The Cost Of Doing Good: WCCO Investigates Salvation Army Spending
MINNEAPOLIS (WCCO) -- Donations help the Salvation Army serve the less fortunate around the world. But when the charity built a half-million dollar home for local leaders, some staff members started questioning where the money goes.
They asked WCCO-TV's Jennifer Mayerle to investigate the cost of doing good.
The sight of bell ringers has been associated with the Salvation Army for decades. Dedicated volunteers raising dollars and cents in a red kettle to serve meals, offer shelter and assistance to thousands every year.
But it's where other donor dollars went that is making noise within the Christian charity. It may come as a surprise to people outside the Salvation Army that the nonprofit provides officers with a home to live in, furniture and a car, plus a minimal salary.
"It is a Christian organization, and their physical needs and their personal needs are not supposed to be that important," former advisory board member Debbie Beck said.
Beck says officers are supposed to be living modestly. So she was floored when she learned the Lt. Colonels appointed in 2016 to run the Northern Division of Minnesota and North Dakota built a new home.
Lonneal and Patty Richardson left a $365,000 north metro home and the Salvation Army built a new home for them just a few miles away. The cost of the land and home: $544,319.
"Is the public OK with this? I mean, if they're OK, then I guess I can be OK. But I'm not OK because I don't think the public would be OK," Beck said.
The Salvation Army spokesperson told WCCO-TV the original home needed several improvements, and "estimates to correct the decades-old issues" would cost an average of $185,000.
Lt. Colonel Lonneal Richardson responded with a statement that said fewer than 1 percent of Army houses are new builds.
"Because the estimated costs to renovate an existing property would have surpassed the cost of new construction, we felt the purchase was justified, even though it was above our normal pricing structure," Richardson said. If we mis-stepped in this decision, it was in earnest as we always strive to find the most fiscally responsible, long-term housing solutions."
Images of the inside of the home from a realtor.com post show what the home looked like. It sold last July for $380,000 and WCCO-TV has learned it was move-in ready with no necessary fixes.
"I think it needs to be explained," said Daniel Borochoff with Charity Watch.
Borochoff points out issues he sees with the pay structure of Salvation Army officers.
"It's hard for outsiders to get a grip on whether total compensation package is reasonable because they don't get only a straight salary, they get their benefits taken care of," he said.
Borochoff thinks some Salvation Army officers homes conflict with its image of sacrifice and service.
"I've heard some cases where it gets out of control and the housing becomes higher than what one might hope. There needs to be a rationale for it if a current house is adequate and less expensive and fulfills the purpose, then they ought to just use the existing [house]," Borochoff said.
Since the Salvation Army is a religious organization, it's exempt from filing a 990 tax form. That form helps the IRS and the public evaluate a nonprofits operation.
Borochoff gives the Salvation Army high marks in some areas. CharityWatch uses their independent audited financial statements and other factors to rate the non-profit but it cannot be rated among its Top-Rated Charities because it does not meet transparency benchmarks. He wishes it would be more transparent.
"It would increase the integrity of the Salvation Army if they were, you know, disclosing these, the compensation of their top people, as other charities do," Borochoff said.
WCCO obtained a 2017 resignation letter from a high-level staff member that went to top officials after learning about the home.
The writer said in part, "The Salvation Army is no longer driven first and foremost by doing good in the community, it is an organization driven by dollars and I will not stand behind a Christian organization that preaches mission, but practices greed."
Beck also received the letter.
"I hope people will start asking questions about where their money is going, and is their money being used in the way they're being led to believe that it's being used," Beck said.
Here is Lt. Col. Lonneal Richardson's full statement:
As you know, all officer housing in The Salvation Army is purchased by the organization, with the intent to hold the property for multiple decades. Fewer than 1 percent of Army houses are new builds. Because the estimated costs to renovate an existing property would have surpassed the cost of new construction, we felt the purchase was justified, even though it was above our normal pricing structure. If we mis-stepped in this decision, it was in earnest as we always strive to find the most fiscally responsible, long-term housing solutions.
It is important to know that the funds used to purchase this house were not provided by donations to our Red Kettle Campaign or cash donations throughout the year. Those donations go directly to fund programs that serve 144,000 people every year—providing a hot meal for nearly 1,100 each day, and housing for 350 people each night here in the Twin Cities alone. Our responsibility to those who entrust their gifts to us, and those who entrust their lives to our care, is paramount.
