the total amount of fundraising expenses recorded in the foundation’s 990s, which would include other expenses besides the commission taken by a fundraiser.

In 2018, the campaign report mostly coinciding with that year states Outreach Marketing kept $390,604 in donations, while the foundation reported just $27,064 in fundraising expenses.

Like other charities, the foundation is also expected to submit an annual financial statement to the Colorado Secretary of State’s Office, which instructs nonprofits to enter information from their 990s into many of the fields.

But some of the foundation’s statements are inconsistent with its 990s, and some years, financial information appears to have simply been copied and pasted from the previous year’s statement.

For example, in 2017 and 2021, the revenue and expense information included in the foundation’s statement doesn’t match up with the corresponding year’s 990 but is identical or within a few dollars of the information reported in the previous year’s statement and 990.

The statement purporting to cover the entirety of 2017 also appears to have been submitted to the state in the middle of 2017.

And, just as the charity’s recent 990s lack information about the cut of donations taken by Outreach Marketing, a space for “outside professional fundraiser fees” in the state financial reports has reflected a value of $0 from 2019 onward — this field in the 2017 and 2018 statements is identical to the field in the 2016 statement, suggesting it, too, may have been duplicated.

In its instructions to charities for completing these reports, the Colorado Secretary of State’s Office says “most or all” of the total amount of outside professional fundraiser fees would reflect the line in the Form 990 where the foundation neglected to report the percentage of donations kept by Outreach Marketing.

When asked specifically about the discrepancies in the 2017 statement, Kailee Stiles, a spokeswoman for the office, wrote in a January email that the office was “researching why the 2017 report by the Aurora Police Association Charitable Foundation was filed in our system the way it was.”

“Because this matter may come before the department, we cannot comment on specifics,” she said. “If any person believes a (charity’s) rule has been violated, they may file a formal complaint with the Secretary of State’s Office.”

Office spokesman Jack Todd said the office does not audit charities nor nonprofit organizations but may require a charity to file an audited financial statement as part of an investigation. The APACF’s financial statements were last audited by an independent accountant in 2019, according to information included in the organization’s Form 990s.

When asked whether the IRS has audited or is auditing the charity, IRS spokesman Anthony Burke said the agency can’t disclose whether or not it is investigating any organization. Stiles also said the Colorado Secretary of State’s Office couldn’t comment on investigations “that are, or may come, in front of our office.”

Todd said that an organization incorrectly reporting the cut of donations kept by a fundraiser and inflating its efficiency as a result would be “a case of filing inaccurate information under oath” and that the information should be included in both the 990 and state filings.

As for Tim Byers and Byers Accountancy Corporation, which have filed the foundation’s three most recent 990s on the nonprofit’s behalf, beginning with the 2019 form, Styron said accountants use the information given to them by charities to fill out a 990.

She also said that the act of filing doesn’t necessarily guarantee that the info has been audited according to national standards or that the accountant complied with nationally-accepted accounting guidelines or IRS reporting rules.

The foundation has stated in every Form 990 filed since its establishment that its governing board reviews and signs off on the form before it is submitted to the IRS.

Regardless of why the foundation failed to report the details of its relationship with Outreach Marketing in its Schedule G forms and 990s, Styron said the effect is that a full picture of the foundation’s finances is not available to the public.

“If it is the case that the charity is paying exorbitant amounts of money to a for-profit fundraising company, then one possible reason to omit Schedule G is to make that fact less obvious,” she wrote.

“It could be anything from an oversight, to a lack of competent staff, to an outside accountant who doesn’t understand the reporting rules, to a deliberate effort to conceal unflattering information.”

The foundation’s eight-year contract with Outreach Marketing is scheduled to expire Dec. 31.