Public Affairs

As originally published in The Physiologist
Volume 45, Number 6, December 2002, page 508-509

Midterm Elections Cloud Appropriations Future 
Animal Activists Indicted 
Animal Charities Get Poor Marks for Stewardship 

Midterm Elections Cloud Appropriations Future 

    In the election for the 108th Congress, Republicans came out ahead, picking up four seats in the House of Representatives. This in-creased their majority over the Democrats to 227-206. The Republicans also picked up two Senate seats, giving them at least 51, with one race undecided and still another race that could be challenged as of this writing. Nevertheless, 51 seats are enough to return the Republicans to the majority for the first time since June 2000. The undecided Senate race is in Louisiana, where there will be a run-off. In the South Dakota race, incumbent Senator Tim Johnson (D-SD) narrowly beat out rival challenger Representative John Thune (R-SD) by a mere 528 votes. Under South Dakota law, Representative Thune is entitled to challenge the vote but he indicated he would not challenge the result absent some indication of fraud or error in the tallies.
    This was an historic election because the party that controls the White House usually loses seats in a midterm election. Nevertheless, the Republican majorities in Congress are very slim, which may do little to ease the legislative gridlock that dogged the 107th Congress.
    The big news for biomedical research in this election is the shift to full Republican control of Congress. However, it is too early to know precisely what this will mean. In the Senate, all committee chairmanships will change hands. This usually means that the ranking Republican assumes the chairmanship, but sometimes a Senator opts to become the chair of a different committee, and this can result in a cascade of other changes.
    Before the election Congress had passed only two of the 13 annual appropriations bills—Defense and Military Construction. Consequently, the rest of the government was left running at FY 2002 levels under a continuing resolution that was scheduled to run out November 22. Biomedical research was left in an especially precarious position. The NIH was hoping to receive the final installment in its five-year doubling. However, while the Senate had approved its NIH funding legislation, the House Appropriations Committee had been unable to muster the votes to produce an acceptable version of its Labor-HHS appropriations bill. Funding for the NSF, VA, and NASA fared only slightly better. Both the House and Senate had passed VA-HUD appropriations bills, but the differences between them still had to be resolved by a conference committee.
    The 107th Congress was scheduled to return for a lame duck session in mid-November where a decision would be made whether to finish the remaining FY 2003 appropriations bills or to pass a continuing resolution that would extend into the New Year when the 108th Congress convenes. Some congressional leaders had said that finishing FY 2003 appropriations should be on the agenda, but others expressed a preference for keeping the government operating at current levels until as late as March to rein in spending. This tactic would discourage the NIH and other agencies from undertaking new initiatives because of uncertainty about their budgets.
    An update on appropriations for research agencies is provided in the chart below. 

Animal Activists Indicted

    On October 25, 12 animal activists were indicted in Boston, MA for stalking an insurance company executive. They believed this executive had ties to Marsh Insurance Company, a major insurer of United Kingdom based Huntington Life Sciences (HLS)-a drug-testing firm that uses animals. In fact, this person had nothing to do with Marsh’s insurance brokerage business. 
    The activists were members of the American branch of Stop Huntington Animal Cruelty (SHAC), whose stated goal is to use any means necessary in order to shut down the British drug-testing firm. The group has harassed, intimidated and in some cases even assaulted not only Huntington’s employees, but also people with relatively distant ties to the company. This includes its directors and investors, as well as employees and investors in firms that do business with HLS.
    According to the indictment, SHAC members allegedly stalked the employee and vandalized his apartment building with red paint. They also called him a “puppy killer,” demanded he quit his job and attempted to target him by publishing the names of his family members on the web. The campaign culminated with an August 2002 protest outside the insurance executive’s apartment. Standing just a few feet away from the man’s residence, the activists protested 24 hours a day using a megaphone to scream chants such as, “what comes around, goes around…burn his house to the ground.” This resulted in members of the group being charged with attempted extortion, threats to burn a dwelling, criminal harassment, stalking in violation of a restraining order, and conspiracy. The most serious of these charges is attempted extortion, which carries a maximum sentence of 15 years in prison and a fine of up $5,000. This indictment highlights just one of the recent incidents in which SHAC has been a part of or been associated with.
    In July 2002, smoke bombs in two Seattle high-rises caused the evacuation of 700 employees. According to Seattle Police Chief Gil Kerlikowske, the targets appeared to be insurance companies whose clients conduct research involving animals. Although SHAC denied having any involvement in the incident, it applauded them: “Although we do support direct action, as long as it doesn’t hurt any animal, human or non-human, we do not engage in, organize or fund such actions,” SHAC website contends. “However, we do applaud those brave enough to do so.”
    For a more in depth analysis of the Stop Huntington Animal Cruelty Campaign and their actions please visit the Americans For Medical Progress opposition research site at: http://www.amprogress.org/ResearchOpposition/ResearchOppositionList.cfm?c=19. 

Animal Charities Get Poor Marks for Stewardship

    Several major animal activist groups have come under renewed criticism for their financial management practices. In October the independent organization Charity Navigator issued a scorecard on the financial soundness of major charities. The ratings were based on data from Form 990, which charities are required to file with the Internal Revenue Service. Its ratings awarded charities from zero to five stars depending upon their performance. Nearly 1,750 of the nation’s largest charities were evaluated, and according to Charity Navigator the majority “continue to be fiscally responsible and financially healthy organizations.” 
    However, several major animal activist groups got low marks. The Humane Society for the United States (HSUS) and its affiliate, the Humane Society International (HSI), and People for the Ethical Treatment of Animals (PETA) were among the 9.4 percent of the rated charities that got only one star because of their “poor” performance. Charities received this rating if they failed to meet industry financial management standards and performed well below most other charities involved in similar activities. The Foundation to Support Animal Protection (FSAP) got zero stars—the lowest possible rating—for its “exceptionally poor” performance. FSAP has close links to PETA and to the Physicians Committee for Responsible Medicine (which was not rated). Only 1.3 percent of the 1,750 charities received a zero star rating.
    Charity Navigator is a relatively new organization (http://www.charitynavigator.org). It evaluates short-term spending practices, including charity’s “fundraising efficiency,” as well as how much of their budgets they allocate to fundraising, programs, and administrative expenses. The ratings are a composite that also include several measures of the organizations’ long-term financial sustainability. Charity Navigator evaluates financial management practices and does not address the quality of program content or purpose of the organization.
    The rule of thumb is that charities should spend at least 60 percent of their budgets on program expenses. Charity Navigator uses the IRS definition of program expenses to make this determination, which is less stringent than the one recommended by the now-defunct National Charities Information Bureau. NCIB did not believe that direct mail appeals should ever be counted as program expenses. The IRS allows such appeals for funds to be considered program expenses if the mailings also contain educational materials. 
    According to Charity Navigator’s report, HSUS reported total income of $57,177,692 for the fiscal year ending in December 2001. It spent $0.30 for each dollar it raised and allocated 28.4 percent of its functional expenses to fundraising. HSUS also spent 61.4 percent of its budget on program expenses and 10.2 percent on administration expenses. 
    Charity Navigator also evaluated the lesser-known HSI, which serves as the international arm of HSUS. (Paul Irwin is the president of both organizations, and both list the same Washington, DC address as their headquarters.) HSI reported total revenue of $1,918,700 for the fiscal year ending in December 2001, with fundraising costs of $0.19 for each dollar it raised. HSI allocated 18.7 percent of its budget for fundraising, 61 percent for program expenses, and 20.3 percent for administration. 
    Both HSUS and HSI were rated as “poor” performers as charities, receiving one star out of a possible five.
PETA reported total revenues of $13,867,001 on its IRS Form 990 for the fiscal year ending July 2001. Charity Navigator calculated that PETA spent a modest $0.16 to raise each dollar, and that it allocated 15.5 percent of its functional expenses for fundraising, 81 percent for program expenses, and 3.5 percent for administrative expenses. As a result, PETA’s performance merited one star on the zero to five star scale.
    The Foundation to Support Animal Protection (FSAP) reported a budget of $2,358,625 for the fiscal year ending June 2001. FSAP spent a whopping $5.42 for each dollar it raised and allocated 44 percent of its functional expenses for fundraising. FSAP also allocated 10.8 percent for program expenses and a hefty 45.2 percent for administrative costs. Consequently, FSAP was rated as “exceptionally poor” and received a zero star rating. 
    However, the unusually close ties between PETA and FSAP merit additional scrutiny of both organizations. FSAP was virtually unknown until its existence was disclosed a year ago by the activist publication Animal People. This monthly newsletter does an annual investigative report on charity finances called “Who Gets the Money?” In its November 2001 report, Animal People revealed that PETA and the Physicians Committee for Responsible Medicine (PCRM) established the FSAP in 1993. According to its IRS Form 990, FSAP is headquartered at the same Norfolk, VA address as PETA. Furthermore, its purpose is described simply as providing “support” to a specified group of organizations, including PETA, four of its subsidiaries, PCRM, and the Washington Humane Society. 
    The FSAP board consists of three people: Neal Barnard (president), Ingrid Newkirk (director) and Nadine Edles (secretary). Barnard is also the president of PCRM. Newkirk is also the president and director of PETA. Edles has not previously been identified as holding positions in either organization, but her address on the form is the PCRM address. 
Since FSAP’s existence was disclosed, there have been various speculations about its significance. It may serve to conceal actual expenses of the beneficiary organizations since fund-raising or administrative expenses picked up by FSAP are kept off their balance sheets. For example, Animal People reports that in its fiscal years 1999-2000, FSAP paid the mortgage on the PETA headquarters and leased the site to PETA, as well as conducted mailings in the names of beneficiary organizations. It may also provide a way for wealthy PETA to quietly channel funds to PCRM. According to Animal People, in its fiscal year 2000 filing, FSAP’s sole reported program expense was a grant to PCRM in the amount of $432,524. The organizational structure of FSAP certainly demonstrates the extent to which PETA and PCRM are intertwined. While PETA has engaged in wild publicity stunts, PCRM has sought to portray itself as a dispassionate source of expert information. However, FSAP’s narrowly defined purpose and tightly-controlled organization reveals an extraordinary degree of cooperation between the two groups.
    Other websites that provide financial information about nonprofits include http://www.give.org (Better Business Bureau Wise Giving Alliance) and http://www.guidestar.org (Philanthropic Research, Inc.). 

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