Charity Case

With Bill Cosby at center stage, Houston's glitterati went on display under glass in the ballroom of downtown's Hyatt Regency Hotel on October 28.

It was the annual gala of the Houston Children's Charity. And another crown jewel in the career of high-flying fund-raiser Laura Rowe. A glossy printed program boasted a full-page biography of HCC's dark-haired director extolling her virtues and listing the names of charities across the Bayou City that have benefited from her largesse. It told of the $7.5 million she has raised over the past 18 years.

But the glowing write-up conveniently omitted anything about her stormy departure four years ago from her Variety Club job that paid $63,000 plus bonuses. And there was no mention of nasty litigation, or that many of those on the club's board bailed out with her to form the new charity.

There also was nothing on the story of how the left-behind Variety Club chapter rose from the ashes to again assist worthy groups.

In 1996 Variety Clubs International launched an investigation into Rowe's practices. Some officials of the local chapter discovered fictional entries in her expense reports, lavish lunches paid for on the club's tab and various operating irregularities. VCI also was concerned about the hefty administrative expenses and the amount of funds that were actually destined for charitable causes (see "Variety Club Follies," by Tim Fleck, July 25, 1996).

It took an out-of-court settlement in a lawsuit to finally end the fighting. The Rowe-backed faction claimed half the office furnishings and funds in the Variety Club chapter's account, and went its separate way to form HCC.

Houston's Variety Club "tent," as chapters are called, had been established in 1949, but suddenly struggled for survival. Jay Branson came on board for the daunting task of putting the pieces back together again after the departure of Rowe and the old board. "It left a real bad taste in everybody's mouth," he said.

Variety Club continues its rebound into respectability after the Rowe years. Last year donations and revenues totaled $130,000, and the club is posting an ambitious budget of $240,000 this year.

"Of that, 75 percent will be going out to children's organizations," Branson said. "The measure of a charity is not what they can gross at a gala but what they give away." Over the three-year period since the new Variety Club has been active, they have contributed six vans to charitable groups, and plans are in the works to expand support to the neonatal units of Ben Taub and LBJ hospitals.

The club has shunned black-tie galas in favor of low-cost but high-return fund-raising campaigns. They've had bowling tournaments and sold Variety's "Gold Heart Pins" at AMC and Edwards movie theaters, as well as receiving direct corporate support. Branson anticipates that the club will soon expand its fund-raising to include a golf or tennis tournament. As for amassing high-paid personnel like the previous club, "We won't hire an executive director until we can definitely afford one," Branson explains.

On the other hand, Houston Children's Charity is hardly a group to be found at the bowling alley. HCC paid huge fees to cozy up to the likes of Liza Minnelli, Burt Bacharach and Dionne Warwick, Lyle Lovett and Ray Charles.

In typical Rowe style, gala auctions have enticed bidding for such jet-setter delights as a week at a French chäteau or in an Italian palazzo on the isle of Ischia.

HCC events are even the stuff of Houston Chronicle society and gossip columns. A search of that newspaper's archives shows that those columns reported that HCC raised almost $1.5 million from its ritzy events (the Chron says that's what was netted; HCC insists that was only the gross). The most recently published gala program for HCC proudly announces that the organization dispensed about $667,000 to charities. That would appear to indicate that of the revenue brought in by HCC, not even half of it went to charitable causes.

When questioned about administrative costs and related expenses that seemed to soar beyond $800,000, HCC officials protested the methodology. Board member Mike Rogers called it "a hatchet job." He said the gala program wasn't intended to give a full accounting of disbursements -- it was designed only to show the types of worthwhile charities benefiting from HCC donations.

However, HCC refused requests from the Houston Press for basic information on revenues and expenses. It submitted sketchy materials to the Better Business Bureau when it tried to get on the BBB's approved charity list in 1998. The BBB requested documentation that HCC said would be submitted later. Those records were never supplied.

Jim Waldrop, BBB philanthropy review analyst, said, "They have submitted information, but they have never submitted all of the information we require."

Executive Vice President Dan Parsons said the group appears to not be within the guidelines for qualifying as a BBB-sanctioned charity. "They must give 75 percent or more of the money raised for the charitable mission of the organization."

In fact, HCC asked in 1998 for a waiver from the BBB rules, such as one granted for the Houston Livestock Show & Rodeo. A handwritten HCC note from its treasurer at the time, Robert Ogle, said, "The Children's Charity cannot meet the 25 percent [administrative and promotion] expense guideline because it has large talent expenses, like the rodeo." The BBB declined.

Rogers of HCC argued that the ratio of donations to charity is high -- but that claim is based on what's left over after the organization finishes paying for the gala stars, meals, facility and related expenses. He said 70 percent of what's left makes it to charitable causes. "We'd like to get it to 90 percent if we could," he said. "We are a relatively new charity, and we'd like to grow it."

But Lynda Gornitsky, a national authority on charities, said the big-expense organizations miss the mark, that the true test of quality is the ratio of revenue to charity. Gornitsky, of Boston College, teaches the only academic course on corporate philanthropy.

Houston Children's Charity doesn't come close to measuring up to benchmarks set by other highly successful nonprofits. "If someone came to me and asked if I would give to them, I would say no," Gornitsky says. "Fund-raising costs should be under 20 percent."

The Variety Club is "in the ballpark," but HCC's galas, like the latest featuring Bill Cosby, is excessive, Gornitsky says. "They probably didn't need to spend that much to raise that money."


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