Direct Relief Helps CNN Expose Sketchy Charity Accounting Practices


Checking Charities' Claims

With assistance from Direct Relief, CNN ran a two-part investigative report last week on how charitable organizations’ accounting and reporting practices regarding medical product donations can be highly misleading to the public.  The report detailed the efforts by CNN and the Center for Investigative Reporting to understand and track the reported donation of $40 million in medical aid to Guatemala by four cancer charities – none of which Direct Relief had any experience or contact with.

In providing background information to the reporters, Direct Relief shared an example from 2012 in which Direct Relief’s own detailed, proper accounting and reporting of charitable contributions of medications and medical supplies (which Direct Relief had accurately valued and reported as worth approximately $3 million on a wholesale acquisition cost basis) to another charitable organization made it possible to uncover that the other organization with which it had been working in good faith had improperly reported Direct Relief’s donations as being worth more than $100 million.

Direct Relief has been a leader in advocating for clear, proper accounting and reporting of medical donations, and the organization was the first to publish – more than 10 years ago — its own detailed, internal policies on this specific subject.

In addition, over five years ago, in January 2009, Direct Relief became the first and remains the only nonprofit organization in the U.S. to obtain accreditation from the National Association of Boards of Pharmacy (NABP) as a Verified-Accredited Wholesale Distributor (VAWD) and obtained re-accreditation two years ago after undergoing another rigorous review.  According to the NABP, VAWD was established in 2004 to help protect the public from the threat of counterfeit drugs affecting the U.S. drug supply and grew out of a desire to make it difficult for illegitimate wholesalers to become licensed and transact business.

Direct Relief operates the largest nonprofit charitable medicines program within the United States (in all 50 states) and uses the same practices, policies, and procedures in its international programs.

For those reasons, in addition to the basic reason of helping inform the public about an important issue that receives little public attention, Direct Relief was pleased to assist the journalists’ efforts to inform the public about any such practices that are questionable, confusing, or intended to mislead – unpleasant though the subject is.

Direct Relief’s published policy regarding its valuation of medical in-kind donations is here and, for additional background, here is a detailed letter that Direct Relief submitted to the Better Business Bureau two years ago when that organization was reviewing charities’ practices in followup to press stories reporting activities similar to those reported by CNN.

The CNN story can be found here.

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