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Image: Wyclef Jean
Lynne Sladky  /  AP
Haitian-born musician Wyclef Jean backs the Yele Haiti Foundation, which groups are now raising doubts about.
updated 1/16/2010 9:34:03 PM ET 2010-01-17T02:34:03

Groups that vet charities are raising doubts about the organization backed by Wyclef Jean, questioning its accounting practices and ability to function in earthquake-hit Haiti. But the Haitian-born rapper calls the allegations baseless.

Even as more than $2 million poured into The Wyclef Jean Foundation Inc. via text message after just two days, experts questioned how much of the money would help those in need.

“It’s questionable. There’s no way to get around that,” said Art Taylor, president and chief executive of the Better Business Bureau’s Wise Giving Alliance, based in Arlington, Va.

Taylor reviewed Internal Revenue Service tax returns for the organization also known as Yele Haiti Foundation from 2005 through 2007. He said the first red flag of poor accounting practices was that three years of returns were filed on the same day — Aug. 10 of last year.

In 2007, the foundation’s spending exceeded its revenues by $411,000. It brought in just $79,000 that year.

“Here’s the bottom line: for an earthquake of catastrophic proportions, do people really believe that this organization is in a position to do anything right now?” he said.

Jean, a 37-year-old Grammy-winning artist, has been imploring followers to text “Yele” to 501501 to donate $5 to his foundation in support of Haitian earthquake victims.

On Saturday, he issued a statement in response, rejecting the allegations.

"I first learned of these baseless attacks when I left Haiti late Friday, where I had been since 12 hours after the earthquake," Jean said in the statement. "Let me be clear: I denounce any allegation that I have ever profited personally through my work with Yele Haiti."

He said he had "committed significant amounts of my own money to support the work of Yéle Haiti and other organizations in support of our efforts over the years."

The foundation, founded in January 2005, intends to airlift supplies using a FedEx plane into Haiti early next week carrying medical supplies, water and Clif Bars, according to foundation president Hugh Locke.

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Intertwined with businesses
An Associated Press review of tax returns and independent audits provided by Jean’s foundation showed that it was closely intertwined with Jean’s businesses.

Three of the five foundation board members — Jean, Jerry Duplessis and Seth Kanegis — are involved in his personal music and business endeavors.

According to an IRS tax return from 2006 reviewed earlier by the Web site The Smoking Gun, the foundation paid $250,000 to buy airtime from Telemax S.A., a for-profit TV station in Haiti that is majority owned by Jean and Duplessis.

Part of that money went to pay for a concert in Haiti put on by Jean himself, Locke said.

Another $160,000 that year was spent on a concert in Monte Carlo that Jean participated in, of which $75,000 paid for backup singers and $25,000 went to Jean through a company he owns with Duplessis, Platinum Sound Recording Studios Inc., Locke said.

“I’m not saying he didn’t benefit from it,” said Locke, who says his own salary is $8,100 a month after taxes. “We were paying that to Platinum Sound because that covered the cost of him participating in the event.”

Locke argued that the foundation took in “several hundred thousand” dollars in exchange for Jean’s work through the proceeds of an auction.

The foundation also rents office space from Platinum Sound, paying about $2,600 a month in New York. Locke said the foundation also plans to partner with Jean’s Sak Pase Records to build a music studio to provide vocational training to Haitian children.

‘We have a niche’
Sandra Miniutti, vice president of marketing for Charity Navigator, an organization that evaluates charities, said the foundation was too small to have been examined recently, although the current flood of goodwill may change that. Its revenue in 2008 was $1.9 million.

“My concern is it goes against our first tip, and that is to give only to groups with experience with disaster relief,” Miniutti said. “I think it’s very hard for a new organization even with the best intentions to handle something on this magnitude.”

Locke said the foundation has been directly involved in delivering food and providing clean-up services in many disasters, including the hurricanes that devastated Haiti in late 2008. Jean’s standing among Haitians can help the foundation gain access to gang-controlled or other troubled regions, he said.

“We have a niche which no one else occupies,” Locke said.

He said the foundation is now seeking bridge financing to allow it to use money that has been pledged in unprecedented volumes by text message.

It could take at least a month for donors’ money to flow in because it is not released until they pay their phone bills.

That delay presents a challenge and an opportunity, the Better Business Bureau’s Taylor said.

“The challenge is they can’t do anything until they get the money,” Taylor said. “The opportunity is that some people may change their minds and decide that $10 or whatever they text to him might be better used somewhere else.”

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Where do Haiti donations actually go?

  1. Closed captioning of: Where do Haiti donations actually go?

    >> lash stiletto it's show-stopping!

    >> there is an out pouring of support. through text messaging alone, more than $10 million has been raised. what happens to the money once you made the donation? sharon, it's always good to see you. they are raising a lot of money. the red cross is raising more than with any disaster. how do we know what will happen to the money?

    >> everyone wants to do the right thing and send a donation and make sure it gets there quickly. people need to do their research. make sure you are donating to a reputable organization that is on the ground in haiti. as we heard from the red cross , they had personnel there that are mobilized.

    >> do we know what kind of relief your donations may go towards?

    >> a lot of reputable organizations will tell you on their website where the money is going or to the best of their knowledge. like the red cross saying it relieves supplies for financial recovery for victims of the earthquake. also if you go to doctors without borders, it talks about the emergency medical care that it's going it give. if you go to the website, you may find out information there and you want them to you what the money will be used for.

    >> the other thing is how quickly it can be allotted. how do you know the money i give will not be put into a bank account and used later on?

    >> we know there roadblocks and it's difficult for aid workers to get the supplies there, but we know from the organizations and also the credit card companies how much time it takes. if you make a donation with your american express , it may take 24-hours to three days for the money to get to the organization and it depends on how the organization is going to take that money and distribute it. you want to make sure how the organization has a lot of funds in the past. you look to see how much goes to programs in general versus management and fund-raising and make sure at least 75% of the expenses goes to programs and therefore you can be assured that that money is going to the relief efforts.

    >> there a couple of websites like charity navigator.org and the relief organizations.

    >> it has a pie chart that breaks down the expenses and where the money is going. this is based on the past not telling us where the money to haiti is going, but you get an idea. other people who donated can tell you how the money is being used.

    >> some of them are waiving these things called transaction costs . what are those?

    >> merchants pay transaction costs whether you buy a sweater or donating money. this is a good thing that they said they will waive the transaction fees for haitian relief. pay pal working with save the children is waiving expenses and transaction fees for this. the great thing about the carriers if you are doing text messaging , verizon is waiving the fees if you decide to text the donation.

    >> anything that helps.

    >> everyone wants the montle faster. there is a lag time . traditionally it can take up to 90 days to get that money to the charity. verizon made an announcement that they sent about $3 million to haitian relief, bypassing the usual system. normally when you text message a donation, it takes time.

    >> appreciate the good insight. log on to our website for a list of participating organizations. we are back after these

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