Tags: unicef | spending

UNICEF Reeling From Allegations of Waste, Fraud

Monday, 15 Dec 2008 01:01 PM

By Stewart Stogel

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UNITED NATIONS — The United Nations Children's Fund (UNICEF), still reeling from a controversial Madonna fundraiser last February, finds itself embroiled in yet new questions over how much money raised by the world body through its annual holiday greeting card sales actually makes it to those in need.

Now an internal audit conducted by the UN General Assembly and obtained by Newsmax, states flatly that not enough is making it to the less fortunate.

UNICEF figures show that its holiday greeting card sales campaign is one of its most profitable endeavors, raising more than $155 million in 2007.

However, just over $60 million, or about 39 percent of total funds, actually made it to those in need in 2007.

UNICEF's card "partner" is industry leader Hallmark. Deidre Mize, a company spokeswoman refused any comment, explaining that Hallmark "is a privately held company."

According to the audit, some local UNICEF chapters around the world actually retained 100 percent of their card income despite an organization rule that capped such retention at 25 percent of sales.

UNICEF has 36 such "autonomous chapters" internationally.

The U.S./U.N. mission said the UNICEF issue "is news to us, we had not heard this before," explained spokeswoman Carolyn Vadino.

After "checking" with UNICEF, Vadino incorrectly explained that the $60 mil cited in the greeting card revenue was actually a "profit." A profit in a non-profit organization? The US/UN mission had no further comment.

UNICEF sources, however, confirmed that the $60 million figure cited was in fact funds that found their way into various field and educational programs.

According to UNICEF spokeswoman Kate Donovan, the organization's financial disbursement to field operations was greater than that of other aid organizations.

UNICEF also cited the 39 percent greeting card "contribution" margin as much greater than the average greeting card profit of 4 to 9 percent.

The problem is that UNICEF's card operations are not marketed as a commercial endeavor but as an adjunct of its contribution efforts to aid the poor and disadvantaged.

UNICEF also states in its 2007 Annual Report that it operates entirely through "voluntary" contributions. It notes in passing that a number of countries do provide "regular" funding.

Such "regular voluntary" government contributions amounted to slightly less than $2 billion, or some two-thirds of its total budget of $3.01 billion for 2007.

The United States, UNICEF's largest "contributor" of 102 nations, paid the organization $277 million in 2007.

That did not include additional income from UNICEF-USA, which is an independent, privately run chapter of UNICEF. Their "contribution" to the organization amounted to $75 million in 2007.

Norway was the second largest national contributor at $197 million, followed by the United Kingdom at $195 million.

Surprisingly, China and Russia were not found among the 20 largest UNICEF contributors.

Several similar aid organizations such as Care International, Oxfam and Worldvision, Inc. receive some governmental grants with most only about 10 percent of that supplied to UNICEF.

Their average overhead retention costs ranged from 10 to 14 percent of each dollar donated organization-wide.

Coincidentally, neither UNICEF nor its "chapters," nor Hallmark, actually specify in their ads or on their websites just how much of each greeting card purchase actually makes it to field programs.

The issue of money disbursed into the field has hounded UNICEF.

In 1995, UNICEF was rocked when an investigation uncovered an operation that skimmed more than $10 million from the agency's offices in Nairobi, Kenya.

The cash was traced to lavish parties and the hiring of casino girls by local UNICEF officials.

The findings resulted in a re-vamped auditing operation by newly appointed executive-director Carol Bellamy of the United States.

The latest revelation comes as the UN and the children's organization are still reeling from the ramifications of a controversial fundraiser with rock-star Madonna and the Italian fashion house Gucci at UN headquarters last February.

Gucci and Madonna raised over $2 million for UNICEF in return for the use of the UN's North Lawn and official marketing tie-ins – all of which was done without the knowledge of U.N. chief Ban Ki-moon, who frowns on corporate partnerships.

Ban was so upset over the UNICEF project he boycotted the event, though he did not block it. He did move to restrict such corporate "projects" in the future.

The day after the UNICEF fundraiser, KCD International, the event's PR firm, was named by New York State Attorney-General Andrew Cuomo as a target of investigation involving bribery in an unrelated fashion house event.

The Cuomo investigation centered on bribes to secure venues for fashion house galas in NYC.

Ban spokeswoman Michelle Montas refused any comment on the current greeting card issue.

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