Charity collected $1.7M, gave $0

Planet Aid claimed $350,000 in losses from 1998 to 2000

Toronto Star/April 26, 2002
By Robert Cribb

A non-profit organization that pledges to support overseas development didn't direct a cent of the first $1.7 million it raised toward humanitarian efforts.

Planet Aid Canada, a Toronto-based charitable clothing operation with three stores and nearly 200 donation bins across the GTA, received the money and donations between 1998 and 2000, largely from people who believed they were helping clothe the poor in places such as India and Africa.

Yet none of that money left Canada. In those three years, the charity claimed total net losses of nearly $350,000.

"We couldn't (contribute to overseas development projects)," said Carsten Hansen, president of Planet Aid Canada, whose stated purpose is "defeating poverty by undertaking development projects in the Third World."

"Our charity is not funded by big corporations or government funding. We're working in plain market conditions. You don't get anything for free in this world. Nobody expects to make anything significant in the first couple of years. After that, we thought we'd have enough going for us, but it wasn't possible."

According to its charity filings with the Canada Customs and Revenue Agency, Planet Aid Canada declared the losses as a result of expenses including management, administration and the cost of acquiring its used clothing.

In 2001, for which no official filing has been made, Hansen said his charity turned a profit and gave $30,000 to two development projects in Zambia.

"We decided to keep on struggling and get back up and we have done that. We still have debt, but we're getting over it."

Carl Juneau, director of policy and communications with the federal government's Charities Directorate, said generally speaking, deficit figures such as those filed by Planet Aid raise questions about how well a charity is run.

"It speaks to how efficiently the organization is operating," he said. "A charity operating at that kind of deficit is probably in fairly serious trouble in terms of its operating capabilities."

Questions about Planet Aid's finances in Canada mirror similar questions being asked about the organization's affiliates around the world.

Planet Aid is part of a complicated international organization of schools, factories, plantations, farms and other clothing recycling operations informally dubbed Tvind after the Dutch area where its founders first came together in the early '70s.

Tvind's vast array of non-profit organizations prompted police and governments in Europe to investigate how its charitable revenue is collected and spent. These probes recently led to the arrest and detainment of the organization's leader, Morgens Amdi Petersen, on charges of tax fraud and embezzlement of millions of dollars.

The Tvind movement comprises dozens of organizations in 55 countries producing millions of dollars in profit, according to a Danish police report on Tvind released last year.

The report alleged tax fraud and said the organization has been "misappropriating funds earmarked for public utility (humanitarian) purposes." Tvind is a "hierarchically built association with clear political aims," "has made no allocations to (humanitarian) purposes," and has enjoyed tax-privileged contributions based on "incorrect, incomplete or misleading information" provided to tax authorities in Denmark, the report reads.

Some Torontonians who went overseas to work on humanitarian projects run by Tvind's Humana People to People network, which includes Planet Aid Canada, say there's little evidence that used clothing sales are helping the world's poor.

"I didn't really feel like I helped people," says Ellen Shifrin, a Toronto teacher who spent six months doing development work in India. "They take a group of young people who want to do something good, who are enthusiastic, creative and energetic and turn them into disillusioned, cynical people."

Nick Moss Gillespie, a Torontonian who spent a year training and working in a Tvind development project in Angola in 1996, says it took him two years after he got home to recover from the guilt of failing to help Africans.

"We invested a year of our lives and a lot of energy and significant personal risk to accomplish something and we were severely underutilized," he says.

"Our money and the money of the project and money from any funders was not being put to good use at all. The money for a project to build 124 latrines didn't come through until just six weeks before the end of my stay. The reality is, this isn't a charity, it's an international business. It exists to perpetuate itself rather than to have an impact on the local people in Angola."

Volunteers say there should be no shortage of money for development projects considering the amounts they provide themselves.

Before going overseas, volunteers on Humana projects first spent about 5 1/2five months training in schools run by the Institute for International Co-operation and Development, which supplies volunteers for Humana projects.

Trainees pay $3,300 (U.S.) in tuition and are then expected to raise another $5,600 (U.S.) by soliciting donations door to door, on university campuses or on the streets of U.S. cities.

"I've researched dozens of volunteer programs and if you look at the training students are receiving in IICD schools, it's a scam," says Zahara Heckscher, co-author of How to Live Your Dream of Volunteering Overseas and one of the first volunteers to travel to Africa with the institute in 1987.

"My estimate is that they're skimming off $3,000 to $5,000 per volunteer above and beyond the real cost of the program. It doesn't add up for the service they're offering."

Line Henricksen, director of the institute's Michigan facility, said tuition costs and money earned by volunteers through fundraising are "reasonable."

"If you sat down and made a reasonable budget, you'd see that it's not overly a big amount of money."

Sara Somerset, a 22-year-old Torontonian, who recently spent three months at the institute's Michigan school, said she doesn't understand why she had to raise $5,600 considering she received no real training.

"They had this self-study program, but everyone stopped doing it after a week and a half because it was bogus.... And they said there was this big database of information, but nobody ever saw it. The language training was terrible. People just e-mailed all day and watched TV."

Volunteers such as Somerset say school leaders told them money they raise through solicitation goes to fund the organization's training schools, not overseas projects. Her work as a fundraiser left her feeling increasingly guilty about her involvement with the organization.

"I thought the money was going to the projects ... I hadn't realized it was all going to the school. I would go door to door and canvass on campuses. I emptied out so many students' wallets ... I was taking these people's money and I just didn't want to do it any more. I was crying because I didn't want anyone to give me money any more. I felt really horrible."