Should Charities Like Smile Train Abuse Sick Children's Photos to Raise Funds?

Should a charity like Smile Train use a sick child's photo printed outside an envelope to raise funds for its own cause? Especially when a small percentage of the donations are actually going to cure cleft palate with surgeries? Is this ethical or exploitation?

Read more HERE...

More financial analysis on Smile Train, and how its "program expenses" include overhead items like CEO salary, pension and 401(k), even rent for its Madison Avenue offices.

Smile Train: The Co-founder is smiling his way to the bank!

Smile Train--Train Bandit? Image from sxc.hu

You have heard about Smile Train, the charity that provides surgeries to cure cleft palate for only $250 each. It is endorsed by a host of celebrities, included Colin Powell, Robin Williams, and Walter Cronkite. It is the subject of a heart-warming, Oscar-winning documentary, “Smile Pinky.” Seems like a winning proposition, especially when you see the before and after photos on their website and mailings.

But the picture changes when you review Smile Train's IRS tax returns, called Form 990, which can be found online at guidestar.org. Smile Train has been public for less than 4 years, so Charity Navigator does not review its financials.

According to its 2009 IRS Form 990, even though Smile Train received close to $100 million in donations (revenues-line 8) in each of the past three years, it gave out as grants only $35 million in '09 (line 13), and $12.5-14 million in the prior years. The charity spent close to $12 million on printed materials for fundraising. Six officers at the non-profit earned over $150,000, with the co-founder earning almost $500,000 (page 31), including a discretionary bonus, which is more than the CEO of the American Red Cross. All of their independent contractors who made over $100,000 were owned by or affiliated with an officer or board member (page 8, 33). One officer flew only first class and another got a free furnished apartment in Manhattan, which the charity had not classified as W-2 income in the prior years (and did so perhaps after an IRS audit).

Perhaps Smile Train indeed started with a touching mission to cure a deformity and change children's lives. But right now, the operation is run out of Madison Avenue like a slick marketing company with highly paid executives. Only a small part of our donations actually go to deserving kids. Every time I get their fat envelope loaded with photos soliticing money (which is once every two months), I rip it without opening. Until they spend 90% of the money they have collected, my charitable donations are going elsewhere. Would you donate to Smile Train?