Unethical practices of philanthropic organizations

Among the most serious abuses associated with charities is that of tax evasion, especially where charities are linked to companies to reduce liabilities. Excessive amounts may be expended by charities in fund-raising thus damaging public confidence in charities. Mismanagement of charity funds and inadequate control and reporting procedures all serve to conceal abuse.

In the UK in 1991 it was estimated that as much as £120 million of tax revenue may be lost through manipulation of the charity law. In 1989 only 15,200 accounts of charities were submitted as required, and a further 3,300 after prompting; these represented 11% of the total charities registered. In the UK it was estimated in 1993 that only 3% of the £300 million spent on charity Christmas cards actually reached charities, the remainder went to retailers, card manufacturers and middlemen. The founder of one of the UK's leading mental health charities was forced to resign her link with the organization after a verdict of mismanagement and that she had failed to separate her personal affairs from those of the charity. Whilst there was no reason to believe money had been diverted into private hands, there had been disregard for proper financial management and a confusion of financial accounts and property documents.

In 1996, a Brussels businessman was convicted of defrauding the charity SOS Sahel, founded in the 1970s to raise money for humanitarian projects in Africa. Much of the money raised went into the his pockets and those of his associates, two of whom are also in prison.