Report: Kars4Kids overstated charity work in Minnesota

(KMSP) - You’ve heard the radio jingle asking you to call 1-877-Kars-4-Kids and donate your car to help fund children’s programs. But a new report from Minnesota Attorney General Lori Swanson found that Kars4Kids raised $3 million from Minnesota donors, but only spent $11,600 on charitable programs for Minnesota residents from 2012 to 2014. 

The compliance report found that Kars4Kids does little direct charitable work itself. Instead, it acts as the fundraising arm for Oorah, Inc., a New Jersey charity whose mission is to promote Orthodox Judaism among children.

Oorah’s two largest programs are summer camps and tuition assistance. Two-thirds of the participants in those programs are children from New York and New Jersey. As of March 2015, only three Minnesota children have participated Oorah’s programs.

Nationwide, Kars4Kids raised more than $87.8 million from the sale and scrapping of donated vehicles from 2012 to 2014. Of that $87.8 million, Kars4Kids donated more than $40 million – or over 90 percent of its actual expenditures on charitable programming – to Oorah.

Kars4Kids has been criticized by watchdog groups for failing to disclose its relationship with Oorah and not adequately monitoring the organization. 

The report also found that Kars4Kids overstated the amount of money it spent on charitable programming.

According to the report, the organization spent less than 44 percent of the proceeds from vehicle donations on its charitable mission between 2012 and 2014, but it used two different financial reporting tactics to make it appear that it spent 63 percent.

The attorney general's office has sent the compliance report to the Internal Revenue Service for review.