Hannity's charity vows to rebut fraud charges -- someday

The Freedom Alliance promises to disprove "smears" filed at the FTC and IRS in the "days and weeks" to come

Published March 31, 2010 7:32PM (EDT)

Will fans of Sean Hannity and Oliver North feel reassured by the pair's denial of any wrongdoing in the operation of the Freedom Alliance, their multimillion-dollar charity? The Fox News personalities no doubt hope so, as they prepare for the annual series of fundraising "Freedom Concerts" tour that will kick off in New Jersey in August, headlined by Lynyrd Skynyrd and the Charlie Daniels Band.

Responding to the complaints against the Freedom Alliance filed last Monday with the Federal Trade Commission and the Internal Revenue Service by Citizens for Responsibility and Ethics in Washington -- alleging both consumer fraud and abuse of tax-exempt status -- the group's chairman, Tom Kilgannon, replied that there is "absolutely no merit to the scurrilous charges." His brief statement went on to promise that "the smear-mongers who have launched this politically motivated witch hunt against Freedom Alliance will be proven wrong as we aggressively defend ourselves in the days and weeks ahead."

But Kilgannon offered no further detail than a week earlier, when he and North posted an answer to similar accusations by conservative blogger Debbie Schlussel, who quoted inside sources saying that Hannity squandered funds supposedly raised to benefit veterans and their children. She also performed her own examination of the charity's tax returns, but both Hannity and Kilgannon rebuffed her attempts to question them about her troubling discoveries.

The CREW complaints, posted on the watchdog group's Web site, provide considerable detail about the facts uncovered in its investigation of Freedom Alliance. Among the documents cached on the site is a contract showing that proceeds from the concert tour are actually controlled by Premiere Marketing, a Tennessee speakers agency that represents Hannity and North, and its president, Duane Ward.

At the heart of the CREW complaints -- and the questions raised about the Freedom Alliance by Schlussel -- is how much of the total that Hannity and North promised to devote to scholarships for the children of wounded and deceased veterans was spent on that worthy purpose. The data compiled by CREW's researchers from Freedom Alliance's own IRS 990 forms show that in every year since 2003, when the concert tours began, the organization has spent more on postage and printing combined (and on salaries) than on "grants" -- and far more on "expenses."

In 2007, for example, the charity collected nearly $12.5 million in revenue -- of which $1 million was spent on "fundraising," $200,000 on consulting, $1.4 million on postage, $1.1 million on printing, and $500,000 on "conferences." Another $1.4 million went to salaries. But that year, the Freedom Alliance reported making grants of only $895,347, while retaining "net assets" of over $19 million.

Although Kilgannon claims that his organization "not only meets, but exceeds standards of program efficiency set by most charity regulators," the gold standard is the American Institute of Philanthropy, whose grading of Freedom Alliance in recent years has been dismally low. AIP doesn't post the grades of the worst charities on its Web site, but in December 2009, according to CREW, the organization got a "D," the same as in December 2008 -- which represented only a slight improvement over the "F" it received in both December 2006 and December 2007.

Yet evaluation of Freedom Alliance has been difficult for AIP and other charity watchdogs. Answering inquiries from CREW during its investigation, an AIP official noted: "Freedom Alliance has repeatedly failed to respond to our requests for financial information, which is why they are listed with 'closed-book' status in the [AIP] Guide. The closed-book status does not affect the letter grade we assign to a charity. However, many donors like to consider a charity's willingness to be transparent when considering whether or not a given charity is worthy of their donation, so we list a charity's open or closed-book status as additional information."

When the FTC and the IRS take action on the complaints filed last Monday, the Freedom Alliance ledgers may at last be opened -- and its real relationships with Hannity, North, Premiere Marketing and a host of other political figures will be revealed. 

By Joe Conason

Joe Conason is the editor in chief of NationalMemo.com. To find out more about Joe Conason, visit the Creators Syndicate website at www.creators.com.

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