Environment, Inc -Part Two

Green machine: Mission adrift in a frenzy of fund raising

(Second of five parts)

By Tom Knudson
Bee Staff Writer
(Published April 23, 2001)

Dear Friend,
I need your help to stop an impending slaughter.
Otherwise, Yellowstone National Park -- an American wildlife treasure -- could soon become a bloody killing field. And the victims will be hundreds of wolves and defenseless wolf pups!

So begins a fund-raising letter from one of America's fastest-growing environmental groups -- Defenders of Wildlife.

Using the popular North American gray wolf as the hub of an ambitious campaign, Defenders has assembled a financial track record that would impress Wall Street.

In 1999, donations jumped 28 percent to a record $17.5 million. The group's net assets, a measure of financial stability, grew to $14.5 million, another record. And according to its 1999 annual report, Defenders spent donors' money wisely, keeping fund-raising and management costs to a lean 19 percent of expenses.

But there is another side to Defenders' dramatic growth.

Pick up copies of its federal tax returns and you'll find that its five highest-paid business partners are not firms that specialize in wildlife conservation. They are national direct mail and telemarketing companies -- the same ones that raise money through the mail and over the telephone for nonprofit groups, from Mothers Against Drunk Driving to the U.S. Olympic Committee.

You'll also find that in calculating its fund-raising expenses, Defenders borrows a trick from the business world. It dances with digits, finds opportunity in obfuscation. Using an accounting loophole, it classifies millions of dollars spent on direct mail and telemarketing not as fund raising but as public education and environmental activism.

Take away that loophole and Defenders' 19 percent fund-raising and management tab leaps above 50 percent, meaning more than half of every dollar donated to save wolf pups helped nourish the organization instead. That was high enough to earn Defenders a "D" rating from the American Institute of Philanthropy, an independent, nonprofit watchdog that scrutinizes nearly 400 charitable groups.

Pick up copies of IRS returns for major environmental organizations and you'll see that what is happening at Defenders of Wildlife is not unusual. Eighteen of America's 20 most prosperous environmental organizations, and many smaller ones as well, raise money the same way: by soliciting donations from millions of Americans.

But in turning to mass-market fund-raising techniques for financial sustenance, environmental groups have crossed a kind of conservation divide.

No allies of industry, they have become industries themselves, dependent on a style of salesmanship that fills mailboxes across America with a never-ending stream of environmentally unfriendly junk mail, reduces the complex world of nature to simplistic slogans, emotional appeals and counterfeit crises, and employs arcane accounting rules to camouflage fund raising as conservation.

Just as industries run afoul of regulations, so are environmental groups stumbling over standards. Their problem is not government standards, because fund raising by nonprofits is largely protected by the free speech clause of the First Amendment. Their challenge is meeting the generally accepted voluntary standards of independent charity watchdogs.

And there, many fall short.

Six national environmental groups spend so much on fund raising and overhead they don't have enough left to meet the minimum benchmark for environmental spending -- 60 percent of annual expenses -- recommended by charity watchdog organizations. Eleven of the nation's 20 largest include fund-raising bills in their tally of money spent protecting the environment, but don't make that clear to members.

The flow of environmental fund-raising mail is remarkable. Last year, more than 160 million pitches swirled through the U.S. Postal Service, according to figures provided by major organizations. That's enough envelopes, stationery, decals, bumper stickers, calendars and personal address labels to circle the Earth more than two times.

Often, just one or two people in 100 respond.

The proliferation of environmental appeals is beginning to boomerang with the public, as well. "The market is over-saturated. There is mail fatigue," said Ellen McPeake, director of finance and development at Greenpeace, known worldwide for its defense of marine mammals. "Some people are so angry they send back the business reply envelope with the direct mail piece in it."

Even a single fund-raising drive generates massive waste. In 1999, The Wilderness Society mailed 6.2 million membership solicitations -- an average of 16,986 pieces of mail a day. At just under 0.9 ounce each, the weight for the year came to about 348,000 pounds.

Most of the fund-raising letters and envelopes are made from recycled paper. But once delivered, millions are simply thrown away, environmental groups acknowledge. Even when the solicitations make it to a recycling bin, there's a glitch: Personal address labels, bumper stickers and window decals that often accompany them cannot be recycled into paper -- and are carted off to landfills instead.

"For an environmental organization, it's so wrong," said McPeake, who is developing alternatives to junk mail at Greenpeace. "It's not exactly environmentally correct."

The stuff is hard to ignore.

Environmental solicitations -- swept along in colorful envelopes emblazoned with bears, whales and other charismatic creatures -- jump out at you like salmon leaping from a stream.

Open that mail and more unsolicited surprises grab your attention. The Center for Marine Conservation lures new members with a dolphin coloring book and a flier for a "free" dolphin umbrella. The National Wildlife Federation takes a more seasonal approach: a "Free Spring Card Collection & Wildflower Seed Mix!" delivered in February, and 10 square feet of wrapping paper with "matching gift tags" delivered just before Christmas.

The Sierra Club reaches out at holiday time, too, with a bundle of Christmas cards that you can't actually mail to friends and family, because inside they are marred by sales graffiti: "To order, simply call toll-free ... " Defenders of Wildlife tugs at your heart with "wolf adoption papers." American Rivers dangles something shiny in front of your checkbook: a "free deluxe 35 mm camera" for a modest $12 tax-deductible donation.

The letters that come with the mailers are seldom dull. Steeped in outrage, they tell of a planet in perpetual environmental shock, a world victimized by profit-hungry corporations. And they do so not with precise scientific prose but with boastful and often inaccurate sentences that scream and shout:

From New York-based Rainforest Alliance: "By this time tomorrow, nearly 100 species of wildlife will tumble into extinction."

Fact: No one knows how rapidly species are going extinct. The Alliance's figure is an extreme estimate that counts tropical beetles and other insects -- including ones not yet known to science -- in its definition of wildlife.

From The Wilderness Society: "We will fight to stop reckless clear-cutting on national forests in California and the Pacific Northwest that threatens to destroy the last of America's unprotected ancient forests in as little as 20 years."

Fact: National forest logging has dropped dramatically in recent years. In California, clear-cutting on national forests dipped to 1,395 acres in 1998, down 89 percent from 1990.

From Defenders of Wildlife: "Won't you please adopt a furry little pup like 'Hope'? Hope is a cuddly brown wolf ... Hope was triumphantly born in Yellowstone."

Facts: "There was never any pup named Hope," says John Varley, chief of research at Yellowstone National Park. "We don't name wolves. We number them." Since wolves were reintroduced into Yellowstone in 1995, their numbers have increased from 14 to about 160; the program has been so successful that Yellowstone officials now favor removing the animals from the federal endangered species list.

Longtime conservationist Peter Brussard has seen enough.

"I've stopped contributing to virtually all major environmental groups," said Brussard, former Society for Conservation Biology president and a University of Nevada, Reno, professor.

"My frustration is the mailbox," he said. "Virtually every day you come home, there are six more things from environmental groups saying that if you don't send them fifty bucks, the gray whales will disappear or the wolf reintroductions in Yellowstone will fail ...You just get super-saturated.

"To me, as a professional biologist, it's not conspicuous what most of these organizations are doing for conservation. I know that some do good, but most leave you with the impression that the only thing they are interested in is raising money for the sake of raising money."

Step off the elevator at Defenders of Wildlife's office in Washington, D.C., and you enter a world of wolves: large photographs of wolves on the walls, a wolf logo on glass conference room doors, and inside the office of Charles Orasin, senior vice president for operations, a wolf logo cup and a toy wolf pup.

Ask Orasin about the secret of Defenders' success, and he points to a message prominently displayed behind his desk: "It's the Wolf, Stupid."

Since Defenders began using the North American timber wolf as the focal point of its fund-raising efforts in the mid-1990s, the organization has not stopped growing. Every year has produced record revenue, more members -- and more emotional, heart-wrenching letters.

Dear Friend of Wildlife:
It probably took them twelve hours to die.
No one found the wolves in the remote, rugged lands of Idaho -- until it was too late.
For hours, they writhed in agony. They suffered convulsions, seizures and hallucinations. And then -- they succumbed to cardiac and respiratory failure.

"People feel very strongly about these animals," said Orasin, architect of Defenders' growth. "In fact, our supporters view them as they would their children. A huge percentage own pets, and they transfer that emotional concern about their own animals to wild animals.

"We're very pleased," he said. "We think we have one of the most successful programs going right now in the country."

Defenders, though, is only the most recent environmental group to find fund-raising fortune in the mail. Greenpeace did it two decades ago with a harp seal campaign now regarded as an environmental fund-raising classic.

The solicitation featured a photo of a baby seal with a white furry face and dark eyes accompanied by a slogan: "Kiss This Baby Good-bye." Inside, the fund-raising letter included a photo of Norwegian sealers clubbing baby seals to death.

People opened their hearts -- and their checkbooks.

"You have very little time to grab people's attention," said Jeffrey Gillenkirk, a veteran free-lance direct mail copywriter in San Francisco who has written for several national environmental groups, including Greenpeace. "It's like television: You front-load things into your first three paragraphs, the things that you're going to hook people with. You can call it dramatic. You can call it hyperbolic. But it works."

The Sierra Club put another advertising gimmick to work in the early 1980s. It found a high-profile enemy: U.S. Secretary of the Interior James Watt, whose pro-development agenda for public lands enraged many.

"When you direct-mailed into that environment, it was like highway robbery," said Bruce Hamilton, the club's conservation director. "You couldn't process the memberships fast enough. We basically added 100,000 members."

But environmental fund raising has its downsides.

It tends to be addictive. The reason is simple: Many people who join environmental groups through the mail lose interest and don't renew -- and must be replaced, year after year.

"Constant membership recruitment is essential just to stay even, never mind get bigger," wrote Christopher Bosso, a political scientist at Northeastern University in Boston, in his paper: "The Color of Money: Environmental Groups and the Pathologies of Fund Raising."

"Dropout rates are high because most members are but passive check writers, with the low cost of participating translating into an equally low sense of commitment," Bosso states. "Holding on to such members almost requires that groups maintain a constant sense of crisis. It does not take a cynic to suggest ... that direct mailers shop for the next eco-crisis to keep the money coming in."

That is precisely how Gillenkirk, the copywriter, said the system works. As environmental direct mail took hold in the 1980s, "We discovered you could create programs by creating them in the mail," he said.

"Somebody would put up $25,000 or $30,000, and you would see whether sea otters would sell. You would see whether rain forests would sell. You would try marshlands, wetlands, all kinds of stuff. And if you got a response that would allow you to continue -- a 1 or 2 percent response -- you could create a new program."

Today, the trial-and-error process continues.

The Sierra Club, which scrambles to replace about 150,000 nonrenewing members a year out of 600,000, produces new fund-raising packages more frequently than General Motors produces new car models.

"We are constantly turning around and trying new themes," said Hamilton. "We say, 'OK, well, people like cuddly little animals, they like sequoias.' We try different premiums, where people can get the backpack versus the tote bag versus the calendar. We tried to raise money around the California desert -- and found direct mail deserts don't work."

And though many are critical of such a crisis-of-the-month approach, Hamilton defended it -- sort of.

"I'm somewhat offended by it myself, both intellectually and from an environmental standpoint," he said. "And yet ... it is what works. It is what builds the Sierra Club. Unfortunately the fate of the Earth depends on whether people open that envelope and send in that check."

The vast majority of people don't. Internal Sierra Club documents show that as few as one out of every 100 membership solicitations results in a new member. The average contribution is $18.

"The problem is there is a part of the giving public -- about a third we think -- who as a matter of personal choice gives to a new organization every year," said Sierra Club Executive Director Carl Pope. "We don't do this because we want to. We do it because the public behaves this way."

Fund-raising consultants "have us all hooked, and none of us can kick the habit," said Dave Foreman, a former Sierra Club board member. "Any group that gives up the direct mail treadmill is going to lose. I'm concerned about how it's done. It's a little shabby."

Another problem is more basic: accuracy. Much of what environmental groups say in fund-raising letters is exaggerated. And sometimes it is wrong.

Consider a recent mailer from the Natural Resources Defense Council, which calls itself "America's hardest-hitting environmental group." The letter, decrying a proposed solar salt evaporation plant at a remote Baja California lagoon where gray whales give birth, makes this statement:

"Giant diesel engines will pump six thousand gallons of water out of the lagoon EVERY SECOND, risking changes to the precious salinity that is so vital to newborn whales."

Clinton Winant, a professor at Scripps Institution of Oceanography who helped prepare an environmental assessment of the project, said the statement is false. "There is not a single iota of scientific evidence that suggests pumping would have any effect on gray whales or their babies," he said.

The mailer also says:

"A mile-long concrete pier will cut directly across the path of migrating whales -- potentially impeding their progress."

Scripps professor Paul Dayton, one of the nation's most prominent marine ecologists, said that statement is wrong, too.

"I've dedicated my career to understanding nature, which is becoming more threatened," he said. "And I've been confronted with the dreadful dishonesty of the Rush Limbaugh crowd. It really hurts to have my side -- the environmental side -- become just as dishonest."

Former Mexican President Ernesto Zedillo halted the project last year. But as he did, he also criticized environmental groups. "With false arguments and distorted information, they have damaged the legitimate cause of genuine ecologists," Zedillo said at a Mexico City news conference.

A senior Defense Council attorney in Los Angeles, Joel Reynolds, said his organization does not distort the truth.

"We're effective because people believe in us," Reynolds said. "We're not about to sacrifice the credibility we've gained through direct mail which is intentionally inaccurate."

Reynolds said NRDC's position on the salt plant was influenced by a 1995 memo by Bruce Mate, a world-renowned whale specialist. Mate said, though, that his memo was a first draft, not grounded in scientific fact.

"This is a bit of an embarrassment," he said. "This was really one of the first bits of information about the project. It was not meant for public consumption. I was just kind of throwing stuff out there. It's out-of-date, terribly out-of-date."

There is plenty of chest-thumping pride in direct mail, too -- some of it false pride. Consider this from a National Wildlife Federation letter: "We are constantly working in every part of the country to save those species and special places that are in all of our minds."

Yet in many places, the federation is seldom, if ever, seen.

"In 15-plus years in conservation, in Northern California, Nevada, Idaho, Oregon and Washington, I have never met a (federation) person," said David Nolte, who recently resigned as a grass-roots organizer with the Theodore Roosevelt Conservation Alliance -- a coalition of hunters and fishermen.

"This is not about conservation," he said. "It's marketing."

Overstating achievements is chronic, according to Alfred Runte, an environmental historian and a board member of the National Parks Conservation Association from 1993 to 1997.

"Environmental groups all do this," he said. "They take credit for things that are generated by many, many people. What is a community accomplishment becomes an individual accomplishment -- for the purposes of raising money."

As a board member, Runte finds something else distasteful about fund raising: its cost.

"Oftentimes, we said very cynically that for every dollar you put into fund raising, you only got back a dollar," he recalled. "Unless you hit a big donor, the bureaucracy was spending as much to generate money as it was getting back."

Some groups are far more efficient than others. The Nature Conservancy, for example, spends just 10 percent of donor contributions on fund raising, while the Sierra Club spends 42 percent, according to the American Institute of Philanthropy.

Pope, the Sierra Club director, said it's not a fair comparison. The reason? Donations to the Conservancy and most other environmental groups are tax-deductible -- an important incentive for charitable giving. Contributions to the Sierra Club are not, because it is a political organization, too.

"We're not all charities in the same sense," Pope said. "Our average contribution is much, much smaller."

Determining how much environmental groups spend on fund raising is only slightly less complex than counting votes in Florida. The difficulty is a bookkeeping quagmire called "joint cost accounting."

At its simplest, joint cost accounting allows nonprofit groups to splinter fund-raising expenditures into categories that sound more pleasant to a donor's ear -- public education and environmental action -- shaving millions off what they report as fund raising.

Some groups use joint cost accounting. Others don't. Some groups put it to work liberally, others cautiously. Those who do apply it don't explain it. What one group labels education, another calls fund raising.

"You use the term joint allocation and most people's eyes glaze over," said Greenpeace's McPeake. The most sophisticated donor in the world "would not be able to penetrate this," she said.

Joint cost accounting need not be boring, however.

Look closely and you'll find sweepstakes solicitations, personal return address labels, free tote bag offers and other fund-raising novelties cross-dressing as conservation. You also find that those who monitor such activity are uneasy with it.

David Ormsteadt, an assistant attorney general in Connecticut, states in Advancing Philanthropy, a journal of the National Society of Fundraising Executives: "Instead of reporting fees and expenses as fund-raising costs, which could ... discourage donations, charities may report these costs as having provided a public benefit. The more mailings made -- and the more expense incurred -- the more the 'benefit' to society."

The Wilderness Society, for example, determined in 1999 that 87 percent of the $1.5 million it spent mailing 6.2 million membership solicitation letters wasn't fund raising but "public education." That shaved $1.3 million off its fund-raising tab.

One of America's oldest and most venerable environmental groups, the Wilderness Society didn't just grab its 87 percent figure out of the air. It literally counted the number of lines in its letter and determined that 87 of every 100 were educational.

When you read in the society's letter that "Our staff is a tireless watchdog," that is education. So is the obvious fact that national forests "contain some of the most striking natural beauty on Earth." Even a legal boast -- "If necessary, we will sue to enforce the law" -- is education.

"We're just living within the rules. We're not trying to pull one over on anybody," said Wilderness Society spokesman Ben Beach.

Daniel Borochoff, president of the American Institute of Philanthropy, the charity watchdog, said it is acceptable to call 30 percent or less of fund-raising expenses "education." But he deemed that the percentages claimed by the Wilderness Society, Defenders of Wildlife and others were unacceptable.

"These groups should not be allowed to get away with this," Borochoff said. "They are trying to make themselves look as good as they can without out-and-out lying ... . This doesn't help donors. It helps the organization."

At Defenders of Wildlife, Orasin flatly disagreed. The American Institute of Philanthropy "is a peripheral group and we don't agree with their standards," he said. "We don't think they understand how a nonprofit can operate, much less grow."

Even the more mainstream National Charities Information Bureau, which recently merged with the Better Business Bureau's Philanthropic Advisory Service, rates Defenders' fund raising excessive.

"We strongly disagree with (the National Charities Information Bureau)," said Orasin. "They take a very subjective view of what fund raising is. We are educating the public. If you look at the letters that go out from us, they are chock-full of factual information."

But much of what Defenders labels education in its fund raising is not all that educational. Here are a few examples -- provided to The Bee by Defenders from its recent "Tragedy in Yellowstone" membership solicitation letter:

Unless you and I help today, all of the wolf families in Yellowstone and central Idaho will likely be captured and killed.

It's up to you and me to stand up to the wealthy American Farm Bureau ...

For the sake of the wolves ... please take one minute right now to sign and return the enclosed petition.

The American Farm Bureau's reckless statements are nothing but pure bunk.

"That is basically pure fund raising," said Richard Larkin, a certified public accountant with the Lang Group in Bethesda, Md., who helped draft the standards for joint cost accounting. "That group is playing a little loose with the rules."

Defenders also shifts the cost of printing and mailing millions of personalized return address labels into a special "environmental activation" budget category.

Larkin takes a dim view.

"I've heard people try to make the case that by putting out these labels you are somehow educating the public about the importance of the environment," he said. "I would consider it virtually abusive."

Not all environmental groups use joint cost accounting. At the Nature Conservancy, every dollar spent on direct mail and telemarketing is counted as fund raising.

The same is true at the Sierra Club. "We want to be transparent with our members," said Pope, the club's director.

Groups that do use it, though, often do so differently.

The National Parks Conservation Association, for example, counts this line as fund raising: "We helped establish Everglades National Park in the 1940s." Defenders counts this one as education: "Since 1947, Defenders of Wildlife has worked to protect wolves, bears ... and pristine habitat."

"It's a very subjective world," said Monique Valentine, vice president for finance and administration at the national parks association. "It would be much better if we would all work off the same sheet of music."

At the Washington, D.C.-based National Park Trust, which focuses on expanding the park system, even a sweepstakes solicitation passes for education, helping shrink fund-raising costs to 21 percent of expenses, according to its 1999 annual report.

Actual fund-raising costs range as high as 74 percent, according to the American Institute of Philanthropy, which gave the Trust an "F" in its "Charity Rating Guide & Watchdog Report." Borochoff, the Institute's president, called the Trust's reporting "outrageous."

"Dear Friend," says one sweepstakes solicitation, "The $1,000,000 SUPER PRIZE winning number has already been pre-selected by computer and will absolutely be awarded. It would be a very, very BIG MISTAKE to forfeit ONE MILLION DOLLARS to someone else."

Paul Pritchard, the Trust's president, said the group's financial reporting meets non-profit standards. He defended sweepstakes fund raising.

"I personally find it a way of expressing freedom of speech," Pritchard said. "I can ethically justify it. How else are you going to get your message out?"