Wyclef Jean spent part of last week in Haiti, aiding in the earthquake relief process. But after raising more than $2 million through an SMS texting campaign, Jean’s Yéle Haiti foundation has come under scrutiny for poor financial management, and some question whether it’s the best organization to donate your money to.
“It seems clear that a significant amount of the monies that this charity raises go for costs other than providing benefits to Haitians in need,” said Dean Zerbe, national managing director of Alliant Group, a tax services company, and the former tax counsel to the Senate Finance Committee, which oversees charities.
Here’s the rundown: Yéle Haiti filed its tax returns for the past three years all on the same day this summer. The organization’s 2007 spending exceeded its revenues by $411,000. Tax returns and audits show that money has gone to some of Jean’s businesses and those of foundation board members. $160,000 was spent on a Yéle benefit concert in Monte Carlo where Jean performed, with $25,000 going to Jean through Platinum Sound Recording Studios, a company Jean and a fellow board member own. Telemax, a TV station and production company in which Jean and another board member own controlling interest, received $250,000 from Yéle Haiti for a TV ad.
This all looks pretty bad on paper – especially if you read the original Smoking Gun story headlined, “Haiti earthquake aid pours into group that has enriched singer,” as though Wyclef’s own talent had nothing to do with being a Grammy-winning, multiplatinum-selling artist who helped create one of the best albums ever: The Score.
A Yéle Haiti PR rep has explained that the aforementioned funds were used for “everything from public-service announcements to educational programming,” and that those companies were used “because it was a way to buy time at a significant discount.” As the video above shows, Jean is eager to defend the organization and is not taking the accusations lightly.
“Not only [do] I denounce all that, I’m disgusted by that,” he says about criticism of his foundation.
“Coming back here, after digging kids up and finding cemeteries for them. This is what I come back to,” Wyclef says in the video. “An attack on my integrity and my foundation, Yéle Haiti. Well, let me tell y’all something – first of all, you can donate to whatever charity you want to, I’m not here to force you to donate to Yéle Haiti. But the proof, as we say in America, is in the pudding. So once you see my footage you judge if you’re gonna send it to me or not.”
Like any business, you have to spend money to make (or raise) money for your nonprofit organization. Jean claims to have invested more than $1 million in Yéle Haiti. Nonprofits, especially in the current economic climate, are struggling to stay afloat. Doing business with companies that offer discounts, or cutting in-kind deals, help organizations’ money go farther and are far from uncommon.
Yéle Haiti was founded in 2005 and has exactly one employee, which may actually be a concern. It may not have either the experience or organizational structure to handle the large volume of donations Yéle is receiving. Some argue that Yéle Haiti is simply not a disaster-relief organization. Still, the group’s president, Hough Locke, says the group is ready and able to make good use of the donations.
“I’m confident that anybody who gives money to Yéle Haiti for emergency relief can be sure it will be used effectively. We may be a small organization, and there are handicaps. But there are also efficiencies.”
Yéle Haiti seems to be a well-intentioned organization that has hit some snags and will likely benefit structurally from this experience. I don’t see accounting gaffs like this happening again, and I susupect we’ll see Yéle Haiti expand its staff. It’s not uncommon for nonprofits and foundations to hit rough spots, and I don’t think any serious wrongdoing is going to be unearthed – or I certainly hope not. The American Red Cross, for example, has experienced its own share of scandals, including embezzlement.
I’m postponing judgment for now, and I don’t regret donating to the group. To quote Wyclef, “the proof is in the pudding.” I just hope it’s some damn good pudding.