Car Donation Foundation

Its “Wheels for Wishes” ads that mention “Make-A-Wish” have attracted tens of thousands of car donations, but it appears that many more of these “wheels” are for profits than for charitable wishes. Car Donation Foundation (CDF), the nation’s largest car donation charity, publicly uses the “Wheels for Wishes” name to solicit vehicle donations across the U.S. for the benefit of local chapters of the Make-A-Wish Foundation (MAW). The promotional-partner MAW chapters receive funds from CDF after the donated vehicles have been sold or scrapped. It turns out, however, that only about 20% of CDF’s revenue benefited charity over the 2011-2014 period. Furthermore, Minnesota’s Office of the Attorney General (OAG) is claiming that CDF, which is based in Minnesota, lacks transparency, misleads donors, and is too closely tied to two of its for-profit vendors.

Car Donation Foundation blends the identities of Wheels for Wishes with Make-A-Wish in its ads and solicitations causing donor confusion in Minnesota, according to a Compliance Report issued by the OAG in October 2015. “When people donate their cars, they have the right to know who they are donating to and where the money is going,” said Minnesota’s Attorney General as quoted in a Star Tribune article about the CDF matter. The OAG Report points to CDF’s use of the title “Make-A-Wish Car Donation” in paid Internet ads and notes that while the “Make-A-Wish” name or logo is prominently featured in Wheels for Wishes ads, the ads do not mention CDF or its professional fundraising company (at least prior to June 2015 when, as the OAG’s investigation was on-going, CDF altered some of its newspaper ads to include a footnote reference to CDF). There are several examples given in the OAG Report describing cases of certain individuals that donated vehicles to CDF under the mistaken impression that they were donating directly to MAW. Even MAW-Minnesota and the national office of MAW expressed their concern to CDF regarding the fact that its ads sometimes made it look as if Wheels for Wishes was a program of MAW rather than an independent charity, according to the OAG Report. In the meantime,  it appears that the Wheels for Wishes ads have been quite successful as CDF has grown its annual revenue from $14.4 million in 2011 to $37.3 million in 2014, more than doubling the number of vehicles it sold or scrapped between those years.

Car Donation Foundation’s poor transparency and allowance of potential donor confusion with its Wheels for Wishes ads is even more deplorable given the fact that two of its major for-profit vendors are owned and operated by the same two individuals that founded and manage CDF. William Bigley and Randy Heiligman, the co-founders of CDF, also 100% co-own and operate the for-profit companies Metro Metals Corporation (MM) and National Fundraising Management, Inc. (NFM). CDF uses MM to auction and scrap the vehicles donated to CDF and uses NFM as its professional fundraising company to solicit vehicle donations from the public and manage its vehicle donation program. Furthermore, the OAG Report notes that Heiligman’s wife, a former CDF board member and officer, is executive vice-president of MM, and Heiligman’s son and daughter and Bigley’s son all are employed at NFM. With regards to NFM, CDF’s 2011 audited financial statements note: “In 2011, a new management company was formed to provide supporting services to Car Donation Foundation. The new management company provides the operations for Car Donation Foundation, and in return, receives administrative fees of 15% of net auction sales proceeds and program commissions at one-half of each location’s net income or loss.” NFM is registered to act as a professional fundraiser for CDF in about 40 states and its only client is CDF, according to the OAG Report. CDF reported paying NFM and MM combined over $56 million from 2011-2014 (based on its annual tax filings), which is more than half of the approximately $108 million in total revenue CDF collected on donated vehicles during that period. By comparison, the total direct donations CDF made to charities (almost all to Make-A-Wish chapters) from 2011-2014 was just less than $22 million and only about 20% of its total revenue.

Minnesota’s AG stated: “[O]ne of the most disconcerting aspects of the Compliance Report is the simultaneous management and ownership by Bigley and Heiligman of the network of non-profit and for-profit organizations. […] [T]he interlocking relationships raise questions about the arms-length negotiations by the charity with the for-profit vendors,” according to the OAG’s press release. Bigley, Heiligman, Heiligman’s wife, and Craig Greenberg, whose law firm also represents Metro Metals and National Fundraising Management, made up four of the five board members/officers of Car Donation Foundation until mid 2013, when CDF was audited by the Internal Revenue Service (IRS). The IRS noted, according to the OAG Report, that a charity should not serve as a “lead generator to get business for the founders’ for-profit companies,” and the IRS questioned whether CDF should keep its charitable tax-exempt status given the significant benefit imparted on MM and NFM by Bigley and Heiligman through their control of CDF. CDF’s 2013 audited financial statements note that as a result of the IRS examination, “the Organization made some changes to its organizational documents and board of directors,” and the change in the board was that Bigley, the two Heiligmans, and Greenberg all resigned. The IRS appeared satisfied, according to the OAG Report, that with these “mass resignations” an arm’s length relationship could now be created between CDF and MM and NFM. However, the Report also notes that immediately after the change in the CDF board, the new board members delegated the day-to-day management of CDF to Bigley and Heiligman, anyway, and Greenberg was even given authority over making payments and signing checks for CDF. Furthermore, CDF’s annual tax filings report that CDF had no employees from 2011-2014, thereby reinforcing Bigley and Heiligman’s control over CDF’s operations and its reliance on MM and NFM to provide operational, fundraising, and administrative services for the charity.