As Christmas season approaches, charities are gearing up for a holiday push in fundraising and American households will soon be bombarded with direct mail and telephone solicitations asking them to donate dollars to various causes. But donors should be wary of a growing number of charities that purport to alleviate poverty in Native American communities but that instead use donated funds to stuff their own stockings.

"There are many, many non-Indian operations that use Indians as a way of garnering revenue," says Jerry Reynolds, associate director of information services for the First Nations Development Institute.

This practice became apparent to Eleanor McMullen, chairwoman of the Port Graham tribe in Northern Alaska, when she learned that 1,000 pounds of beef liver were en route to her tiny coastal village. The donation was made in 1991 by American Indian Heritage Foundation (AIHF), a charity in Falls Church, VA, which had solicited funds on behalf of the Port Graham tribe but had not consulted with the Port Graham people.

McMullen was offended and demanded that the beef be returned to sender. "We weren't looking for any donations, we were just trying to adjust to being without what we normally have." The Port Graham Aleuts were hard hit by the Alaska oil spill that year. "I found out that this occurred amongst many people and that a lot of that money went to [the AIHF president's] program, her wage, her staff."

My investigation showed similar dubious practices by the National Relief Charities, the Native American Heritage Association, the Southwest Indian Foundation, and the Southwest Indian Children's Fund.

For Sale: Native Poverty

The incident at Port Graham is not, unfortunately, an isolated one. "There are many, many non-Indian operations that use Indians as a way of garnering revenue," says Jerry Reynolds, associate director of information services for the First Nations Development Institute, a Fredericksburg, VA-based non-profit organization.

Ken LeDeux, a former business manager for the Rosebud Sioux tribe, says he keeps a close eye on charity activities in the area. "It's real difficult when you're dealing with any kind of poverty-stricken area," LeDeux says. "Any kind of assistance is looked at as very beneficial." But charitable organizations are latching on to Native American causes because they are an easy sell, says Daniel Borochoff, director of the American Institute of Philanthropy. Americans feel guilty about their nation's treatment of Native peoples, he says, and they give money with the intention of correcting history's wrongdoings.

"If they're claiming that Indian people and Indian kids are starving or without food, they're probably not legitimate," says Reynolds of the First Nations Development Institute.

"These charities exploit the tremendous reservoir of goodwill that exists worldwide for Indian people," agrees Vernon Bellecourt (Ojibwe), an American Indian Movement leader.

Shady operations may also proliferate because government oversight of charities is sorely lacking. The U.S. Supreme Court has forbidden states from setting limits on what percentage of a charity's funds must be spent on programs. The majority of charities fall into two categories--religious organizations and charities with gross receipts less than $25,000--both of which are exempt from making IRS tax information available to the public. The inner workings of two-thirds of American charities remain a mystery for that reason.

Scandalous in South Dakota

One rogue charity, the American Indian Relief Council (AIRC) in Rapid City, SD, gained notoriety among Sioux activists in the early 1990s when it dumped useless textbooks and outdated seeds on the reservation as part of its relief program. Employees blew the whistle on the organization's dubious fundraising pitches, which they said were manipulative exaggerations and lies. AIRC workers also complained that the money they raised for Native Americans wasn't making it to the reservations.

Eventually the Pennsylvania Attorney General's office sued AIRC in 1993 for lying to donors that certain reservations were hit by catastrophic natural disasters and that funds were needed to prevent famine and death. The lawsuit also charged that AIRC overvalued the price of goods donated to tribes--like the expired seeds--which it listed at market value. AIRC settled in 1999 and paid $350,000 to the state.

AIRC's president, Brian Brown, had been a private accountant for six large national charities. Four of his clients were sued in 1991 by the Attorneys General of Connecticut and Pennsylvania for willfully conspiring to inflate commodity values and deceive donors.

In 1993, when Brown's AIRC scam was laid bare by the media, the charity discreetly downsized its South Dakota operations and shifted its focus to the American Southwest. Today the charity has been reborn under a different parent organization, National Relief Charities (NRC), which operates two new subsidiaries, Council of Indian Nations and Southwest Indian Relief, both in Apache Junction, AZ.